Changes and Trends in Managerial Accounting

Changes and Trends in Managerial Accounting

I. Introduction

Increasing complexity in manufacturing processes increased overhead costs and production systems and the emergence of technological advancements in business operations have led to a number of fundamental transitions in the profession of management accounting. More than in any other business sector, the manufacturing environment possess significant issues in light of this transformation, and commonly held beliefs and practices in the accounting systems have been challenged by an emergence of new accounting protocols necessitated by an increasingly technical manufacturing sector.

In order to understand the application of new process in managerial accounting systems, it is necessary that professionals not only understand the major changes in the accounting systems in manufacturing, but also grasp the essential principles that have come out of the need for increasing effectiveness in managerial accounting. Fundamental changes have followed the insurgence of ABC (activity-based costing), but there have been major changes in the past few years in the application of this system, and the progression of change has required adaptations to this once "new" system.

It is clear that it is imperative that professionals in the field of managerial accounting recognize the fundamental practices, while also preparing systems for constant change. In recent years, increasing technology has changed the perspective of cost evaluations and manufacturing finance tracking systems and the automation of these systems has demonstrated accounting changes as well. But perhaps the most instrumental changes will come as a result of downsizing, reengineering, and the application of total quality management processes thorough out the manufacturing sector. Effective managerial accounting will reflect an understanding and projection for these instrumental changes.

II. Managerial Accounting in Manufacturing

Management accountants play a...