Libby, Libby and Short1 -*
Task Force Clip Art included in this electronic presentation is used with the permission of New Vision Technology of Nepean Ontario, Canada.
1 -*
CHAPTER
1 -*
Provide a brief historical description of management accounting.
Identify the current focus of management accounting.
Objectives
Continued
1 -*
5. Describe the role of management accountants in an organization.
6. Explain the importance of ethical behavior for managers and management accountants.
7. List three forms of certification available to management accountants.
Objectives
1 -*
1. To provide information for costing out services, products, and other objects of interest to management.
2. To provide information for planning, controlling, evaluating, and continuous improvement.
3. To provide information for decision making.
The managerial accounting system has three broad objectives:
1 -*
Planning
Controlling
Planning requires setting objectives and identifying methods to achieve those objectives.
1 -*
The Management Process is defined by the following activities:
Controlling is the managerial activity of monitoring a plan’s implementation and taking corrective action as needed.
Planning
Controlling
Planning
Controlling
1 -*
Feedback is information that can be used to evaluate or correct the steps being taken to implement a plan.
Management Process
Planning
Controlling
Decision making is the process of choosing among competing alternatives.
1 -*
1 -*
Targeted Users
Targeted Users
1 -*
Restrictions on Inputs and Processes
Management accounting is not subject to the requirements of generally accepted accounting principles.
Financial accounting reporting must follow the accounting procedures set by the SEC and the FASB.
1 -*
3. Financial and nonfinancial informa-tion; subjective information possible
3. Objective financial information
Types of Information
The restrictions imposed on financial accounting tend to produce objective and verifiable financial information.
For management accounting, the financial or nonfinancial information may be much more subjective in nature.
1 -*
3. Financial and nonfinancial informa-tion; subjective information possible
3. Objective financial information
4. Historical orientation
1 -*
Financial accounting records and reports events that have already happened.
Time Orientation
3. Financial and nonfinancial informa-tion; subjective information possible
3. Objective financial information
4. Historical orientation
5. Internal evaluation and decisions based on very detail information
5. Information about the firm as a whole
1 -*
Management accounting provides measures and internal reports used the evaluate performance of entities, product lines, departments, and managers.
Degree of Aggregation
Degree of Aggregation
3. Financial and nonfinancial informa-tion; subjective information possible
3. Objective financial information
4. Historical orientation
5. Internal evaluation and decisions based on very detail information
5. Information about the firm as a whole
6. Broad, multidisciplinary
6. More self-contained
It includes aspects of managerial economics, industrial engineering, and management science.
Breadth
1 -*
Management Accounting
1880 - 1925 Most of the product-costing and internal accounting procedures used in this century were developed
1925 Emphasis of inventory costing for external reporting
1950s/60s Effort to improve the managerial usefulness of traditional cost systems
1980s/90s Significant efforts have been made to radically change the nature and practice of management accounting
1 -*
Activity-Based Management
Activity-based management is a system wide, integrated approach that focuses management’s attention on activities with the objective of improving customer value and the resulting profit.
1 -*
Customer Orientation
Customer value is the difference between what the customer receives (customer satisfaction) and what the customer gives up (customer sacrifice).
What is received is called the total product.
1 -*
Strategic Positioning
Strategic cost management is the use of cost data to develop and identify superior strategies that will produce a sustainable competitive advantage.
Strategies:
Value-Chain Framework
The internal value chain is the set of activities required to design, develop, produce, market, and deliver products and services to customers.
The industrial value chain is the linked set of value-creating activities from basic raw materials to the disposal to the final products by end-use customers.
1 -*
1 -*
Managing the value chain means that a management accountant must understand many functions of the business, from manufacturing to marketing.
1 -*
The philosophy of total quality management is to manufacture perfect products.
This emphasis on quality has created a demand for management accounting systems that provide financial and nonfinancial information about quality.
1 -*
The role of management accountants in an organization is one of support.
1 -*
President
Honesty
Integrity
1 -*
CMA: One of the main purposes of the CMA was to establish management accounting as a recognized, professional discipline, separate from the profession of public accounting.
CPA: The responsibility of a CPA is to provide assurance concerning the reliability of financial statements.
CIA: The focus of the CIA is to recognize competency in internal auditing rather than external auditing as with the CPA.
Professional Certifications
Economics, finance, and management
Financial accounting and reporting
Decision analysis and information systems
1 -*