Managerial accounting is the process of identifying, measuring, analyzing, interpreting, and communicating information to managers for the pursuit of organization's goals.

1. Discuss with examples how managerial accounting can help managers in performing three vital activities of planning, controlling and decision making.
2. You are the owner of a shoe company that makes a complete line of quality shoes for the retail and wholesale markets. A summer intern has just completed an activity-based costing study that concluded, among other things, that one of your largest recurring jobs is losing money. A local Non-Profit Organization orders the same assortment of shoes every month for its monthly gift giving activity for a fixed price of 100,000 per month. The NPO is quite happy with the quality of the shoes the company has been providing, but it would seek bids from other local suppliers if the price increases.

The activity-based costing study conducted by the intern revealed that the cost to the company providing these shoes is 150,000 per month, resulting in an apparent loss of 50,000 per month or over 600,000 per year. Scrutinizing the intern's report, you find that the weekly cost of 150,000 includes facility-level costs of 80,000. These facility-level costs include portions of the rent on the company's building, your salary, depreciation on the office personal computer, and so on. The facility-level costs were arbitrarily allocated to the NPO job on the basis of direct labor-hours.

b.1 Should you demand an increase in price from the NPO for the ordered shoes to at least 150,000? Discuss your answer.

b.2 If an increase is not forthcoming, should you withdraw from the agreement and discontinue providing the shoes? Discuss your answer.