We have already discussed the topic of management control on our blog many times. We have talked about what it is, but not only that. Today we want to delve more deeply into cost accounting and management control. How do these two elements relate to each other?
Cost accounting, also known as cost accounting or industrial accounting, is a branch of business accounting that focuses on the detailed analysis of a company's costs and revenues. Unlike financial accounting, which is primarily concerned with preparing financial statements and external financial reporting, cost accounting is intended for internal use by the company to:
We could therefore say, simplifying to the minimum terms, that analytical accounting is a system of collection and re-elaboration of data that are contained within the general accounting. Its ultimate purpose is to achieve the objectives set through programming and, more generally, the control of company management.
Cost accounting offers a re-elaboration of information, i.e. costs and revenues, with the aim of defining forecasts of margins and objectives to be achieved in terms of growth or increase in market share. Through cost accounting, companies can analyze in detail the costs and revenues related to specific production processes, products or services, departments or cost centers. This analysis allows to identify the strengths and weaknesses of the company, as well as to identify possible margins for improvement.
Furthermore, analytical accounting management allows you to monitor the progress of business performance over time, comparing current results with past ones and setting pre-established objectives to be achieved in the future. This analysis allows you to make informed decisions on resource allocation and optimization of business processes, leading to effective management exponentially over time.
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Furthermore, this practice allows you to evaluate the effectiveness of your business strategies and make any corrections to ensure the success of your business in the long term.
The difference between cost accounting and general accounting lies mainly in their purpose and approach to recording and analyzing a company's financial data. While general accounting focuses on the financial statement and the accrual principle, analytical accounting deals with analyzing costs by destination and operating income. Analytical accounting allows for effective management control through the use of specific software and business intelligence for analyzing financial data. Furthermore, analytical accounting is not required by law, but it is essential for any company that wants effective management control.
Every company should implement an analytical accounting system as part of its management control system, as it is a fundamental tool for monitoring and optimizing the company's financial performance. A management control can help identify any deviations from plans and take the necessary corrective measures. In addition, the analytical accounting system allows for greater transparency and precision in decision-making processes, improving overall business management and profitability.
Management control is the ultimate goal of analytical accounting. Its task is to bring together different aspects of a business. From human resources, to materials, to machines/work tools, processes and finally economic resources. To place this within management control, it is important to consider all the key elements that contribute to the success or failure of a business. Management control should include monitoring and analyzing human resources, materials and machines/work tools to ensure that they are used efficiently and optimally. Furthermore, management control should include the evaluation of business processes to identify any inefficiencies and possible improvements. For this reason, it is important to rely on a software that gives a complete overview from a single platform, such as Hoida.
Finally, management control should also involve the management of economic resources, such as monitoring income and expenses, designing budgets, and evaluating the overall financial performance of the company. In this way, management control allows for informed decisions to be made and strategies to be planned to improve the efficiency and profitability of the company.
Although it is rare for management control to be managed with Excel. But an infinite amount of spreadsheets is not the most optimal solution. Otherwise, a much simpler path, even for those who physically deal with this sector within a company, is the one that involves the use of a management platform that has an analysis and reporting system integrated within it.
Having all your business data in one place makes it much easier to control, monitor and intervene if necessary. A management system like Hoida, specifically, can be integrated with a broader management system like HubSpot, which controls communications, customer relations, website and much more.
A: They are tools used by companies to monitor and analyze financial and operational data in detail in order to make informed management decisions. While general accounting is primarily concerned with recording accounting facts, analytical accounting and management control focus on analyzing and controlling the company's performance.
A: Cost centers are organizational units within a company to which costs and revenues can be attributed. In accounting and management control, the assignment of costs to cost centers allows you to monitor the performance of each unit and make certain targeted decisions to optimize the efficiency of the company.
A: General accounting deals with the recording and financial reporting of the company according to national or international accounting principles, while analytical accounting analyzes costs and revenues in detail, providing useful information for management control and management at company level.
A: Analytical analysis allows companies to understand the composition of the production costs of a product or service, identifying areas of inefficiency and possibilities for cost reduction. This analysis is essential for making certain targeted economic decisions and improving the management of the company.