What new or different perspectives have you gained through this course of the role of managerial accounting in the operations of business or organization? Explain and support.
This course helped me gain vital insights into the role of managerial accounting in the day-to-day operation of businesses. Though I already knew what a budget is, chapter 7 offered new insights into the budgeting dynamics at large organizations. First, I never knew about a “self-imposed” or a “participative” budget – a budget prepared by managers across all the different levels. I often thought that budget preparation was a prerogative of the Finance Department and that whatever decisions the department comes up with are only reviewed by the board of directors. I believe that organizations that use this type of budget are more productive since everyone contributes to the budgeting process. Since frontline managers are often in touch with the customers and junior employees, they possess valuable information to help the organization attain its financial goals.
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Chapter 11 entailed capital budgeting decisions, which gave me a new perspective on how large corporations are managed. In any large organization, deciding on the ideal project to invest in at any particular time is often challenging. I believe that screening decisions is a better approach than the use of preference decisions during capital budgeting for some reasons. First, it does not allow any form of bias or favoritism of one project over others since each potential project must qualify itself for funding by meeting the minimum set threshold. Secondly, screening decisions means that all the employees in an organization are involved or aware of the company’s considerations before choosing a project to invest in. Nonetheless, I agree that all capital budgeting decisions must be made once the company knows the most financially rewarding option. Doing this ensures that the company does not invest in white elephant projects that take decades to breakeven.
