Managerial Accountants Costing
Managerial Accounting has acquired more importance during the past years. The process of managerial costing consists of “measuring and assigning value to a company’s operation” (Hoffelder, 2012). Because of the value that this has acquired for many companies, is that the Institute of Management Accountants also referred as the IMA, have now been working on guidelines that detail the principles of managerial costing that are “unrelated to the cost modeling commonly used for financial reporting” (Hoffelder, 2012).
Presently, managerial accountants work with a company’s information that is usually left out the financial reports. This supplement information is becoming very valuable that GAAP, also knows as the Generally Accepted Accounting Principles, is considering its own accounting principles. The model framework is not being put together as an alternative to GAAP, but instead its complement. As the chair of the IMA’s Managerial Costing Conceptual Framework Task Force, Mr. Larry White states “Management accounting is about what goes on inside the organization and making the purely economic decisions that are necessary for sustainable long-term growth and profitability” (Hoffelder, 2012). In other words, these guiding principles are not meant to set actual standards, but rather achieve the objective of forward looking models for internal costing purposes.
Companies put a great significance on their financial reporting. The key principle behind these guidelines is to shift that focus into the significance of a costing model of “cause-and-effect relationships” (Hoffelder, 2012). What this means is that the starting point of the model will be to identify the resources available to a company. Then, finding a way to figure out the costs that are involved and how these support or affect different areas of the company;