Management accounting is primarily focused as a decision making tool for running a business, hence they require more flexibility. According to Kaplan management accounts have become a subset of financial accounts and that they reflect more on the external rather than internal requirements of the company. Most of the managerial decision-making and control systems in use in the late 1980s were described by Johnson and Kaplan as stagnant. As a result, they went onto research in new accounting systems raising the profile of internal accounting systems by use of financial and non-financial measures although their work was seen as controversial by Drury but is now consider

 current managers have little knowledge of their organisation's technology hence they rely on creating value through accounting activities

Product costing is not the only use of ABC. By finding appropriate drivers and cost units, overheads can be assigned to anything that uses them. This allows sales and marketing costs to be assigned both to the products and customers. Traditional systems do not take into account costs generated by customers. For organisations concerned with customer focus, ABC will give valuable insights into customer behaviour. The other benefits of using ABC are its focus on continuous improvement, its measurement of activities at the process level, its provision of accurate cost data including those generated by the customers, and it is geared for the medium term (3-5 years).

Present cost accounting and management control systems were developed almost a century ago when the nature of competition and demands for internal information were very different from what they are today. Accounting and financial executives must redirect their thinking from external reporting to the more effective management of their companies' tangible and intangible assets. Internal management accounting systems also need renovation. This essay has highlighted the ways in which these can be done.

Managers tend to use the economic order quantity (EOQ) model which helps in determining the cost balance between an additional set-up (for a new production run or change of product) to the cost of holding inventory. If set-up costs could be driven to zero and by just-in-time inventory control systems implementation firms would hold less inventory and raw materials. These would result to lesser costs in holding material that has no value being added to it. In addition, reducing uncertainties in deliveries from suppliers through close co-ordination can enable factories to run without any raw materials in stock. Reducing machine breakdowns also contributes significantly toward reducing work-in-process (WIP). Thus by investing in information systems and integrating with suppliers, inventory costs can be reduced significantly and accurate information on the company's manufacturing performance can be obtained.

2. Internal Business Perspective: What must we excel at internally?

A greater understanding of factors critical to the success of manufacturing organisations is needed. Accounting researchers can play a critical role in this effort by attempting to develop non-financial measures of manufacturing performance like quality, productivity, inventory innovation and workforce . A particular challenge is to de-emphasise focus on short-term financial measures and develop indicators that are more consistent with long-term competitiveness and profitability. The challenge of improving a firm's manufacturing performance is particularly relevant to managerial accountants as they are supposed to provide information for planning and decision making. Therefore, measurement systems for today's manufacturing operations must consider the following non-financial indicators of manufacturing performance:

Some common words found in the essay are:
Johnson Kaplan, Costing ABC, Financial Perspective, Kaplan Norton, Productivity Productivity, Management ABM, Pont Electric, Inventory Managers, Quality Quality, Kaplan Johnson, manufacturing performance, management accounting, balanced scorecard, control systems, financial measures, excess capacity, non-financial measures, customer satisfaction, short-term financial, continuous improvement, accounting management control, management control systems, cost accounting management, short-term financial performance, manufacturing performance quality,
Approximate Word count = 2348
Approximate Pages = 9 (250 words per page double spaced)