MANAGEMENT
ACCOUNTING
Lecture 1: Introduction of the course and about the
manager and management accounting
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting Markus Brunner
Stefan Schaper
TODAY’S CONTENT
​During this lecture we will:
• Introduce the course and its structure
• Reflect on the role of the accountant
in organizations
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting
Markus Brunner
Stefan Schaper
WHO IS WHO – THE TEAM
​Stefan Schaper
​Lectures Part 1
(weeks 5-11)
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting
​Markus Brunner
​Lectures Part 2
(​ weeks 11-19)
Markus Brunner
Stefan Schaper
WHO IS WHO – THE TEAM
Instructors for the tutorials and study cafés
• Maggie Ng
• Ansgar Boss Henrichsen
• Lukas Grueneke
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting
Markus Brunner
Stefan Schaper
STEFAN SCHAPER
Since 2021
Associate Professor in Management Accounting at AU
2017-2021
Assistant Professor in Management Accounting at AU
2014-2017
Consulting (BI and RegRep) in Munich and FFM, Germany
 2014 PhD in Management and Business Administration in Italy
Lecturing: Management Accounting (BSc), Cost Management (MSc), Financial
Accounting and Decision Making (MSc); Management Control Systems: Concepts and
Cases (BSc - Elective)
Research interests: At the crossroads of Financial and Managerial Accounting
• Non-financial disclosure
• Social sustainability management and disclosure
DEPARTMENT OF
Management Accounting
Markus Brunner
AARHUS
MANAGEMENT
• UNIVERSITY
Risk management and disclosure Stefan Schaper
MARKUS BRUNNER
Since 2020
Associate Professor in Management Accounting at AU
2018-2020
Assistant Professor in Management Accounting at AU
2011-2018
Postdoc at Technical University Munich, Germany
 2011
PhD in Management Accounting, LMU Munich
Lecturing: Management Accounting (BSc), Planning and Budgeting
(MSc), Management Control Systems: Concepts and Cases (BSc Elective)
Research interests:
• Experimental and analytical research in management accounting
• Management control systems
• Incentive systems and performance evaluation
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting
Markus Brunner
Stefan Schaper
COURSE ORGANISATION
​Teaching material
Lectures, tutorials, study café:
• Articulated in 2 modules
• Plan available on Brightspace
• Changes might follow
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting
Markus Brunner
Stefan Schaper
COURSE ORGANISATION
How to make the best use of learning resources?
• Be proactive, read chapters before attending classes
• Solve assignments and exercises at home and ask questions during
tutorials
• Prepare + active participation + help others
​Explore additional resources (MyLab, check AU library, etc.)
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting
Markus Brunner
Stefan Schaper
ILO AND ASSESSMENT
Intended Learning Objectives (see course description):
Understand, describe and apply:
 key cost concepts
 cost accounting systems
 methods of pricing and production planning
 performance measurement of both financial and non-financial
performance measures
 budgeting methods and methods of financial control
Examination
• Final exam (+ Hand-ins)
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting
Markus Brunner
Stefan Schaper
DEPARTMENT OF MANAGEMENT
A ARHUS UNIVERSITY
Management Accounting Markus Brunner
Stefan Schaper
GETTING STARTED
​To prepare for this lecture, please:
• Read chapter 1
• Have a look at exercise 1.19
Alnoor Bhimani; Charles. T. Horngren, Srikant M. Datar and Madhav
Rajan. Management and Cost Accounting. Pearson; Seventh edition.
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting
Markus Brunner
Stefan Schaper
WHAT IS ACCOUNTING?
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
SUCCESSFUL COMPANIES
Mission and values
(purpose)
Vision
Strategy
Efficient Management and Execution of the
Strategy
Access to
Efficient
Valuable
resources
processes
products
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
SUCCESSFUL COMPANIES
Mission and values
(purpose)
Vision
Strategy
Efficient Management and Execution of the
Strategy
Access to
Efficient
Valuable
resources
processes
products
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
Strategic
Control
Manageme
nt Control
COURSE PURPOSE
​Why do we study Management Accounting?
