...CHAPTER 1 THE CHANGING ROLE OF MANAGERIAL ACCOUNTING IN A DYNAMIC BUSINESS ENVIRONMENT Learning Objectives 1. Define managerial accounting and describe its role in the management process. 2. Explain four fundamental management processes that help organizations attain their goals. 3. List and describe five objectives of managerial accounting activity. 4. Explain the major differences between managerial and financial accounting. 5. Explain where managerial accountants are located in an organization, in terms of formal organization, deployment in cross-functional teams, and physical location. 6. Describe the roles of an organization's chief financial officer (CFO) or controller, treasurer, and internal auditor. 7. Briefly describe some of the major contemporary themes in managerial accounting. 8. Understand and explain the concepts of strategic cost management and the value chain. 9. Understand the ethical responsibilities of a managerial accountant. 10. Discuss the professional organizations, certification process, and ethical standards in the field of managerial accounting. Chapter Overview I. The Management Process in Organizations A. What is managerial accounting? B. Management activities 1. Decision making 2. Planning 3. Directing operational activities 4. Controlling II. How Managerial Accounting Adds Value to the Organization A. Provides information...
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...Changing Role g of Managerial Accounting in a y 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 g g Managerial accounting is the process of Identifying Measuring Analyzing Interpreting Communicating information 1-3 Learning Objective 2 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Managing Resources, Activities, and P d People l An organization . . . Directing Acquires Resources Organized set of activities Decision Making Controlling g Planning Hires People 1-5 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 Add V l t th O i ti • Providing information for decision making and planning. • Assisting managers in directing and controlling g g g g activities. g g p y • Motivating managers and other employees towards organization’s goals. • Measuring performance of activities, managers, and other employees. • Assessing the organization’s competitive position. 1-7 Learning Objective 4 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Managerial versus Financial Accounting A ti Financial...
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...Cost accounting goal is to assist managers in achieving the maximum value for their organizations. Measuring the effects of decisions on the value of the organization is one of the fundamental services of cost accounts. Providers of information = accountants Users of information = managers We want the value chain to be as efficient as possible Value chain goes from beginning to end (complete end/disposal) Managers evaluate value-added activities (activities that customers perceive as adding utility to the goods or services they purchase) to determine how they contribute to the final product’s service, quality, and cost. Financial accounting teaches us to prepare and interpret financial statements Cost accounting we understand how the individual stages contribute to value and how to work with other managers to improve performance. Cost accounting is for managers or internal users – the one who make decisions for the organization. They do not need comparisons instead only use information relevant for the decisions that managers operating in a business environment with a particular strategy make. Managers add value to the organization by the decisions they make. From a different perspective, accoun- tants (you) add value by providing good information to managers making the decision. The better the decisions, the better the performance of your organization, whether it is a manufacturing firm, a bank, a not-for-profit hospital, a government agency, a school club, or...
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...Introduction to Managerial Accounting Regardless of your major or intended career path, most of you will become managers one day. A manager has responsibility and control of selected parts of a company’s operations, or in some cases, multiple aspects of operations. Only those of you that happen to stay at the ‘bottom’ of a company, prefer never to get promoted, or never accept any responsibility for some aspect of a business, will miss the ‘management’ opportunity. Fortunately, none of you will likely fall into this persona given that you have taken the initiative to attend college. Understanding managerial accounting will help you move up the ladder more quickly, regardless of your chosen career path. How Can Managerial Accounting Help You? In any responsible business capacity, your boss and all other management levels above you will want to know how well you handle your responsibilities. To do so requires that they measure your performance. The evaluation process is similar to your perceptions in each college course in which you enroll. During your first class meeting in each course, one of your initial goals is to find out how your performance will be evaluated. In a business environment, you want to know what they expect, i.e., how they will measure your performance. While you won’t be earning letter grades in the business world, your performance will ultimately translate into promotions, bonuses, raises, reprimands, or perhaps dreaded walking...
