...------------------------------------------------- Management accounting From Wikipedia, the free encyclopedia | This article contains wording that promotes the subject in a subjective manner without imparting real information.Please remove or replace such wording and instead of making proclamations about a subject's importance, use facts and attribution to demonstrate that importance. (February 2012) | Accounting | | * Historical cost accounting * Constant purchasing power accounting * Management accounting * Tax accounting | Major types of accounting[show] | Auditing[show] | People and organizations[show] | Development[show] | Business portal | * v * t * e | In Management accounting or managerial accounting, managers use the provisions of accounting information in order to better inform themselves before they decide matters within their organizations, which aids their management and performance of control functions. Contents [hide] * 1 Definition * 2 Scope, practice, and application * 3 Differences between financial accountancy and management accounting * 4 Traditional vs. innovative practices * 5 Role within a corporation * 6 Specific methodologies * 6.1 Activity-based costing (ABC) * 6.2 Grenzplankostenrechnung (GPK) * 6.3 Lean accounting (accounting for lean enterprise) * 6.4 Resource consumption accounting (RCA) * 6.5 Throughput accounting * 6.6 Transfer pricing * 7 Resources...
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...Chapter 18 Comparison of Management and Financial Accounting The role of management accounting Management accounting differs from financial accounting in many respects: * Primary users * Management accounting information: managers, employees, supply chain partners * Financial accounting information: owners or stockholders, lenders, customers, government agencies * Report format * Management accounting: flexible format, driven by user’s needs * Financial accounting: based on generally accepted accounting principles * Purpose of reports * Management accounting: to provide information for planning, control, performance measurement, and decision making * Financial accounting: to report on past performance * Nature of information * Management accounting: objective and verifiable for decision making; more subjective for planning (relies on estimates) * Financial accounting: historical, objective, and verifiable * Units of measure * Management accounting: dollars at historical, current market, or projected values; physical measures of time or number of objects * Financial accounting: dollars at historical and current market values * Frequency of reports * Management accounting: prepared as needed; may or may not be on a periodic basis * Financial accounting: prepared on a periodic basis (minimum of once a year) Management accounting provides relevant information at each stage...
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...NATURE OF MANAGEMENT ACCOUNTING [SUMMARY] What is Management Accounting? Management Accounting is the process within an organization that provides information used by an organization’s managers in planning, implementing and controlling the organization’s activities. Management Accounting as One Type of Information Information is a fact, datum, observation, perception or nay other thing that adds to knowledge. An organization’s day-to day activities requires a considerable amount of operating information. This information provides the raw materials for the summarized information that is reported in the financial accounting and management accounting processes. Management Accountants Those employees of an organization who are responsible for the design and operation of the management accounting system are called management accountants. Treasurer – responsible for more outward directed tasks such as arranging loans and other external sources of funds. Steps to become a Certified Management Accountant File an application for admission and register for the CMA examination Pass all four parts of the CMA examination within a three year period Satisfy the experience requirement of two continuous years of professional experience in management and/or financial accounting prior to or within seven years of passing the CMA examination. Comply with the standards of ethical conduct for practitioners of management accounting and financial...
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...{ { II Semester Paper: Examination \a "a sa sa { Management IIBM Institute of Business ExaminationPaPer Accounting Management Section A: Objective Type (30 marks) o . . questions shortnotetypequestions' & ofmultiple choice consists This section Answerall thequestions. carriesI markeach& PartTwo Partoneouestion MM.100 Ea Ea \a \a \o \ia Part One:Multiple choices: be revenue(SR) Rs 8 thenthe vAy' ratio is given I . If the variablecost(vc) be Rs 5 andthe sales by: a. 1.6 b . 3 c. 40 d. 0.625 level: 2. Re-order * deliverytime) a. Minimumlevel+ (normalusage average + leadtime) * safetystock b. (Daily usage + stock c. (Daily usage leadtime) + average - minimumlevel)i2 stocklevel d. (Average 3. Acid testratio is the ratiobetween: liabilities and a. Quickassets current debtors average and b. Net creditsales inventory average c. Costofgoodssoldand d. CostofgoodsonlY AS-17 is a: standards account 4. In select partydisclosure a. Related reporting b. Segment c. DiscontinuingoPeration rePorting financial d. Interim 5. Ledger is: a. A kind of payment b. A kind of strategy are c. A bookin whichbankaccounts kept d. lt is a receiptofselling \a Y \a \a \a \a \ \a ! It F. Fr t:-, l - H 23 Manag,ement llBM lnstitute Business of a \a \a { Examination Paper: Semester II 6. Which-of.the following industries doesnot useprocsss costing? a. Oil refineries b. Distilleribs Sugar o . Chemical Aircraft manufacturing 7. Thedemand curveis alsocalledthe:...
