The Managerial Accounting Process in General Electric Inc Term Paper

The Managerial Accounting Process in General Electric Inc - Term Paper Example Planning of operations primarily involves the budgeting process. It is associated with the cost of producing a unit of product. Thereafter, the actual performance of the firm is compared along with the budgeted amounts and controlling occurs in those sectors where the difference seems to be significant (CSN, 2011). Simultaneously, along with the development of managerial accounting principles, the traditional accounting system also witnessed a rapid development. However, there are good numbers of firms which are still following the traditional accounting system. But with the increasing global competition and evolution of technologies, production oriented operations are becoming more and more complex. Firms need to do an effective evaluation of the cost that they incur for producing goods so that proper pricing of those goods can be done, which will generate sufficient revenues for the company. Precise cost information is very crucial for every aspect of the business, be it pricing po licies, product designs or performance reviews. These requirements saw the inception of activity based accounting over two decades ago and now is widely used in the US, Europe and Pacific. Similar to managerial accounting, activity-based costing not only includes the evaluation of a company from a financial perspective but also from the wholesome perspective as it includes both financial and non-financial data in its reporting (Gupta & Galloway, 2003). The following section will involve a thorough analysis of the managerial accounting process followed in General electric Inc thereby explaining the significance of Activity-based costing towards the financial performance of the company. Moreover, comments will be made as to whether the use of activity-based costing system will add to the benefits of the company or not. Thereafter, emphasis will be laid on the use of standard costing by General Electric (GE). Standard costing is basically used by companies for comparing standard cost s et by the company with the actual cost that is incurred. Hence it draws attention to the performance of the company with respect to the goal that is set by the company. The fifth part of the project enlightens the benefits of the relevant cost for the future projects of the company. It helps the management of the company to take any crucial decision regarding the acceptance of the project or take make or buy decision. Â