This document provides an overview of managerial accounting basics including: - The key differences between financial and managerial accounting - The objectives and activities of managerial accounting like decision making, planning, directing, and controlling - Different cost classifications like direct/indirect materials, direct/indirect labor, and manufacturing overhead - The roles and qualifications of managerial accountants - Career paths for those pursuing managerial accounting like the CMA certification

1. Basics of Accounting
Basics of
Managerial Accounting

2. Financial
Accounting vs.
Management
Accounting
2
• Financial Accounting is engaged on
dealing with the changes in assets and
liabilities, accounting revenues and
administration or management of
finances.
• Involves making monetary records
available to external users such as
analysts, business owners, prospective
investors and creditors.

3. Financial
Accounting vs.
Management
Accounting
3
• Management Accounting involves
measures and methodologies that are
concentrated in the efficient utilization of
an entity’s resources.
• Information associated with it are primarily
directed on goods or services, units in an
organization and business actions
• Encompasses topics on finance, marketing,
long-term strategic plans, operating
budgets and other non-financial
information

4. Objectives of
Managerial
Accounting
4
• Enhance the performance, strength
and efficacy of management
planning and control functions
• Supply information that is needed
when making internal decisions

5. Management
Activities
5
• Decision making
• Good decisions are derived from
tireless accession and assessment of
information
• The management team determines
which among the other possible
choices or courses of action will
support the company effectively in
achieving its objectives

6. Management
Activities
6
• Planning
• Focused on identifying what needs to get
done; how to carry it out; and who will
perform the necessary actions
• The management will determine the
inflows and outflows of economic
resources
• Comprehensive financial and operational
descriptions of expected and forthcoming
operation will be developed

7. Management
Activities
7
• Directing
• The management delegates roles and
responsibilities; guides the employees on
how to accomplish their chores; motivates
and inspires them until the fulfillment of
the tasks; and responds to employees’
queries on how to pull off their tasks
• Managerial accountants take into account
and list all the assignments that must be
realized

8. Management
Activities
8
• Controlling
• Keeps all business activities on track and
identifies if the company’s objectives are
met
• Achieved by measuring performance,
comparing actual performance with
budgets and taking action when needed

9. Cost
Classifications
9
• Direct Materials
• These are raw materials
• Direct materials are materials that turn
into an important component of the
finished goods and whose costs can be
easily tracked to the end product.
• Indirect materials are associated with
the manufacturing overhead.

10. Cost
Classifications
10
• Direct Labor
• Comprised of gross salaries anted to
the people who directly work on the
product
• Touch labor
• Compensates workers who “touched”
the product while it was being
produced

11. Cost
Classifications
11
• Indirect labor are labor costs incurred
when there is no physical or direct
contact to any product.
• Examples are salaries of security
guards, janitors and supervisors.

12. Cost
Classifications
12
• Manufacturing Overhead
• Covers all the manufacturing costs
excluding direct materials and direct
labor
• Examples are property taxes, insurance
and depreciation.

13. Product Costs vs
Period Costs
13
• Product costs are composed of the direct
materials, direct labor and manufacturing
overhead.
• These costs are listed in an inventory
account and are not considered as
expense until they are marketed.
• Period costs include non-manufacturing
costs, selling expenses, administrative
costs and rental costs

14. Other Costs
14
• Variable and fixed costs are cost
categories footed on the behavior of cost
relative to the changes in volume.
• Direct and indirect costs are cost
classifications based on the convenience
of tracking the costs to a cost object.
• Differential, opportunity and sunk costs
are terminologies used in problem solving
and in evaluating decisions.

15. Roles of
Managerial
Accountant
15
• Controller
• Treasurer
• Internal auditor
• The one who has a direct or indirect
involvement on the daily operations of an
entity
• Chief accountant
• Managers in line position
• Managers in staff position

16. Career in
Managerial
Accounting
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• Certified Management Accountant (CMA)
• Have at least 2 years of continuous
practice in management accounting
• Adhere to code of ethics
• Competent
• Diligent in their work
• Exhibit integrity
• Objective
• Honor and secure client’s confidentiality

17. Good fortune is what
happens when
opportunity meets with
planning.
- Thomas Alva Edison
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