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Managrial accountancy
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GET OPTIMAL UTILISEATION OF ASSETS

GET OPTIMAL UTILISEATION OF ASSETS

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  • 1. Managerial Accounting PRESENTED BY BABASAB PATIL
  • 2. What is Managerial Accounting?
    • Contrast between financial and managerial accounting:
      • Financial accounting (keeping books, financial statements, audits, etc.)—reporting to external parties
      • Managerial accounting—(budgeting, department reports, production reports, etc.)—needs of internal parties
  • 3. Contrast between Financial and Managerial Accounting (cont.)
    • Financial accounting
      • Focus on past—”results of operations”
      • Based on GAAP
      • Mandatory reporting with prescribed format (income stmt, balance sheet, etc.)
    • Managerial accounting
      • Focus on past, present and future (budgeting, planning, controlling, etc.)
      • No constraining standards or requirements—whatever management needs
  • 4. Controlling & the Management Cycle
    • Role of the Controller:
      • Chief accounting officer, responsible for reporting and interpreting data needed in management decision-making
    • Accounting information & the management cycle:
      • Planning—budgeting process
      • Controlling—performance reporting, budget to actual, identifying problems requiring management attention
      • Organizing & Directing—day to day information
      • Decision making—cost/benefit data, etc.
  • 5. New Management Philosophies & Management Accounting
    • Just-in-time (JIT) operations
    • Total quality management (TQM) operations
    • Activity based management (ABM) using activity based costing (ABC) models
    • GOAL—Continuous improvement
      • ISO 9000, Six-Sigma, etc.
      • Eliminate waste/ zero defects
  • 6. Management accounting reports
    • No specified format as in financial acctg –any form useful to management
    • Four W’s of Successful Report Presentation:
      • Why ? Why is report needed? Purpose?
      • Who ? Who will use report?
      • What ? What information is relevant? Detail?
      • When ? When needed? Timely info? Deadlines?
    • Basic purpose of any mgt report—provide useful information to management to aid in planning/controlling/organizing/decisions.
  • 7. Cost Accounting (intro.)
    • Cost accounting is a key element of management reporting
    • Cost classification:
      • Cost Traceability—Direct and Indirect costs
        • Direct—easily traceable
        • Indirect—essential, but not conveniently traced
      • Cost Behavior—Fixed and Variable costs
        • Fixed—do not fluctuate in relevant range
        • Variable—change proportionate to production
  • 8. Cost Accounting Intro (cont.)
    • Cost Behavior (continued):
      • Cost and operations : Value-added and Non value added:
        • Value-added —increases market value of product or service
        • Non value-added —increases cost but not market value
      • Cost and reporting : Product and Period Costs:
        • Period costs —non-inventoried, currently used
        • Product costs —become part of inventoriable production
  • 9. Flow of Product Costs: Direct Materials Direct Labor Factory Overhead Work In Process Finished Goods Balance Sheet: Ending Inventory Income Statement: Cost of Goods Sold