Managerial accounting involves nonfinancial as well as financial measures of business activities.

a. Measures of activity, such as material usage and defect rates, are useful for understanding and reducing production costs.

b. Measures of time required for production and deliver)' are important tor reducing inventory requirements and increasing efficiency.

c. Global competition requires many companies to produce products quickly. Determining the benefits of investments in modern technology are important for operating in t his environment.

d. Managers need to understand cost drivers, the activities that create costs, in order to control costs. Focusing on cost reduction in the short run may not lead to long-term success.

e. Companies often need to focus their efforts on improving the quality of their products and activities. A broad set of measures for evaluating company performance is needed for these efforts.

f. Accountants work in teams with other managers to make strategic and operating decisions.
g. Managerial accounting is important for service companies as well as manufacturing and retail companies.