Managerial Accounting outline

Chapter 1 : the changing role of managerial accounting in a dynamic business environment. Chapter 2 : basic cost management concepts. Chapter 3 : Product costing and cost accumulation in batch production environment. Chapter 5 : activity based costing ABC. Chapter 8 : cost volume profit analysis CVP analysis. Chapter 9 : profit planning, activity based budgeting and e-budgeting. Chapter 14 : decision making: relevant costs and benefits. Anwar Ghuloom: BSC, AAT, ACPA, CIPA, GEDD
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Chapter 1
The Changing Role of Managerial Accounting in a Dynamic Business Environment

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Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objective 1

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Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.

Define Managerial Accounting

Managerial accounting is the process of Identifying Measuring Analyzing Interpreting Communicating information

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Learning Objective 2

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Managing Resources, Activities, and People

An organization . . .
Directing

Acquires Resources

Organized set of activities

Decision Making

Controlling

Planning

Hires People
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Learning Objective 3

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How Managerial Accounting Adds Value to the Organization

Providing information for decision making and planning. Assisting managers in directing and controlling activities. Motivating managers and other employees towards organizations goals. Measuring performance of activities, managers, and other employees. Assessing the organizations competitive position.
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The Balanced Scorecard

How do we look to owners?

Financial Perspective Goals Measures

In which activities must we excel?

Customer Perspective Goals Measures

How do customers see us?

Operations Perspective Goals Measures

Innovation Perspective Goals Measures

How can we continue to improve?

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Learning Objective 4

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Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.

Managerial versus Financial Accounting

Accounting System (accumulates financial and managerial accounting data in the cost accounting system) Managerial Accounting Information for decision making, planning, and controlling an organizations operations. Internal Users Financial Accounting Published financial statements and other financial reports.

External Users
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Managerial versus Financial Accounting

Financial Accounting Interested parties, outside the organization. Required and must conform to generally accepted accounting principles. Regulated by the Financial Accounting Standards Board, and, to a lesser degree, the Securities and Exchange Commission. Source of Data The organization's basic accounting system, plus Almost exclusively drawn from the organization's various other sources, such as rates of effective basic accounting system, which accumulates products manufactured, physical quantities of financial information. material and labor used in production, occupancy rates in hotels and hospitals, and average take-off delays in airlines. Nature of Reports and Reports often focus on subunits within the Reports focus on the enterprise in its entirety. Procedures organization, such as departments, divisions, Based almost exclusively on historical transaction geographical regions, or product lines. Based on a data. combination of historical data, estimates, and projections of future events.
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Managerial Accounting Users of Information Managers, within the organization. Regulation Not required and unregulated, since it is intended only for management.

Learning Objective 5

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Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.

Line and Staff Positions

A line position is directly involved in achieving the basic objectives of an organization. Example: A production supervisor in a manufacturing plant. A staff position supports and assists line positions. Example: A cost accountant in the manufacturing plant.

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Learning Objective 6

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Controller
The chief managerial and financial accountant responsibility for: Supervising accounting personnel Preparation of information and reports, managerial and financial Analysis of accounting information Planning and decision making

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Treasurer
Responsible for raising capital and safeguarding the organizations assets. Supervises relationships with financial institutions. Work with investors and potential investors. Manages investments. Establishes credit policies. Manages insurance coverage

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Internal Auditor
Responsible for reviewing accounting procedures, records, and reports in both the controllers and the treasurers area of responsibility. Expresses an opinion to top management regarding the effectiveness of the organizations accounting system.

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Learning Objective 7

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Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.

Major Themes in Managerial Accounting

Behavioral Issues Costs and Benefits

Information and Incentives

Evolution and Adaptation

Managerial Accounting
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Evolution and Adaptation in Managerial Accounting

E-Business Service vs. Manufacturing Firms Emergence of New Industries Global Competition Focus on the Customer Cross-Functional Teams Computer-Integrated Manufacturing Product Life Cycles Time-Based Competition

Change

Information and Communication Technology Just-in-Time Inventory Total Quality Management Continuous Improvement
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Cost Management Systems

Objectives
Measure the cost of resources consumed. Identify and eliminate non-value-added costs.

Cost Management System

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Cost Management Systems

Objectives
Determine efficiency and effectiveness of major activities. Identify and evaluate new activities that can improve performance.

Cost Management System

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Learning Objective 8

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Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.

Strategic Cost Management and the Value Chain

Product Design Production Research and Development Securing raw materials and other resources

Cost accounting
Financial accounting

Marketing

Distribution Customer Service

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Start

Learning Objective 9

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Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.

Ethical Climate of Business

The corporate scandals experienced over the last few years have shown us that unethical behavior in business is wrong in a moral sense and can be disastrous in the economy. In addition to Sarbanes-Oxley, there will likely be more reforms in corporate governance and accounting.

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Learning Objective 10

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Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved.

Managerial Accounting as a Career

Professional Organizations
Institute of Management Accountants (IMA)

Publishes Management Accounting and research studies.

Administers Certified Management Accountant program

Develops Standards of Ethical Conduct for Management Accountants

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Professional Ethics
Competence: develop knowledge and skills.

Confidentiality: keep information confidential. Integrity: avoid conflict of interest. Credibility: communicate information fairly and objectively.
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End of Chapter 1

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