Management accounting helps to explain the operation of the company to clarify the choices to compare predictions and achievements, so as to lead to correct decisions (Kaplan, 2006).
The problem here is that Management accounting, in contrast to financial accounting is not governed by mandatory accounting standards (IFRS for listed companies in stock market) and, contrary to what one might think, it is not mandatory (Sharman, 2003). The objectives of management accounting are, firstly, to know the costs of the various functions of the company, to determine the basis for valuation of certain balance sheet items, to explain the results by calculating the costs of products to compare the price of sale. On the other hand, to forecast load and product, record completion and explain the differences that result (management control) (Cedillo, 2008). In case of JM, the overhead expenses are becoming too high, reducing the profitability. The company has sufficient modern equipment and the operations are completely automated. The labor costs need to be minimized in order to reduce overheads expenses. The company has already shrunk its direct employees, but, due to the complexities involved with the automated procedures, a lot of support staffs had to be employed (Karpov, 2008).
The accountant will have to make decisions in terms of planning, organization, and evaluation in order to establish the objectives and define the means. The duties and activities of the different employees should be organized and coordinated in order to extract their best output with respect to the hourly expenses. Monitoring/evaluation of all labors and support employees should be done for measuring performance and to explain the differences.