Managerial Accounting

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The summation of a nine-year study, published in the January 2007 edition of Accounting, Organizations, and Society, provided evidence that responsibility accounting, the process of measuring and reporting operating data by areas of responsibility, is necessary to achieve corporate goals. The authors, Casey Roe, Jacob Birnberg, and Michael Shields suggest that a Responsibility Center Manager’s behavior and communication skills were positively influenced by the quality and pertinence of the provided accounting information given a responsibility center manger thus helping make his/her responsibility center be more productive.


Managerial accounting is a job whereby accountants are responsible for providing information to the managers and other leaders within a company. Some practices are innovative, while other are more traditional and haven’t changed in years. There are several practices that are performed by almost all managerial accounting departments:


Variance analysis
Standard costs
Cost volume profit analysis


Topics you are asked to discuss as it relates to the four (4) identified practices are:

How can/should responsibility center managers use accounting information developed from the four (4) defined practices be utilized to make better decisions.

How can/should responsibility center managers be “helped” on how to use this information in the best possible way within their individual responsibility centers.

How can/should responsibility center managers department decision making performance be properly evaluated. Also, as it relates to this topic, discuss the impact that company bonuses can/should have on responsibility center managers decision process.

If top management determines that the company will not provide a defined practice if the cost of providing the defined practice outweighs the perceived benefits and strategic risk, how can/should the Accounting Department make this determination and how will this impact the holding of a Responsibility Center accountable.

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