MSc MA Lecture 1 Overview
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Transcript of MSc MA Lecture 1 Overview
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8/3/2019 MSc MA Lecture 1 Overview
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ACC 6620LECTURE ONE
Development and Changing Role of MA
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Managerial accounting is the process ofIdentifyingMeasuringAnalyzing
InterpretingCommunicating information
Define Managerial Accounting
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The Changing Business
Environment
A more competitiveenvironment emphasizing:
Higher quality products
Lower prices and costs
Global competition
Meeting and anticipatingcustomer needs
Business environmentchanges in the past
twenty years
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Manufacturing
Single-production facilityStandard costing
Maximum volume & variance reporting
High volume, standard Inventory mgt
production
Inventory as buffers Scrap & rework expected
Ex post control
Traditional World View
Product Concept, Design & Development
Design for engineering features
Mechanisation (machine-paced)
Post-Sales Service & Disposal
Financial
information
Profitability
(External fin.
Reporting)
Domestic competition
Mass production using
same technology in
stable labour-intensive
production environment Long product life
cycle
Cost recovered via
pricing Standard products
Management Organisation Mechanistic form
Hierarchical structure
Individual-productivity focused Short-term emphasis
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ManufacturingFlexible mfg system ABC & ABM Automation Kaizen costing Mass customization Low volume, high variety
production JIT Elimination of waste, TQM
inventory & unevenness Theory of constraints Employee empowerment Individually & team-paced Visual control
Contemporary World View
Product Concept, Design & Development
Design for manufacturability
Reverse engineering Target costing
Value engineering Life cycle costing
Reengineering Benchmarking
Post-Sales Service & Disposal Back-end costs Disposal of harmful wastes
Strategic
cost &non-financial
information
(CSF)
Global competition
Innovative technology
&advanced production
techniques
shortened product lifecycle
CSF:
Cost
Quality
Time
Variety (Diversity)
Management Organisation Organic form Flatter structure Cross-functional team
Strategic focus
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The Balanced Scorecard
Financial PerspectiveGoals Measures
Customer Perspective
Goals Measures
Operations Perspective
Goals Measures
Innovation Perspective
Goals Measures
How do welook to
owners?
How docustomers
see us?How can wecontinue to
improve?
In whichactivities
must we
excel?
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Evolution and Adaptation inManagerial Accounting
Service Vs. ManufacturingFirms
Emergence of NewIndustries
Global Competition
Focus on the Customer
Cross-Functional Teams
Computer-IntegratedManufacturing
Product Life Cycles
Time-Based Competition
Information andCommunicationTechnology
Just-in-Time Inventory
Total QualityManagement
Continuous Improvement
Change
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Major Themes in ManagerialAccounting
Managerial
Accounting
Informationand Incentives
Costs andBenefits
Evolution andAdaptation
BehavioralIssues
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ProductDesign
Research
andDevelopment
Strategic Cost Management andthe Value Chain
Securing raw
materials andother resources
Production
Marketing
Distribution
CustomerServiceStart
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IN SEARCH OF ANSWERS
What impact will changes in processes/product designs have on thebottom line?
Improved profitabilityHow can support costs be reduced?
Better tracing of support costs to activities that cause costs tobe incurred.
How can waste be eliminated? Better resource utilizationWhat are the key success factors?
Time, Quality and Price (Cost) What are the key performance indicators for measuring how wellthe organization is performing?
Time, Quality and Price (Cost)
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Operations of a WCM
A world-class manufacturer can best be distinguishedfrom other manufacturers through the way he
conducts his business. A world-class manufacturer hasthe following components in his business.
International Business: A world-class manufacturerconducts his business in more than one country.Usually, world-class manufacturer would have
businesses in many parts of the world. For example,Toyota would havebusinesses such as manufacturing
plants and marketing in Asia, North America, Europeand Latin America.
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International Financing:
A world-class manufacturer finances his operations not just
from its country of residence but from other places as well.
