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Managrial accountancy
 

Managrial accountancy

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GET OPTIMAL UTILISEATION OF ASSETS

GET OPTIMAL UTILISEATION OF ASSETS

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    Managrial accountancy Managrial accountancy Presentation Transcript

    • Managerial Accounting PRESENTED BY BABASAB PATIL
    • 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
    • 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
    • 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.
    • 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
    • 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.
    • 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
    • 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
    • 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