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...Chapter 1 Introduction to Managerial Accounting Regardless of your major or intended career path, most of you will become managers one day. A manager has responsibility and control of selected parts of a company’s operations, or in some cases, multiple aspects of operations. Only those of you that happen to stay at the ‘bottom’ of a company, prefer never to get promoted, or never accept any responsibility for some aspect of a business, will miss the ‘management’ opportunity. Fortunately, none of you will likely fall into this persona given that you have taken the initiative to attend college. Understanding managerial accounting will help you move up the ladder more quickly, regardless of your chosen career path. How Can Managerial Accounting Help You? In any responsible business capacity, your boss and all other management levels above you will want to know how well you handle your responsibilities. To do so requires that they measure your performance. The evaluation process is similar to your perceptions in each college course in which you enroll. During your first class meeting in each course, one of your initial goals is to find out how your performance will be evaluated. In a business environment, you want to know what they expect, i.e., how they will measure your performance. While you won’t be earning letter grades in the business world, your performance will ultimately translate into promotions, bonuses, raises, reprimands, or perhaps dreaded walking...
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...TUI UNIVERSITY MICHAEL J. GILLIARD ACC 501, Accounting for Decision Making MODULE 2: Case, A Revised Income Statement, The Contribution Margin Approach Anthony Culpepper, PHD In the 21st century the business environment is changing very rapidly. These changes are reflected in global competition, rapidly advancing technology, and improved communication systems, such as the Internet. The activities that make an enterprise successful today may no longer be sufficient next year. A crucial role of managerial accounting is to continually assess how an organization stacks up against the competition. I do agree with the notion of value costing for the 21st Century organizations. Traditional accounting systems distribute indirect costs on the basis of direct labor hours, machine hours, or material costs. This leads to a distorted picture. The costs of products and services must be accurate, or management can be misled. In the last 15 years value costing has been at the forefront for businesses in the 21st century. New cost concepts allocates costs to the things people are doing in companies and assures that these costs are paid by the products that generated them. Virtual enterprise and efficient supply chain management systems will shape the future of these enterprises. Organizations are trying to become agile enterprises with the help of strategic alliances of firms and integration using information technologies. Traditional performance and cost measures are no longer suitable...
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...Accounting Information for Managers To Make Better Decisions 1 Abstract This paper analysis how the accounting information would support the decision making process. The main goal of an accounting system is to provide financial information about the organization including financial situation and the performance of the organization. The decision makers should know the situation of the organization either by comparing competitors or previous periods’ performance in order to achieve the objectives of the company and this being possible by using accounting information. In addition, this thesis studies the importance of having effective and efficient accounting system to make better decision as it relates to increase the profitability target of an organization. Organizations should replace their weak accounting system in order to ensure that each team member in the Accounts Department is conscious of their role to produce good accounting information (1, Okoli Margaret). The result of this paper describes that providing right information to the right people in time via management reporting to maximize the use of reports in decision-making. 2 Introduction Any organization should survive and excel in the fast paced and ever changing market. We are living in the digital era so information can be found everywhere via websites, databases documents, reports, and emails. However, it’s important to read the historical data-set during decision making process but providing report in quick...
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...scorecard. The balanced scorecard translates an organization’s mission and strategy into operational objectives and performance measures for four different perspectives. The President would like for the managerial accounting team to continue research and explain how to use a balanced scorecard to measure unethical behavior with EEC. First as the team is going to obtain research in how to transition to a balanced scorecard let us review the first part of the research, as well. Definition of a Balanced Scorecard The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. It was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance (Balance Scorecard Institute). Any measurement system should be developed by the mission, goals, and objectives of the organization, in this case we are analyzing EEC (MUSE, 2010). After defining a balanced scorecard it has an integrated set of performance measures to support and are derived from EEC’s strategies. EEC’s performance...
