Who Are the Users of Managerial Accounting?

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Managerial accountants work inside businesses to provide managers and employees with resources to operate their own segment of the business. Managerial accountants create analyses based on the needs of the user, oversee the budgeting process and recommend various actions based on the financial implications of each action. Each user requires different information from the managerial accountant.

Sales Managers

  • Sales managers work with managerial accountants to determine the impact of various pricing decisions, to create a sales budget and to evaluate unique business opportunities. Sales managers negotiate with customers regarding sales volumes and pricing options. These sales managers need to know the impact on profit that different pricing levels would make. The sales managers like to know both the target price and the minimum price to work with when negotiating. Sales managers also collaborate with the managerial accountant when creating the sales budget by reviewing historical reports provided by the managerial accountant. Sometimes sales managers receive offers for unique business opportunities, such as a one-time production run for a customer at a reduced price. The managerial accountant can evaluate the profitability of taking this business.

Production Managers

  • Production managers use labor reports, material reports and variance reports created by managerial accountants. Production managers oversee the labor hours, including overtime hours, spent with each production run. Labor reports allow the production manager to determine if the employees are working effectively. Material reports allow the production manager to evaluate waste created during the production process. Variance reports allow the production manager to compare actual performance to the budgeted performance and evaluate performance.

Senior Management

  • Senior management works with managerial accountants to learn the financial implications of various actions being considered and to receive ad hoc information. Senior management spends time considering the direction of the company. The team might consider closing a facility or acquiring another business. Managerial accountants evaluate the financial feasibility of these actions and make recommendations to the team. Senior management might also request the managerial accountant create reports communicating specific data, such as labor hours by department.

Employees

  • Employees work with managerial accountants to maintain their own responsibilities. For example, an employee running a machine might need to know the production levels for each of his shifts to ensure he meets a quota. The managerial accountant can provide production quantity information for the employee.

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