Managerial Accounting Overview - New Learning Technologies

Chapter 1
The Changing Role
of Managerial
Accounting in a
Dynamic Business
Environment
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning
Objective
1
McGraw-Hill/Irwin
Copyright © 2009 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
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Managing Resources, Activities,
and People
An organization . . .
Directing
Acquires Resources
Decision
Making
Organized set
of activities
Controlling
Planning
Hires People
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Learning
Objective
3
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
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 organization’s goals.
• Measuring performance of subunits, activities,
managers, and other employees.
• Assessing the organization’s competitive position.
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The Balanced Scorecard
How do we look
to owner’s?
Financial Perspective
Goals
Measures
In which activities
must we excel?
Customer Perspective
Goals
Measures
Operations Perspective
Goals
Measures
How do customers
see us?
Innovation Perspective
Goals
Measures
How can we
continue to
improve?
1-8
Learning
Objective
4
McGraw-Hill/Irwin
Copyright © 2009 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
organization’s
operations.
Internal
Users
Financial Accounting
Published financial
statements and other
financial reports.
External
Users
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Managerial versus Financial
Accounting
Managerial Accounting
Users of Information Managers, within the organization.
Regulation Not required and unregulated, since it is intended
only for management.
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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Learning
Objective
5
McGraw-Hill/Irwin
Copyright © 2009 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
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
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
organization’s assets.
– Supervises relationships with financial institutions.
– Work with investors and potential
investors.
– Manages investments.
– Establishes credit policies.
– Manages insurance coverage
1-16
Internal Auditor
Responsible for reviewing accounting procedures,
records, and reports in both the controller’s and the
treasurer’s area of responsibility.
– Expresses an opinion to top
management regarding the
effectiveness of the
organizations accounting
system.
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Learning
Objective
7
McGraw-Hill/Irwin
Copyright © 2009 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
1-19
Evolution and Adaptation in
Managerial Accounting
E-Business
Product Life Cycles
Time-Based
Competition
Service vs.
Manufacturing Firms
Emergence of New
Industries
Global Competition
Focus on the Customer
Cross-Functional Teams
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
McGraw-Hill/Irwin
Copyright © 2009 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
Start
Marketing
Distribution
Customer
Service
1-24
Theory of Constraints
A sequential process of identifying and
removing constraints in a system.
Restrictions or barriers that impede
progress toward an objective
1-25
Learning
Objective
9
McGraw-Hill/Irwin
Copyright © 2009 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
McGraw-Hill/Irwin
Copyright © 2009 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
Confidentiality
Integrity
Credibility
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End of Chapter 1
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