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Chap001

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  • 1. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Chapter 1 The Changing Role of Managerial Accounting in a Dynamic Business Environment
  • 2. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Learning Objective 1
  • 3. Managerial accounting is the process of  Identifying  Measuring  Analyzing  Interpreting  Communicating information Define Managerial AccountingDefine Managerial Accounting
  • 4. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Learning Objective 2
  • 5. Managing Resources, Activities,Managing Resources, Activities, and Peopleand People An organization . . . Acquires Resources Hires People Organized setOrganized set of activitiesof activities Organized setOrganized set of activitiesof activities Decision Making Decision Making PlanningPlanning DirectingDirecting ControllingControlling
  • 6. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Learning Objective 3
  • 7. How Managerial AccountingHow Managerial Accounting Adds Value to the OrganizationAdds Value to the Organization • Providing information for decision making and planning. • Assisting managers in directing and controlling activities. • Motivating managers and other employees towards organization’s goals. • Measuring performance of subunits, activities, managers, and other employees. • Assessing the organization’s competitive position. • Providing information for decision making and planning. • Assisting managers in directing and controlling activities. • Motivating managers and other employees towards organization’s goals. • Measuring performance of subunits, activities, managers, and other employees. • Assessing the organization’s competitive position.
  • 8. The Balanced ScorecardThe Balanced Scorecard Financial Perspective Goals Measures Customer Perspective Goals Measures Operations Perspective Goals Measures Innovation Perspective Goals Measures How do we lookHow do we look to owner’s?to owner’s? How do customersHow do customers see us?see us? How can weHow can we continue tocontinue to improve?improve? In which activitiesIn which activities must we excel?must we excel?
  • 9. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Learning Objective 4
  • 10. Managerial versus FinancialManagerial versus Financial AccountingAccounting Accounting SystemAccounting System (accumulates financial and(accumulates financial and managerial accounting data in themanagerial accounting data in the cost accounting system)cost accounting system) Accounting SystemAccounting System (accumulates financial and(accumulates financial and managerial accounting data in themanagerial accounting data in the cost accounting system)cost accounting system) Managerial AccountingManagerial Accounting Information for decisionInformation for decision making, planning, andmaking, planning, and controlling ancontrolling an organization’sorganization’s operations.operations. Managerial AccountingManagerial Accounting Information for decisionInformation for decision making, planning, andmaking, planning, and controlling ancontrolling an organization’sorganization’s operations.operations. Financial AccountingFinancial Accounting Published financialPublished financial statements and otherstatements and other financial reports.financial reports. Financial AccountingFinancial Accounting Published financialPublished financial statements and otherstatements and other financial reports.financial reports. InternalInternal UsersUsers ExternalExternal UsersUsers
  • 11. Managerial versus FinancialManagerial versus Financial AccountingAccounting Managerial Accounting Financial Accounting Users of Information Managers, within the organization. Interested parties, outside the organization. Regulation Not required and unregulated, since it is intended only for management. Required and must conform to generally accepted accounting principles. Regulated by the Financial Accounting Standards Board, and, to a lesser degree, the Securities and Exchange Commission. Source of Data The organization's basic accounting system, plus various other sources, such as rates of effective products manufactured, physical quantities of material and labor used in production, occupancy rates in hotels and hospitals, and average take-off delays in airlines. Almost exclusively drawn from the organization's basic accounting system, which accumulates financial information. Nature of Reports and Procedures Reports often focus on subunits within the organization, such as departments, divisions, geographical regions, or product lines. Based on a combination of historical data, estimates, and projections of future events. Reports focus on the enterprise in its entirety. Based almost exclusively on historical transaction data.
  • 12. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Learning Objective 5
  • 13. • A staff position supports and assists line positions. – Example: A cost accountant in the manufacturing plant. • A staff position supports and assists line positions. – Example: A cost accountant in the manufacturing plant. Line and Staff PositionsLine and Staff Positions • A line position is directly involved in achieving the basic objectives of an organization. – Example: A production supervisor in a manufacturing plant. • A line position is directly involved in achieving the basic objectives of an organization. – Example: A production supervisor in a manufacturing plant.