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...Case study: Variable and Fixed Costs, Contribution Margin and Decision Making Assignment #01 BUSMGT 734: STRATEGIC MANAGEMENT ACCOUNTING Yiyong Zhou ID: 6818321 Number of pages: 6 Q (a): To develop the contribution margin income statement, it is necessary to calculate the number of bottles of wine produced by HCV. This number is dependent upon the yield from the grapes. The relevant calculations are as follows: Pinot Noir Yield: Pounds harvested Loss in processing Yield: Grapes 100,000 10,000 10% 90,000 Generic red Grapes 60,000 3,000 5% 57,000 Bottles of wine produced: Pinot NoirPrivate Bin Kilograms of grapes: Pinot Noir grapes Generic red grapes Total kilograms of grapes Bottles (3 lb./bottle) 72,000 0 72,000 24,000 18,000 9,000 27,000 9,000 0 48,000 48,000 16,000 90,000 57,000 147,000 49,000 Regular Pinot Noir Melbec Total Notes to the contribution margin income statement: Variable costs: The liquor taxes, sales commissions and wine barrels are based on the number of bottles sold, and therefore are included in the variable cost. Fixed cost: Wine maker cost is treated as fixed cost because it is done on a contract basis. HCV pays the wine master $5,000 for each type of wine that is formulared. 1 Contribution Margin Income Statement Number Sales Pinot Noir-Private Bin Pinot Noir-Non Private Bin Melbec Total Revenues Variable Costs Grapes Bottle, labels, corks Harvest labor Crush labor Indirect materials Liquor taxes Sales distribution Barrels Total...
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...Fundamentals Pilot Paper – Knowledge Module Management Accounting Pilot Paper from December 2011 onwards Time allowed: 2 hours ALL 50 questions are compulsory and MUST be attempted. Formulae Sheet, Present Value and Annuity Tables are on pages 16, 17 and 18 Do NOT open this paper until instructed by the supervisor. This question paper must not be removed from the examination hall. The Association of Chartered Certified Accountants Paper F2 ALL 50 questions are compulsory and MUST be attempted Please use the space provided on the inside cover of the Candidate Answer Booklet to indicate your chosen answer to each multiple choice question. Each question is worth 2 marks. 1 A manufacturing company benchmarks the performance of its accounts receivable department with that of a leading credit card company. What type of benchmarking is the company using? A B C D Internal benchmarking Competitive benchmarking Functional benchmarking Strategic benchmarking 2 Which of the following BEST describes target costing? A B C D Setting Setting Setting Setting a a a a cost by subtracting a desired profit margin from a competitive market price price by adding a desired profit margin to a production cost cost for the use in the calculation of variances selling price for the company to aim for in the long run 3 Information relating to two processes (F and G) was as follows: Process F G Normal loss as % of input 8 5 Input (litres) 65,000 37,500 Output (litres) 58,900...
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...Question 1 - (20 marks) Deciding where to produce. Pam Engines Company produces the same power generators in two plants, a newly renovated, automated plant in Polly, and an older, less automated plant in Maddy. The following data are available for the two plants: | Polly | | Maddy | Selling price | | $150.00 | | | $150.00 | Variable Manufacturing Cost per unit | $72.00 | | | $88.00 | | Fixed Manufacturing Cost per unit | $30.00 | | | $15.00 | | Variable Marketing and distribution Cost per unit | $14.00 | | | $14.00 | | Fixed Marketing and distribution Cost per unit | $19.00 | | | $14.50 | | Total Cost per unit | | $135.00 | | | $131.50 | Operating income per unit | | $15.00 | | | $18.50 | Production Rate per day | | 400 units | | | 320 units | Normal annual capacity usage | | 240 days | | | 240 days | Maximum annual capacity | | 300 days | | | 300 days | All unit fixed costs are calculated based on a normal year of 240 working days. When the number of working days exceeds 240,variable manufacturing costs increase by $3.00 per unit in Polly and $8.00 per unit in Maddy. Pam Engines is expected to produce and sell 192,000 generators during the coming year. Wanting to maximize the higher unit profit at Maddy, Pam Engines' production manager has decided to manufacture 96,000 units at each plant. This production plan results in Maddy operating at capacity (320 units per day 300 day) and Polly operating at its normal...