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...Managerial Accounting: Chapter 1: Managerial Accounting: An Overview - This chapter explains why managerial accounting is important to the future careers of all business students. It answers three questions: (1) What is managerial accounting? (2) Why does managerial accounting matter to your career? (3) What skills do managers need to succeed? It also discusses the importance of ethics in business and corporate social responsibility. □ What is Managerial Accounting? | Financial Accounting | Managerial Accounting | 1. Users | External persons whomake financial decisions | Managers who plan for and control an organization | 2. Time focus | Historical perspective | Future emphasis | 3. Verifiability versus relevance | Emphasis on objectivity and verifiability | Emphasis on Relevance | 4. Precision versus timelines | Emphasis on precision | Emphasis on timeliness | 5. Subject | Primary focus is on companywide reports | Focus on Segment reports | 6. Rules | Must follow GAAP / IFRS | Not bound by GAAP / IFRS | 7. Requirement | Mandatory for external reports | Not Mandatory | There are seven key differences between financial accounting and managerial accounting: 1. Users: Financial accounting reports are prepared for external parties, whereas managerial accounting reports are prepared for internal users. 2. Emphasis on the future: Financial accounting summarizes past transactions. Managerial accounting has a strong future orientation. 3. Relevance...
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...Abstract This essay is written to inform of the difference in financial accounting and managerial accounting. What is account first and foremost accounting is an information system that reports on the economic activities and financial condition of a business or other organization. Financial accounting and managerial accounting plays different roles in society. This essay is also written to inform the readers of the financial statements used in accounting and what impact each statement has on the accounting process. Accounting provides information that helps answer such questions, by taking a look at what it would cost, and how the costs are relevant to the survival of a business. Accounting is an information system that reports on the economic activities and financial conditions of a business or other organization. Do not underestimate the importance of accounting information. Communicating economic information is so important that accounting is frequently called the language of business. (Edmonds, 2012) Here are some questions about the role of accounting in Society according to Edmonds, Olds, McNair, and Tsay (2009). How should society allocate its resources? Should we spend more to harvest food or cure disease? Should we build computers or cars? Should we invest money in IBM or General Motors? Accounting provides information that helps answer such questions, by taking a look at what it would cost, and how the costs are relevant to whether a business survive or not. (Edmonds...
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...Mismanagement of a Fiscal Cycle | How To Manage Necessary Budget Cuts to Efficiently Run A Community Center | | Reginald Lee | 10/10/2012 | This is the detailed account of the mismanagement of GED community center and how to complete renovations to the operations of the center due to the advent of budget cuts needed to complete the management of staff on the incoming workload of an annual fiscal cycle. | Managerial accounting entails developing the structure of a business project from the aspect of designing how productivity occurs within the timeframe of the project upgrades. For instance, you are the senior level management supervisor of maintenance department. You are to devise a strategy to cut the cost of production from the beginning of a project’s completion and implementation into the first stages of production so that they increase revenue for the upcoming fiscal cycle. You have to consider the pros and cons of letting go employees to manage funds needed to complete the increase in the levels of productivity that spearhead the increase in total revenue for this to come to fruition. The information about last year’s fiscal cycle will prove vital in the effort to complete this. On the other hand, cost accounting is a smaller bit to that equation. For instance, in cost accounting this job will be given to the lower management for the purpose of finding the fiscal information of the last three years in an effort to determine how many workers are needed to efficiently...
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...MA1 2014-2015 MANAGEMENT ACCOUNTING MODULE 1 PART 5 Slide 67: Exercise 1-2 pages 24-25 Solution 1. 2. 3. 4. 5. 6. 7. 8. 9. work in process Six Sigma business process corporate governance enterprise risk management just-in-time business risks Non-value added activity value chain 10. enterprise system 11. code of professional ethics 12. lean thinking model 13. customer value proposition 14. Sarbanes Oxley Act 15. corporate social responsibility -1- MA1 2014-2015 MANAGEMENT ACCOUNTING MODULE 1 PART 5 Slides 68 – 70: Past CGA Exam question For the year ended March 31, 1993, you are given the following data: Direct materials used Manufacturing overhead Total manufacturing costs Beginning work-in-process inventory Cost of goods manufactured Sales Beginning finished goods inventory Cost of goods sold Net income Required Compute the following: 2 a. Direct labour 2 b. Ending work-in-process inventory 2 c. Goods available for sale 2 d. Ending finished goods inventory 2 e. Operating expenses $ 9,000 20,000 37,000 3,500 30,000 50,000 2,000 27,000 3,000 Solution Take what you are given and use it to try to determine the missing parts. You must understand the format and calculations for the schedule of cost of goods manufactured and the income statement. Calculations: Direct materials used Direct labour MOH Total manufacturing costs WIP, beginning (WIP, end) COGM 9,000 (a) 20,000 37,000 3,500 (b) 30,000 (a) = 37,000 – (20,000 +9,000) = 8,000 (b) = 10,500...
