MANAGEMENT

CONSULTANCY
ACC 510
HAZEL JADE E. VILLAMAR
What is Management
Consultancy?
MANAGEMENT CONSULTANCY

NON-ASSURANCE SERVICE
MANAGEMENT CONSULTANCY
HELPING THE CLIENTS TO
IMPROVE THE USE OF THEIR
RESOURCES TO ACHIEVE
THE GOALS
 MAIN TYPES OF CONSULTANT FIRMS
IT Firms
Accounting Firms Offering Consultancy
Major Consulting Only Firms
Independents
CAREER STRUCTURE IN CONSULTING FIRMS
ANALYSTS
CONSULTANTS
SENIOR CONSULTANTS OR MANAGERS
BUSINESS DEVELOPMENT MANAGERS
DIRECTORS/PARTNERS
CONSULTATION vs.
ENGAGEMENT
 CONSULTATION
PROVIDING AN ADVICE AND
INFORMATION DURING A
SHORT TIME FRAME
 ENGAGEMENT
AN ANALYTICAL APPROACH
AND PROCESS IS APPLIED IN A
STUDY OR PROJECT
 THE ANALYTICAL PROCESS
1. Ascertaining the pertinent facts and circumstances.
2. Seeking and identifying objectives.
3. Defining the problem or opportunity for improvement.
4. Evaluating and determining possible solutions.
5. Presenting findings and recommendations.
6. Implementing the solution, if appropriate.
MANAGEMENT FUNCTIONS
PLANNING
DIRECTING AND MOTIVATING
CONTROLLING
MANAGEMENT ACCOUNTING
vs.
FINANCIAL ACCOUNTING
 MA vs. FA
USERS OF REPORT STANDARD OF
PURPOSE PRESENTATION
TYPES OF REPORTS REPORTING ENTITY
BASIS OF REPORTS PERIOD COVERED
STANDARDS OF ETHICAL CONDUCT FOR
MANAGEMENT ACCOUNTANTS
COMPETENCE
CONFIDENTIALITY
INTEGRITY
CREDIBILITY
 CHAPTER 4
COSTS IN MANAGEMENT
ACCOUNTING
DEFINE COST.
 COST
MONETARY MEASURE OF
THE AMOUNT OF
RESOURCES GIVEN UP OR
USED FOR SOME PURPOSES
COST TERMS

COST OBJECT
COST TERMS

COST DRIVER
COST TERMS

COST POOL
COST TERMS

ACTIVITY
COSTS ACCORDING TO TYPE

PRODUCT COST
PERIOD COST
COSTS ACCORDING TO FUNCTION

MANUFACTURING COST
NON-MANUFACTURING COST
COSTS ACCORDING TO TRACEABILITY

DIRECT COST
INDIRECT COST
 COSTS FOR DECISION
MAKING PURPOSES
RELEVANT COST
DIFFERENTIAL COST
OPPORTUNITY COST
SUNK/PAST/HISTORICAL COST
COSTS ACCORDING TO BEHAVIOR
VARIABLE COSTS
FIXED COSTS (COMMITTED OR
DISCRETIONARY)
MIXED COSTS
STEP COSTS
ANALYSIS OF MIXED COSTS
WHAT IS RELEVANT
RANGE?
 RELEVANT RANGE
range of activity that
reflects the company’s
normal operating range
The COST FUNCTION

Y = a + bX
SEPARATION OF FIXED AND
VARIABLE COMPONENTS
HIGH-LOW METHOD
SCATTERGRAPH METHOD
LEAST SQUARES REGRESSION
METHOD
LEAST SQUARES REGRESSION
METHOD

ΣY = na + bΣX
𝟐
ΣXY = aΣX + bΣ𝑿
MULTIPLE REGRESSION ANALYSIS

when the dependent

variable is caused by more
than one factor
CORRELATION ANALYSIS
measure of co-variation
between dependent and
independent variables
COEFFICIENT OF CORRELATION

measure of extent of linear

relationship between two
variables
Range of Values

r: -1 to 1
 r = 0; no correlation
r = +; direct relationship
r = -; inverse relationship
 ACTIVITY
Page 146 (Belle Company)
EXPRESS THE COST FUNCTION USING:
A. High-Low Method
B. Least Squares Method
 SEATWORK
EXPRESS THE COST FUNCTION USING:
A. High-Low Method
B. Least Squares Method
 NUMBER OF SCANS UTILITIES COST (Pesos)
JANUARY 60 2,200
FEBRUARY 70 2,600
MARCH 90 2,900
APRIL 120 3,300
MAY 100 3,000
JUNE 130 3,600
JULY 150 4,000
AUGUST 140 3,600
SEPTEMBER 110 3,100
OCTOBER 80 2,500