Group Faith Integration In Business
Information for Decision Making
Matto and Sippola (2016), define cost management as the “application of MA (managerial accounting) concepts, methods of data collection, and presentation in order to provide the information needed to plan, monitor and control costs”. Business owners and management face decision making on a continual basis as they strive to achieve company goals, strategies and benchmarks. The effects of decisions may give value to the company or eliminate non-value activities and sectors within the company. In order to make informed, responsible, efficient and effective decisions, management will need relevant, timely and reliable information. Cost accounting gives management financial and non-financial reports and analysis for a proposed activity and its alternatives. It is biblical principle to seek out wisdom and good information with which to make informed decisions. The bible states “if any of you lacks wisdom, let him ask God, who gives generously to all without reproach and it will be given him”. Proverbs 4:7 extends this thought stating, “the beginning of wisdom is this: Get wisdom, and whatever you get, get insight”. Seeking pertinent, relevant information is prudent and wise since, “the decisions managers make will be only as good as the information they have”. Cost accounting gives business owners, management and others the information they need to make plans and decisions that will not only move the business toward its goals, but also align with God’s purposes.
Cost Analysis and Estimation
Cost analysis involves the weight of costs associated with a decision using qualitative or quantitative factors. This process can be used to make decisions on investments and any other business decisions that could make a major impact on the business as a whole. The cost analysis process benefits most when the figures are reduced to financial terms so that they can be compared. The comparison leads to the act of estimation.
Estimation in cost accounting
Accounting estimation requires accountants to determine a financial value when that value is unknown. The two actions of cost analysis and estimation are important to cost accounting and mainly assist in the role of decision-making. By using cost analysis and estimation, management of a business can make more educated business decisions because they are able to forecast situations. It is important that as Christians we make our decisions based off of the best information that is available. Philippians 4:8 says, “Finally, brethren, whatever is true, whatever is honorable, whatever is right, whatever is pure, whatever is lovely, whatever is of good repute, if there is any excellence and if anything worthy of praise, dwell on these things. ” Making educated choices and having a system to make the best decision we can as humans in situations for the glory of God is something that should be prioritized.
Management Control System
A management control system is a cost accounting tool used to influence decision making of employees in a decentralized company. Through different methods, the principals try to align the managers’ goals with those of the company. The method includes performance evaluation, resource allocation and comparative analysis. However, if everyone more closely followed biblical teachings, there would be less of a need for a management control system. For example, company agents would not be following their own interests to the detriment of the company. Instead, they would follow the path laid out by God. So if there is any encouragement in Christ, any comfort from love, any participation in the Spirit, any affection and sympathy, complete my joy by being of the same mind, having the same love, being in full accord and of one mind. Do nothing from rivalry or conceit, but in humility count others more significant than yourselves. Let each of you look not only to his own interests, but also to the interests of others.
Cost Management Systems
Cost management systems provide management with information about the cost of goods and services sold by the firm and the processes used to produce the goods and services. A cost management system is commonly used to determine the selling price of a product or service, whether the product should be added or dropped and whether to outsource selected product or services. A well-designed system reports costs that are associated with processes that management uses to make decisions that meet customer needs, serve the customers, and comply with regulatory and tax authorities. It is critical that management uses these reports to make cost decisions that are beneficial for the customers and the company.
According to Corinthians 9:8, “And God is able to bless you abundantly, so that in all things at all times, having all that you need, you will abound in every good work” (New International Version). In business, there are many resources available to assist in decision making. A business owner should seek the abundance that God provides to have a successful business and be a devoted Christian.
Conclusion
The Bible tells in II Peter 1:3 that the Bible has given Christians “all things that pertain to life and godliness” (English Standard Version). This does not exclude the business world. Managers are routinely making difficult decisions that affect their own performance and the performance of the company. To make these decisions, managers must seek wise counsel found in Scripture or from others. When managers seek wisdom in their decisions, seek to align their own goals with the company’s, and live out the principles discussed above from God’s Word they are better able to make well-informed and beneficial choices for the company. To do any less could be detrimental to the business, and ultimately, goes against direct teaching found in Scripture.
