Accounting Management at Shell Company Case Study

Accounting Management at Shell Company - Case Study ExampleManagement accounting entropy is the culture which is necessary for the higher direction to take into consideration when making important decisions regarding the organization. It allows the management to make well-informed decisions which dismiss drastically help the follow to achieve improved results. Management accounting information is future-oriented which means that unlike financial accounting, it does not just announce the past performance of the company except also highlights the sections which can be improved to achieve greater efficiency and profitability. There are basically three types of management accounting information which can be significant for business decision making. This information can be classified into three statements or reports which include the personify allocation reports, budget reports, and prediction statements. The first type of management accounting information that can be used by She ll management is the cost allocation reports. This report consists of the information regarding the coin invested or supposed to be invested, in particular projects. Organizations today have limited resources and they need to evaluate very carefully the projects they invest in. In the case of Shell, most of its projects involve huge investments and they cannot afford to make a mistake in choosing the right project. Therefore, Shell management can use the cost allocation reports to evaluate the projects which give the highest possible return and also are in line with its company goals and strategy. The second type of management accounting report is a budget report which usually has to be formulated and presented at the start of the financial year. A budget report will consist of the money the business should invest in each business operation and function. Managers usually refer to master, standard and flexible budgets to take decisions. Master budgets include all the parcel out res ources for expenditures of the whole company as well as for separate departments. On the other hand, a standard and flexible budget can help the management to compare the actual and budgeted expenses of the company which can again provide very useful information to the Shell management.