The Advantage To A Manufacturing Manager In Taking Accounting Courses

Many individuals who study accounting do not work directly in an accounting position. The technical skills obtained from the study of accounting provides them with an underlying foundation on which to perform various business functions. Managers in a manufacturing company can enhance their work performance by taking college courses in accounting.

The practical application of accounting principles entails much more than just working with numbers. As a business manager, your role is to manage both people and processes in the most efficient manner. Your performance is made more effective by studying the accounting subject areas applicable to manufacturing companies.

Cost accounting

The use of cost accounting is essential to determine the precise amount of expenses required to manufacture any particular product. Cost is not only comprised of materials. It also includes labor and overhead. Costs are added at each stage of the manufacturing process, and a cost per unit can usually be determined for even a small part or product.

Management accounting

Some of the costs of your business are fixed and do not vary with output. Other costs are variable and may rise at differing rates as manufacturing output increases. By analyzing the fixed and variable costs of manufacturing, products can be priced at a level that ensures a reasonably predictable profit margin.

Many manufacturing companies prepare operating budgets for the upcoming months based on projected sales expectations. On a periodic basis, the expected budget is compared with actual results to identify factors responsible for any major variances from the budget. If not corrected, unexpected costs may affect the profitability of your company.

Financial accounting

An introductory accounting course is likely to focus on the various accounts used in financial statements. All of the asset categories of your company must be accounted for, including the materials used at various points in the manufacturing process.

Raw materials and finished inventory are likely separate accounts at your company. As products are manufactured, raw materials decrease and finished inventory increases. The inventory of finished products is eventually sold and shipped, increasing cash or accounts receivable.

Understanding the terminology of accounts, and how material is accounted for, helps company managers communicate. The results reported in your company's year-end financial statements are dependent on the decisions made by managers throughout the year.

Accounting is the language of business. The completion of courses in accounting is likely to also increase your future prospects for promotion. Contact a college or university for further information about business courses.