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...Chapter 01 The Changing Role of Managerial Accounting in a Dynamic Business Environment Chapter 01 The Changing Role of Managerial Accounting in a Dynamic Business Environment Answer Key True / False Questions 1. Controlling involves the coordination of daily business functions within an organization. FALSE AACSB: Reflective Thinking AICPA BB: Industry AICPA FN: Decision Making Bloom's: RC Difficulty: Easy Learning Objective: 01-02 Explain four fundamental management processes that help organizations attain their goals. 2. Measuring the performance of managers and subunits is not an objective of managerial accounting. FALSE AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Research Bloom's: RC Difficulty: Easy Learning Objective: 01-03 List and describe five objectives of managerial accounting activity. 3. Middle-level managers would likely be considered internal users of accounting information rather than external users. TRUE AACSB: Reflective Thinking AICPA BB: Resource Management AICPA FN: Reporting Bloom's: RC Difficulty: Easy Learning Objective: 01-04 Explain the major differences between managerial and financial accounting. 4. A controller is normally involved with preparing financial statements. TRUE AACSB: Analytic AICPA BB: Resource Management AICPA FN: Reporting Bloom's: RC Difficulty: Medium Learning Objective: 01-06 Describe the roles of an organization's chief financial...
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...Chapter 1 Managerial Accounting and the Business Environment Lecture Notes Chapter theme: This chapter serves four main purposes. First, it explains the differences and similarities between financial and managerial accounting. Second, it describes the role of management accountants in an organization. Third, it explains the basic concepts underlying Lean Production, the Theory of Constraints (TOC), and Six Sigma. Fourth, it discusses the importance of upholding ethical standards. I. Globalization A. Import/Export Data i. Imports into the United States (in billions) 1. The data reveal an enormous increase in import activity from 1990 to 2004. In particular, imports from Canada, Mexico, and China skyrocketed. ii. Exports from the United States (in billions) 1. The data reveal an increase in exports to Canada and Mexico. Interestingly, the increase in exports to China pales in comparison to the growth rate in imports from China. iii. Internet Usage 1. The internet fuels globalization by providing companies with greater access to geographically dispersed customers, employees, and suppliers. 2. The number of internet users more than doubled during the first four years of the new millennium. 3. As of 2004, more than 87% of the world’s population was still not connected to the Internet...
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...A STUDY ON VARIOUS ACCOUNTING PRACTICES FOLLOWED AT LAXMIPATI SAREES A Project Report Submitted for the partial fulfillment of the Bachelor of Business Administration 2011-2014/15 SEMESTER IV Page 1 In the subject of MANAGERIAL ACCOUNTING Submitted by Karishma Chandak Nishit Deora Chinmay Jariwala Sameer Iyer Submitted to Mrs. Meghna Dangi AURO UNIVERSITY TABLE OF CONTENTS Acknowledgment .......................................................................................................................................... 3 1 2 3 4 5 6 Introduction:.......................................................................................................................................... 4 Company profile ................................................................................................................................... 6 Production and Operations carried out at Laxmipati Sarees: ................................................................ 8 Answers to the Questions:..................................................................................................................... 9 Recommendations: .............................................................................................................................. 14 Conclusion .......................................................................................................................................... 15 Page 2 ACKNOWLEDGMENT The success of any project depends...
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