Segmental Accounting in Facilitating Effective Management Decision-Making
Keywords:
Segmental accounting, management decision-making, contribution margin, cost allocation, return on investment (ROI), activity-based costing (ABC), financial performance, business segments.Abstract
Effective management decision-making is essential for organizational success in a competitive business landscape. This study explores the role of segmental accounting, a method that disaggregates financial data into distinct business units, in enhancing managerial decisions. Using a quantitative approach, financial data from various industries were segmented, analyzed, and evaluated based on key performance indicators such as revenue, contribution margin, and return on investment. Results indicate that segmental accounting provides detailed insights into segment-specific performance, enabling managers to optimize resource allocation and identify underperforming areas. However, challenges such as subjective cost allocation and potential oversight of inter-segment synergies were noted. The study concludes that segmental accounting, when supported by robust methodologies, significantly improves decision-making efficiency across diverse business contexts.
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