Interviewing a Friend about Managerial Accounting Techniques Used In Their Work As a method to get clear picture and understanding of how managerial accounting skills are applied in unexpected circumstances, I interviewed my friend by the name Robert Nyatangi who works as a company pharmacist in a local pharmaceutical manufacturer. Dr. Robert is a qualified pharmacist with a master degree on pharmacy and has worked in several companies throughout his career life. Robert seemed to have proper understanding of the application of managerial skills despite the fact that he is not an accountant by profession.
As it turned out, I also discovered that Robert also operates his own proprietary dispensing chemist in the capital. Robert initiated the interview by asking me what I wanted to know about his profession and what aspects of accounting I was interested in. This made me to think broadly since I was not sure of how accounting could be useful to a pharmacist in addition I had figured out that accounting could only make sense to accounting managers and other top executives in a company who may be concerned with the profits or losses that occur.
I told him that I was interested to know how he applies different managerial accounting skills in various circumstances in his occupation. To begin with, Robert told me that he works for a pharmaceutical manufacturing company that specializes with production of human medicines as a quality assurance manager. In addition, Robert told me that he was responsible for the quality of medicines produced in the company as well as purchasing of quality consumables. Further, Robert clearly indicated to me that throughout the interview that his docket in the company had serious financial implication from the decision he made. According to Robert, quality management is expensive and requires some form of accounting in order to keep track of expenses and also make informed decision.
This was clear to me since I had already pictured the roles of a quality manager to be concerning purchase of materials and other important ingredients to enable production of quality products. Robert further told me that his position as a quality manager made him to gain more skills on managerial accounting and went ahead to give an example of understanding the cost implications of every aspect that contributes to product realization.
Robert told me that he has successfully managed his own proprietary chemist in the capital because of proper understanding of cost implications to management of business. On this note, I asked Robert how his company costs the medicines. He told me that costing of medicines is done by considering all resources that contribute to the final product. He further told me that overhead costs such as electricity bills and gas expenses are factored into the general cost of a product.
Additionally, Robert told me that product costing in the company is regularly evaluated using the actual costs incurred in purchasing raw materials, labor costs and other factory overheads. He also told me that the company usually compares the cost of products determined using real values as described above to that of predetermined production costs in order to identify aspects of production that contribute to increased costs. However, he insisted that product costing using real value of resources used is the most preferred method of product costing in order to reduce chances of incurring losses.
I asked Robert on the type of decisions that he is responsible for in the company and whether such decision are based on managerial accounting. He said that since the company was operating under his practice license, he was responsible for making major production decisions. For example, he told me that he liaises with the directors and other senior executives in the company in order to decide the type of products the company should produce.
Further, his technical skills in the production of medicines are critical in determining the production processes that should be followed. Robert also told me that in advising the top management about new products, he gives out an outline of resources that are necessary for production as well as their costs in order to facilitate informed decisions. On another aspect of the interview, I wanted to what economic factors the company puts into consideration while making decision. Therefore, I asked Robert to tell me some of the economic considerations he makes as a quality assurance manager.
He told me that financial implications of decisions made in the company are highly considered. He gave an example of a disinfectant he had suggested to be introduced in to the company since there was ready market for the product but the product was not adopted by the company management. According to Robert, materials necessary for production of the disinfectant were available and affordable but the management declined the suggestion citing low profitability from the product due high storage and transportation costs since the product was packed in five-liter containers.
Lastly, I asked Robert about the kind of budgets made in the company and how performance is evaluated. He told me that important budgets made in the company revolve around production of medicines. The target product output is used to determine the required raw materials, labor and other overhead costs. On this note, the company is able to budget the level of finance that is required in order to attain the intended objective. In addition, Robert told me that evaluation on performance is based on production output as well as revenues obtained from sale of medicines. In conclusion, I expected that this interview will enlighten my understanding of managerial accounting and especially in the concept of application in other industries apart from accounting industry.
Moreover, Robert was able to point out several uses of managerial accounting skills in quality assurance of medicines. Questions Asked in the Interview 1. What products do your company provides? 2. What is your position in the company? 3. What are your responsibilities? 4. How does your company cost its products? 5. How is overhead assigned? 6.
How does your company evaluate its processes to determine if there are excess costs in production? 7. What types of decisions are you responsible for in your company? 8. What economic factors does your company consider when making the decision? 9. What are the important budgets that your company constructs? 10. How does your company evaluate performance