1.1. Planning and controlling organisation’s budget
According to Yazdifar, et al (2008) management accountants plans and control the budget of the business. This means that management accountants are the one forecasting the future revenue and expenditure of the organisation and make sure that the company do not go beyond the limited amount of expenditure planned to be spent in the year or receive less than expected revenue in a year. Moreover management accountants can forecast the future cash flow of the organisation and advice the management with reference to the cash budget of the organisation.
1.2. Evaluation of business performance
The association for accountants and financial professional in business argues that management accountants are the one evaluating the performance of the business. This means that they are the one looking on where the business came from, current situation, and where it is going. Furthermore management accountants can advice the management on how they can improve the performance of the business by offering them techniques or ideas which can help improving performance of the business. For example Tesco offers of buy now pay later within six month without interest on large screen TV. This was an idea of management accountants at Tesco who want to increase the movement of big screen TV and improve revenue of the business.
1.3. Profit improvement
Glynn, et al (2003) argue that profit improvement is management accountant’s role and not sales manager since most of the sales managers are looking to increase the volume of sales without considering the effect on profit. Therefore, management accountants are the one to advice top management on different ways or techniques of which they can use to improve their profit. Management accountants can play an important role towards improvement of profit by advising the top management on whether to reduce the price in order to increase volume and hence increase profit or to give discounts to royal customers or for large orders in order to encourage buying in large quantities. For example at Tesco, customers with 100 points will receive discount vouchers.
1.4. Problem solving
According to Upchurch (1998) management accountants as management support help top management in solving different problems within the organisation. This is by providing the management with information about the cause of the problem and the positive and negative consequences of a possible course of action. By doing so, management accountants solved the problem because once the source of the problem is known, the problem is half solved. For example Tesco may have high production cost which made them selling some of their products at high price. Management accountants may look on what makes Tesco incur high production cost if it is due to high wages, type of material or machines used. If the source of production is high wage level paid to Tesco employees, management accountant may advice the top management to move its factory to Asia where it can get cheap labour and on top of that they will give effects of moving factory there such as high initial cost and so on.