What Is Strategic Management Accounting?

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Strategic management accounting focuses on strategies to enhance a company's profitability.
Strategic management accounting focuses on strategies to enhance a company's profitability. (Image: Young business man and woman at office image by dimis from Fotolia.com)

Strategic management accounting is a type of accounting that focuses not only on internal factors of a company, but factors that are external. This includes industry-wide financials, averages and upcoming trends.

Strategy

Strategic management accounting makes and implements strategies to increase a business’s profitability.

Costs

Strategic management accounting takes an interest in the costs of goods made. Costs such as overhead and raw material are examples of internal factors strategic management accountants use.

Prices

Strategic accounting studies the industry prices on goods in order to help find a good selling price for the goods a company manufactures. For example, lowering a price of a product from $2.00 to $1.95 may actually increase total profit by increasing the quantity of products sold.

Trends

Strategic management accountants study trends so they can forecast what goods consumers will demand in the future. For example, a strategic management accountant for a shoe manufacturer will study other shoe companies to determine the latest styles and colors.

Planning

Strategic management accountants compile this external and internal information to determine a plan for the company. They recommend certain products to be made, and help the company carry out the plans they have created.

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