• Modern cost accounting provides key information to managers for
their decision making process.
• The study of modern cost accounting gives an insight into both the
manager’s role and the accountant’s role in an organisation.
 Measurement and reporting of financial and non-financial information for
decision making!
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
MANAGEMENT DECISIONS
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
LEARNING OBJECTIVES CH. 1
 Differentiate management accounting from financial accounting and cost
management
 Recognise the growing role of strategy in management accounting
processes
 Identify five broad purposes of accounting systems
 Understand how accounting can influence planning, control and decision
making
 Distinguish between the scorekeeping, attention-directing and problemsolving functions of management
accounting
Management Accounting Stefan Schaper
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Assistant Professor, Ph.D.
LEARNING OBJECTIVES (…)
 Recognise that economic benefits are to be considered in the design,
implementation and use of accounting systems
 Describe evolving themes that shapes management accounting systems
 Discuss forces of change in management accounting, including enterprise
structure, digitisation, intellectual capital and knowledge management
Or in other words – the world changes, and so do the economic
systems
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
AREAS OF COMPETENCE
Financial Accounting
focuses on reporting
to external parties.
• It measures and
records business
transactions.
• It provides financial
statements based on
generally accepted
accounting
principles (GAAP).
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Cost Accounting
Management
Accounting
provides information
for both management
accounting and
financial accounting.
• It measures and
reports financial
and non-financial
data that relates to
the cost of acquiring
or consuming
resources by an
organisation
measures and reports
financial and nonfinancial information
that helps managers to
make the right
decisions to fulfil the
goals of an
organisation.
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
COST MANAGEMENT
Cost management describes the activities of managers in short-run and long-run
planning and control of costs.
• It entails the continuous reduction of costs.
• It is a key part of general management strategies and their
implementation.
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
MANAGEMENT ACCOUNTANTS
• Increased focus on
expansion by risky and
entrepreneurial
strategies
• Aim to create (not just
preserve) shareholder
value in the short term
• Increase focus to
external opportunities
All this means an
increased role for
management accountants.
• Assist management to
make balanced
decisions
• Monitor and evaluate
strategic and
operational progress
• …
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
ACCOUNTING SYSTEMS’ PURPOSE
Reporting Purpose:
1. Formulating overall strategies and long-range
plans
 internal non-routine reporti
 internal routine reporting
2. Resource allocation decisions, e.g. product
and customer emphasis and pricing
 internal routine reporting
3. Cost planning and cost control of operations and
activities
4. Performance measurement and evaluation of
people
5. Meeting external regulatory
and legal reporting
Management Accounting Stefan Schaper
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
requirements
Assistant Professor, Ph.D.
 internal non-routine reporti
 external reporting
ACCOUNTING SYSTEMS
Internal reporting
Internal routing
reporting
This purpose covers
information provided
for decisions that occur
with some regularity:
• Daily reports
• Weekly reports.
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Internal non-routing
reporting
This purpose covers
information for
decisions that occur
irregularly or even
without precedent:
• Outsourcing
• Design of a special
cost control
tracking system
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
External reporting
This purpose covers
information provided to
investors, government
authorities and other
outside company
stakeholders on the
organisation’s financial
position, operations
and related activities.
MANAGEMENT ACCOUNTING
Look also at the
ethical guidelines
on page 20
​“Management accounting is a profession that involves partnering
in management decision making, devising planning and
performance management systems and providing expertise in
financial reporting to control to assist management in the
formulation and implementation of an organisation’s
strategy” (IMA, 2008)
​“Management accounting combines accounting, finance and
management with the leading edge techniques needed to drive
successful businesses” (CIMA, 2015)
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
Example?
• Exhibit 1.2 on page
9
• Ex. 1.19 on page 26
DEFINITIONS
Planning
Planning is deciding on
organisation goals,
predicting results under
various alternative
ways of achieving
those goals, and then
deciding how to attain
those desired goals.
Planning most often
results in budget(s).
