Accounting Management at Shell Company Case Study

Accounting Management at Shell Company - Case Study Example Management accounting information is the information which is necessary for the higher management to take into consideration when making important decisions regarding the organization. It allows the management to make well-informed decisions which can drastically help the company to achieve improved results. Management accounting information is future-oriented which means that unlike financial accounting, it does not just report the past performance of the company but 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 cost allocation reports, budget reports, and forecasting statements. The first type of management accounting information that can be used by Shell management is the cost allocation reports. This report consists of t he information regarding the money 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 allotted resources for expenditures of the whole company as well as for separate depar tments. 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.