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...Chapter 4 Cost-Volume-Profit Analysis QUESTIONS 1. Variable costs are costs that change in response to changes in activity (e.g., production or sales activity). Fixed costs are costs that do not change in response to changes in activity. 2. A mixed cost is a cost that has a fixed cost component and a variable cost component. For example, the amount paid for telecommunication services would be a mixed cost if there was a fixed monthly fee plus a charge for use. 3. Discretionary fixed costs are those fixed costs that management can easily change in the short-run (e.g., advertising). Committed fixed costs are those fixed costs that cannot be easily changed in the short-run (e.g., rent). 4. Commissions paid to salespersons and direct materials are examples of variable costs. 5. Rent and insurance expenses are examples of fixed costs. 6. Salespersons are paid a base salary plus commissions. The base amount is fixed and commissions are variable. Thus, total compensation paid to the sales force is mixed. 7. With telecom, there is likely to be a basic service charge (fixed) plus a charge for use (which will be variable if use increases with business activity). 8. The horizontal axis would be production. 9. With account analysis, managers use judgment to classify costs as either fixed or variable. The total of the costs classified as variable can then be divided by a measure of activity to calculate the variable cost per unit...
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...Cost-Volume-Profit Analysis Objective 1 • Identify how changes in volume affect costs. Types of Costs Variable Fixed Mixed Total Variable Cost Total variable costs change when activity changes. Total Long Distance Telephone Bill Your total long distance telephone bill is based on how many minutes you talk. Minutes Talked Variable Cost Per Unit Variable costs per unit do not change as activity increases. Per Minute Telephone Charge Minutes Talked The cost per long distance minute talked is constant. For example, 10 cents per minute. Variable Costs Example Consider Grand Canyon Railway. • Assume that breakfast costs Grand Canyon Railway $3 per person. • If the railroad carries 2,000 passengers, it will spend $6,000 for breakfast services. Variable Costs Example Total Variable Costs (thousands) $24 – $18 – $12 – $6 – – – – – 0 1 2 3 4 5 Volume (Thousands of passengers) Total Fixed Cost Total fixed costs remain unchanged when activity changes. Your monthly basic telephone bill probably does not change when you make more local calls. Monthly Basic Telephone Bill Number of Local Calls Mixed Costs • Contain fixed portion that is incurred even when facility is unused & variable portion that increases with usage. • Example: monthly electric utility charge – Fixed service fee – Variable charge per kilowatt hour used Mixed Costs Total Utility Cost Variable Utility Charge Fixed Monthly Utility Charge Activity (Kilowatt...
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...Management Accounting and Financial Accounting Monitoring and controlling the business financial performances is imperative for the success of the business operations and its profitability. Management and financial accounting have tools that can help the company in different ways when trying to reach their goals. Financial accounting is the business tool that provides reports to the stakeholders, creditors, the government, and other individuals outside the organization and is based on past activities and historical results (Atkinson, Kaplan, Matsumura, & Young, 2006). Financial accounting summarizes information that concerns the whole company, reports are prepared on a regular basis, each report most follow specific guidelines in order to be consistent and it focuses on accuracy. Management accounting in the other hand is the business tool that provides financial and nonfinancial information to internal members of the business such as managers and employees. Management accounting helps internal members of the company with profit planning and budgets. It focuses in making current and future decisions in order to better the company. The reports provided by management accounting are prepared when needed and may not be required in a regular basis. Management accounting helps the company’s Chief Executive Officer (CEO) with controlling the company’s performance by measuring outputs produced and their efficiency. It helps by controlling expenses and costs and by organizing resources...
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...Strategic management accounting: how far have we come in 25 years? Kim Langfield-Smith Monash University, Melbourne, Australia Abstract Purpose – The purpose of this paper is to provide a review of the origins of strategic management accounting and to assess the extent of adoption and “success” of strategic management accounting (SMA). Design/methodology/approach – Empirical papers which have directly researched SMA and prior review papers of the adoption and implementation of SMA or SMA techniques are reviewed. As well as assessing the extent of adoption of SMA and the reasons underlying an apparent low adoption rate, the role of accountants in adopting and implementing SMA is considered. Finally, the success or otherwise of SMA is discussed. Findings – SMA or SMA techniques have not been adopted widely, nor is the term SMA widely understood or used. However, aspects of SMA have had an impact, influencing the thinking and language of business, and the way in which we undertake various business processes. These issues cut across the wider domain of management, and are not just the province of management accountants. Research limitations/implications – There is limited value in conducting future surveys of the adoption and implementation of SMA or SMA techniques. Rather, the focus should be on how SMA-inspired techniques and processes diffuse into general practice within organizations. Originality/value – Twenty-five years after the term strategic management accounting was first...