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Control
Budgets
Control is deciding and
taking actions that
implement the planning
decisions
• deciding on
performance evaluation
and the related
feedback that will help
Performancefuture decision making.
Budgets are quantitative
expressions of a
proposed plan of action
by management for a
future time period and a
tool to the coordination
and implementation of the
plan.
report
a report that
compares actual
results with
budgeted amounts.
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
FEEDBACK
Feedback involves managers examining past
performance and systematically exploring alternative
ways to make better informed decisions in the future.
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
FUNCTIONS
Scorekeeping
Attention directing
Scorekeeping involves
accumulating data
and reporting reliable
results to all levels
of management.
involves helping
managers properly focus
their attention.
• This role: asks which
opportunities and
problems should be
emphasised first.
• This role asks: how is
the business doing?
Control
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Attention directing should
focus on all opportunities
to add value to an
organisation, not just
cost-reduction Control
opportunities.
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
Problem solving
Problem solving involves
comparative
analysis for decision
making with an element
of analytical review.
• This role asks: of the
several alternatives
available, which is the
best?
Plannin
g
KEY GUIDELINES
1. Cost-benefit approach
Should be used in order to spend resources if they
promote decision making that better achieves
organisational goals in relation to the costs
of those resources
2. Use of different costs for different purposes
A cost concept used for the external reporting purpose
need not be the appropriate concept for the purpose of
internal routine reporting to managers.
3. Full recognition to behavioural as well as technical
considerations
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
Bene
fit
Benefi
t
Benefi
t
Cost
Cost
Cost
Cost
KEY THEMES
Customer focus
Success factors
Time, quality,
cost, innovation
Value-chain and
supply-chain
analysis
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
Continuous
improvement
KEY THEMES
Customer focus
The challenge facing
managers is to continue
investing sufficient (but not
excessive) resources in
customer satisfaction such
that profitable customers
are attracted and retained
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Success factors
Time, quality,
cost, innovation
Operational factors that
directly affect the economic
viability of the organisation,
e.g.:
• Cost
• Quality
• Time
• Innovation
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
KEY THEMES
1. Treat each of the business
functions in the value chain
as an essential and valued
contributor.
2. Integrate and coordinate
the efforts of all business
functions in addition to
developing the capabilities
of each individual business
function.
Continuous improvement by
competitors creates a neverending search for higher
levels of performance within
many organisations
Value-chain and
supply-chain
analysis
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
Continuous
improvement
CHANGES IN THE ROLES
The 21st century
The 20th century
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
CHANGES IN THE ROLES
​Enterprise structure
• Organisational change – move towards integrated, cross functional
operations
• Move to flexible production shifting mass market focus towards a more
niche market, higher margin initiative
• Focus on non-financial metrics.
​
​Digitalisation
•
•
•
Emergence of the ‘new economy’
Requirements for accelerated decision making in a virtual age
Greater focus on interactive relationships with both suppliers and
customers
DEPARTMENT OF
Management Accounting Stefan Schaper
• UNIVERSITY
Aim for seamless integration
of management
information and reporting.
AARHUS
MANAGEMENT
Assistant Professor, Ph.D.
EXERCISE 1.19
 Let’s solve the exercise…
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
EXERCISE 1.19
 … what is missing?
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
* You find it
on
BlackBoard
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
April
Newspapers sold
7.500.000
13.640.000
Price per newspaper €
0,70
€
0,50
Revenue €
5.250.000
€
6.820.000
(-) variable costs €
750.000
€
1.364.000
(=) Contribution Margin €
4.500.000
€
5.456.000
(-)Fixed costs €
3.000.000
€
6.000.000
(=) Profit €
1.500.000
-€
544.000
Let's assume:
Variable cost per paper €
DEPARTMENT OF
AARHUS UNIVERSITY
MANAGEMENT
May
April
May
0,10
€
0,10
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.
Fixed costs for each production
capacity of 8 mio. newspapers €
3.000.000,00
€
3.000.000,00
x2
DEPARTMENT OF MANAGEMENT
A ARHUS UNIVERSITY
Management Accounting Stefan Schaper
Assistant Professor, Ph.D.