Financing maybe secured from places where he conducts hisbusiness, or from places where it has no operations at all.
Thus, Toyota may secure funding from Switzerland even if it
does not have any plant or manufacturing or even sales outletsthere.
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International Employer
A world-class manufacturer would employ
people from across the globe. Employees may
come from the country where it has operationsor they may be recruited from other countries
to serve in other parts of the world where the
company has operations. For example, aGhanaian may be working for Toyota
Company in The United States.
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International Customers
Whiles most companies have their productspatronized by customers from other parts of theworld; this is usually the case for all WCM; Dueto the high quality of their products as well as itscompetitive prices, the products of world-class
manufacturers are wellsought by global
customers. Thus one can find such products asGillette Shaving Blades in every corner of theglobe: From New Zealand to Chad in West
Africa
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International Raw MaterialProcurement
World-class manufacturers source their raw
material and other supplies from different parts
of the world. Usually, they look for quality andcompetitive prices. Thus, Toyota may source
some of its parts from Malaysia, Thailand,
Brazil, Togo or Indonesia.
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Advantages and Challenges ofWorld
Class manufacturing
1. Better Quality2. Reducing Inventoriesas a result of JIT
3. Reduced floor space
4. High Inventory Turnovers
5. Shorter setup and lead-times
6. General Reduction in production cost
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The effect of WCM on management
accounting and finance
WCM changes the way companies manage their accounts andfinances. changes the way goods are produced, stored anddelivered. changes in the nature and components of expenses
such as increase in research and development and capital(technology) expenses poses a challenge to accountants
With the complex financing of these expenditures, WCM greatly
affects the nature of finance. Hence the prominence of suchaccounting/finance topics as bond valuation, leasing and MRP.
WCM also affects the way WIP, Direct labour, stock valuationand overheads are being accounted for
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The management accountants role:
Provide cost-management information at a
rigorous pace to keep up with the ever-changingenvironment
The information provided should include as manynonfinancial measures as possible a variety of
operating and financial measures The reports should be applicable to cross-
functional teams and conducive with a flexiblemanagement structure
How do these changes affect
management accounting?
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IFACs Phases for Developing Cost
Management Information Systems
Stage One
(Prior to1950)
MA focused on cost determination and
financial control (via budgeting and costaccounting technologies)
Stage Two(By 1965)
Provision of info. for mgt planning andcontrol via techniques such as decisionanalysis and responsibility accounting
Stage Three
(By 1985)
Focus on reduction of waste in in biz
processes via the use of processanalysis and cost management.
Stage Four
(By 1995)
Focus on creation of value via effectiveuse of resources which examine main
stakeholders value and orgn innovation.
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Managing Resources, Activities,and People
An organization . . .
Acquires Resources
Hires People
Organized setof activities
DecisionMaking
Planning
Directing
Controlling
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Ethical Climate of Business
The corporate scandals experienced over the lastfew years have shown us that unethical behaviorin business is wrong in a moral sense and can be
disastrous in the economy. In addition to
Sarbanes-Oxley, there will likely be more reformsin corporate governance and accounting.
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Importance of Ethicsin Accounting
Ethical accounting practices build trust and promoteloyal, productive relationships with users ofaccounting information.
Many companies and professional organizations,such as the Instituteof Management Accountants (IMA),have written codes of ethics whichserve as guides for employees.
Code of Conduct for Management Accountants
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Managerial Accounting as aCareer
Professional Organizations
Institute of Management Accountants (IMA)
PublishesManagementAccounting
and researchstudies.
AdministersCertified
ManagementAccountant
program
DevelopsStandards of
EthicalConduct forManagementAccountants
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IMA Code of Ethics forManagement Accountants
Four broad areas ofresponsibility:
Maintain a high level ofprofessional competence
treat sensitive matters withconfidentiality
Maintain personal integrity
Be objective in all disclosures