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... Robert Samuel Kaplan was born in 1940. He is an American accounting academic, and a Professor of Accounting at Carnegie-Mellon University and Arthur Lowes Dickinson Professor of Accounting at the Harvard Business School. He had wrote a journal entitled “The Evolution of Management Accounting” in 1983. The purpose of this article is to summarize the development of management accounting, including the new demands for management information, and to develop a research strategy to meet these demands i) THE EVOLUTION OF MANAGEMENT ACCOUNTING (From Robert S. Kaplan point of view) In his paperwork, he divided it into five sections. • Section 1 - Development of cost accounting practices from the early textile mills and railroads (circa 1850) through the formation of the great industrial enterprises in the U.S. and the emergence of the scientific management approach. • Section 2 - Management control innovations of the DuPont Corporation and the General Motors Corporation after its reorganization by Pierre du Pont and Alfred Sloan in 1920. • Section 3 - Development in cost accounting and managerial control form 1925 to the present. • Section 4 - Challenges from the contemporary environment that may not be met by the accounting practices developed more than 60 years ago for a substantially different competitive situation. • Section 5 - Agenda for field based research to document or develop innovative management control practices appropriate for the changing industrial environment...
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...The Role of Management Accounting in the Organization The purpose of management accounting in the organization is to support competitive decision making by collecting, processing, and communicating information that helps management plan, control, and evaluate business processes and company strategy. The interesting thing about management accounting is that it is rare to find an individual within a company with the title of “management accountant.” Often many individuals function as accountants within the organization, but these individuals typically operate as financial accountants, costs accountants, tax accountants, or internal auditors. However, the ability to develop and use good management accounting (which covers a lot more ground than the product costing done by cost accountants) is actually an important ability for many individuals, including finance professionals, operational and marketing managers, top-level executives, and information technologists. Generally, in a very large company, each division has a top accountant called the controller, and much of the management accounting that is done in these divisions comes under the leadership of the controller. On the other hand, the controller usually reports to the vice president of finance for the division who, in turn, reports to the division’s president and/or overall chief financial officer (CFO). All of these individuals are responsible for the flow of good accounting information that supports the planning...
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...14/05/2014 Mixed Costs Total Mixed Cost VC Per Unit (Slope) Purpose of Mixed Cost Analysis To predict cost at an activity level with no historical record: Total mixed cost line can be expressed as: 2N Y Total Utility Cost Fixed Cost (Intercept) Level of Activity If your fixed monthly utility charge is $40, your variable cost is $0.03 per kilowatt hour, can you predict the utility of next month when you plan to use 2,000 kilowatt hours? Y = a + bX Variable Cost per KW Fixed Monthly Utility Charge Y = $40 + ($0.03 × 2,000) Y = $100 X Activity (Kilowatt Hours) A mixed cost has both fixed and variable components. Total cost CHANGES with activity level but NOT IN PROPORTION The High-Low Method 1. Find the data with highest & lowest activity level 2. Compare high vs low point data to get the slope, b, unit VC 3. Use either high or low point data to get a, total fixed cost Assume the following hours of maintenance work and the total maintenance costs for six months. Y = a + bX • From Algebra, if we know any two points on a line, we can determine its slope. 2. Break-Even Analysis (J. Smith ~ Taxi Driver) Break Even Point is the point at which costs and sales are equal CM = fixed costs. Fixed costs (FC) Insurance Car payment Interest Dispatcher fees Variable costs (VC) Gas Maintenance & repairs neither gain nor loss $ (principal or amortization) Value of Costs or Revenue Step 2, the slope or b is determined by difference...
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...ASSIGNMENT ON ASSURANCE OF LEARNING – ETHICS IN MANAGEMENT ACCOUNTING (CMA) Awoluyi Adekunle, Matric Number: 201403007 JUNE 29, 2015 MEMBA 3 LBS, Lagos AWOLUYI ADEKUNLE Matric Number: 201403007 Introduction The source of cost management ethical problems in any organization can be one or more of the following; 1. 2. 3. 4. Organisation’s management expectation Vs. professional ethics Personal desire for recognition / and promotion within the company Strife for quick money or cash Personal commitment or colleagues commitments In view of this, certain steps are required to be taken to ensure that strict adherence to business ethics is promoted within every organization. Several professional bodies have tried to ensure that best ethical practices are promoted and impunity punished. Take for instance the issue surrounding the stigma surrounding Cadbury Nigeria Plc in 2006. The organization posted profits not earned and the audit firm was also found culpable in the process. The company’s CEO was sanctioned by the Institute of Chartered Accountants of Nigeria (ICAN), being a chartered accountant himself, and the Audit firm was also sanctioned by the same body. All of this was done to promote high level of ethical standards amongst professionals and ultimately within organisations. The Institute Management of Accounts (IMA), USA developed four basic principles required by its members to maintain ethical standards. They are; Confidentiality ...
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