IMA Releases New Report on Managerial Costing Models

Giuseppe Barone
IMA
(201) 474-1681
giuseppe.barone@imanet.org

Taylor Fenske
Stern Strategy Group
(908) 325-3866
tfenske@sternstrategy.com

Montvale, N.J., April 25, 2019 IMA® (Institute of Management Accountants) has released a new Statement on Management Accounting (SMA), “Developing an Effective Managerial Costing Model,” that builds on IMA’s Conceptual Framework for Managerial Costing (CFMC).

Most organizations today base their decision-making on inadequate cost models that, while acceptable for external financial reporting, fail to meet the decision-making needs of managers operating in today’s complex business environment. IMA’s new SMA addresses this issue by providing a six-step process that organizations can use to develop an appropriate costing model for economic decision making by managers and employees.

This SMA identifies principles and concepts that organizations can use to model the behavior of resources and operations, and how resources are consumed by outputs. Based on these concepts, organizations can improve their managerial costing model by:
  1. Assessing the current costing system’s effectiveness
  2. Analyzing the organization’s strategy and business environment
  3. Considering managerial cost modeling concepts
  4. Evaluating current managerial costing practices in the organization
  5. Designing the appropriate level of costing model sophistication for the organization
  6. Implementing the new cost model across the organization
“The managerial costing done by companies is often not sufficient to support their internal decision making,” said co-author Raef Lawson, Ph.D., CMA, CSCA, CPA, CFA, CAE, professor-in-residence and vice president of research and policy at IMA. “Having an effective managerial costing system that meets organizational needs such as operational cost control, financial planning and analysis (FP&A), pricing decisions, and capacity management is critical for organizations to effectively compete in today’s business environment.”

This SMA, written by IMA’s Managerial Costing Task Force, is part of IMA’s ongoing efforts to advance a key competency of professional accountants in business. The members of the Task Force include Raef Lawson (chair), Gary Cokins, Doug Hicks, Kip Krumwiede, Monte Swain and Larry White.

To read the full report, visit here.

About IMA® (Institute of Management Accountants)
IMA®, named the 2017 and 2018 Professional Body of the Year by The Accountant/International Accounting Bulletin, is one of the largest and most respected associations focused exclusively on advancing the management accounting profession. Globally, IMA supports the profession through research, the CMA® (Certified Management Accountant) program, continuing education, networking and advocacy of the highest ethical business practices. IMA has a global network of more than 100,000 members in 140 countries and 300 professional and student chapters. Headquartered in Montvale, N.J., USA, IMA provides localized services through its four global regions: The Americas, Asia/Pacific, Europe, and Middle East/India. For more information about IMA, please visit www.imanet.org.

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