  • 14. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Learning Objective 6
  • 15. ControllerController The chief managerial and financial accountant responsibility for: – Supervising accounting personnel – Preparation of information and reports, managerial and financial – Analysis of accounting information – Planning and decision making The chief managerial and financial accountant responsibility for: – Supervising accounting personnel – Preparation of information and reports, managerial and financial – Analysis of accounting information – Planning and decision making
  • 16. TreasurerTreasurer Responsible for raising capital and safeguarding the organization’s assets. – Supervises relationships with financial institutions. – Work with investors and potential investors. – Manages investments. – Establishes credit policies. – Manages insurance coverage Responsible for raising capital and safeguarding the organization’s assets. – Supervises relationships with financial institutions. – Work with investors and potential investors. – Manages investments. – Establishes credit policies. – Manages insurance coverage
  • 17. Internal AuditorInternal Auditor Responsible for reviewing accounting procedures, records, and reports in both the controller’s and the treasurer’s area of responsibility. – Expresses an opinion to top management regarding the effectiveness of the organizations accounting system. Responsible for reviewing accounting procedures, records, and reports in both the controller’s and the treasurer’s area of responsibility. – Expresses an opinion to top management regarding the effectiveness of the organizations accounting system.
  • 18. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Learning Objective 7
  • 19. Major Themes in ManagerialMajor Themes in Managerial AccountingAccounting ManagerialManagerial AccountingAccounting Information and Incentives Information and Incentives Costs and Benefits Costs and Benefits Evolution and Adaptation Evolution and Adaptation Behavioral Issues Behavioral Issues
  • 20. Evolution and Adaptation inEvolution and Adaptation in Managerial AccountingManagerial Accounting E-Business Service vs. Manufacturing Firms Emergence of New Industries Global Competition Focus on the Customer Cross-Functional Teams Product Life Cycles Time-Based Competition Information and Communication Technology Just-in-Time Inventory Total Quality Management Continuous Improvement ChangeChange
  • 21. Objectives Measure the cost of resources consumed. Identify and eliminate non-value-added costs. Objectives Measure the cost of resources consumed. Identify and eliminate non-value-added costs. Cost Management SystemsCost Management Systems Cost Management System
  • 22. Objectives Determine efficiency and effectiveness of major activities. Identify and evaluate new activities that can improve performance. Objectives Determine efficiency and effectiveness of major activities. Identify and evaluate new activities that can improve performance. Cost Management SystemsCost Management Systems Cost Management System
  • 23. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Learning Objective 8
  • 24. ProductProduct DesignDesign ProductProduct DesignDesign ResearchResearch andand DevelopmentDevelopment ResearchResearch andand DevelopmentDevelopment Strategic Cost Management andStrategic Cost Management and the Value Chainthe Value Chain Securing rawSecuring raw materials andmaterials and other resourcesother resources Securing rawSecuring raw materials andmaterials and other resourcesother resources ProductionProductionProductionProduction MarketingMarketingMarketingMarketing DistributionDistributionDistributionDistribution CustomerCustomer ServiceService CustomerCustomer ServiceServiceStartStart
  • 25. Theory of ConstraintsTheory of Constraints A sequential process of identifying andidentifying and removing constraintsremoving constraints in a system. Restrictions or barriers that impede progress toward an objective Restrictions or barriers that impede progress toward an objective
  • 26. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Learning Objective 9
  • 27. Ethical Climate of BusinessEthical Climate of Business The corporate scandals experienced over the last few years have shown us that unethical behavior in business is wrong in a moral sense and can be disastrous in the economy. In addition to Sarbanes-Oxley, there will likely be more reforms in corporate governance and accounting. The corporate scandals experienced over the last few years have shown us that unethical behavior in business is wrong in a moral sense and can be disastrous in the economy. In addition to Sarbanes-Oxley, there will likely be more reforms in corporate governance and accounting.
  • 28. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Learning Objective 10
  • 29. Managerial Accounting as aManagerial Accounting as a CareerCareer Professional Organizations Institute of Management Accountants (IMA)Institute of Management Accountants (IMA) PublishesPublishes Management Accounting and researchand research studies.studies. PublishesPublishes Management Accounting and researchand research studies.studies. AdministersAdministers Certified Management Accountant programprogram AdministersAdministers Certified Management Accountant programprogram DevelopsDevelops Standards of Ethical Conduct for Management Accountants DevelopsDevelops Standards of Ethical Conduct for Management Accountants
  • 30. Professional EthicsProfessional Ethics CompetenceCompetence ConfidentialityConfidentiality IntegrityIntegrity CredibilityCredibility
  • 31. End of Chapter 1End of Chapter 1

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