Answer:
Management accounting is the accounting used by managers.
Explanation:
For example, imagine a company makes cookies. In order to make a profit on cookies, the management needs to decide, what raw materials to use. How much will they cost? If the raw materials per cookie is $20, then how much should the profit be set to per batch? If the targetted profit is 25% then the price for the cookies to the end customer will have to be $25.
Also, management accounting helps identify how many units to make. So, for example, your bakery costs $1000 rent per month. So, you want to know how many cookies you'll have to sell to at least be able to pay rent for your shop? This is where we do a break-even analysis. So, if you're selling cookies for $25 and cost to make is $20, you're only left with $5.
Now, $1000/$5 = 200 cookies. Now, you know that as a manager/owner that if you want to be able to just make the business viable, you have to sell 200 cookies at $25 a piece.
