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21 Management Accounting Techniques

 , updated on May 15, 2019
Management accounting, or managerial accounting, is the use of accounting techniques for business analysis to support strategy formation, business execution, decision making and risk management. It includes both analysis of financial and non-financial measures. It should be noted that management accounting is generally considered a separate practice from financial management functions such as controlling a team budget.The following are considered fundamental techniques of management accounting:

Activity Based Costing

Activity based costing is an accounting approach that assigns cost to activities based on their resource usage. Activities can then be related to products, services and projects.

Cost Benefit Analysis

Cost benefit analysis is a general term for comparing the costs of a business strategy with its anticipated results.

Data Dredging

A brute force method of data analysis that tries to match known statistical models to large sets of data. At risk of finding patterns that are meaningless noise.

Data Mining

The analysis of a large repository of data to find meaningful patterns of information. Typically starts with a hypothesis that you want to confirm with data.

Demand Forecasting

Demand forecasting is the practice of predicting the market demand for a product or service.


Forecasting is the process of making future predictions based on analysis of past data and trends using informal techniques such as educated guesses or formal methods such as statistical analysis.

Lifecycle Cost Analysis

Lifecycle cost analysis is the process of evaluating costs over the life of an asset.

Net Present Value

Net present value is a metric for evaluating strategies and investments that considers the time value of money.

Time Value Of Money

A principle that states that time has an impact on the value of assets.

Rate Of Return

The gain or loss on an investment over a period of time expressed as a percentage.

Statistical Analysis

The use of probability distributions to solve problems or make predictions.

Statistical Model

A probability distribution constructed to support data analysis.

Statistical Population

A set of observations that share a set of properties. For example, the set of all coffee drinkers in Japan.

Probability Distribution

A function that predicts the results of a set of experiments over a large sample space.

Throughput Accounting

A management accounting approach that focuses on the throughput of cash.

Theory Of Constraints

A management approach that examines the constraints that are holding an organization back.


The process of identifying and clearing constraints commonly known as bottlenecks that limit the output of an organization, process or procedure.

Total Cost Of Ownership

A financial estimate that seeks to determine the full cost of an investment over its lifetime.

Cost To Company

The total annual cost of an employee.

Variance Analysis

Variance analysis is a tool of financial control that evaluates the difference between actual costs and budgeted, planned or standard costs.

Regression Analysis

A statistical method of investigating the relationships between variables. For example, regression analysis can be used to plot the relationship between two variables on a graph.
Overview: Management Accounting
The practice of measuring management objectives.
Related Concepts
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Decision Making

A list of decision making techniques.

Abilene Paradox

The observation that groups may make collective decisions that are viewed as wrong or irrational by each individual member of the group.

Decision Making Process

A complete guide to the decision making process.

Rational Thought

The difference between rational thought and logic.


The common types of uncertainty in decision making and strategy.

Information Costs

A definition of information costs with examples.

Reverse Brainstorming

A definition of reverse brainstorming with examples.

Decision Fatigue

The definition of decision fatigue with examples.

Devils Advocate

Taking a position that you do not necessarily agree with for the purposes of argument.

Paradox Of Choice

The definition of paradox of choice with examples.
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