Managerial

Accounting:
An Introduction To Concepts,
Methods, And Uses
9th Edition
Maher, Stickney and Weil

Chapter 1
Overview and Basic
Concepts

Learning Objectives (Slide 1 of 2)

Distinguish between managerial &
financial accounting.
Understand how managers can use
accounting information to implement
strategies.
Identify the key financial players in the
organization.
Understand managerial accountants
professional environment and ethical
responsibilities.
Master the concept of cost.

Learning Objectives (Slide 2 of 2)

Compare and contrast income statements

prepared for managerial use and those
prepared for external reporting.
Describe how managerial accounting
supports modern production environments.
Understand the importance of effective
communication between accountants and
users of managerial accounting information.
Understand the ethical standards that
comprise the Institute of Management
Accountants Code of Ethics. (Appendix 1.1)

Compare Financial
& Managerial Accounting
Financial
Accounting

Managerial
Accounting

Discuss Implementing
Strategies

Review Misuses of
Accounting Information

Key Financial Players

Partial Organizational Chart
President and
Chief Operating Officer

Industrial
Department

Staff and
Administrative
Departments
Finance
Vice-President

Other
Vice-Presidents
Including Engineering,
Legal, Employee Relations

Treasurer

Controller

Internal Audit

Cost
Accounting

Financial
Reporting

Tax

Professional Environment
(Slide 1 of 2)

Institute of Management Accountants (IMA)

Sponsors Certified Management Accountant &
Certified Financial Management programs
Publishes a journal, policy statements and
research studies on accounting issues

Certified Public Accountant

Cost Accounting Standards Board
Sets accounting standards for contracts
between the U.S. government and defense
contractors

Professional Environment
(Slide 2 of 2)

Ethical issues, while always

important, have taken on added
significance due to recent
accounting failures
The IMA has developed a Code of
Conduct mandating that
management accountants have a
responsibility to maintain the
highest levels of ethical conduct

Define the Following Basic

Cost Concepts (Slide 1 of 4)
A cost

Opportunity cost

Basic Cost Concepts (Slide 2 of 4)

Distinguish between a cost and an
expense

Basic Cost Concepts (Slide 3 of 4)

A cost object is any item for which
the manager wishes to measure
cost
Differentiate between Direct and
Indirect Costs

Basic Cost Concepts (Slide 4 of 4)

What is the distinction between
fixed and variable costs? It is
important since it affects strategic
decision-making

Income Statement For

External Reporting
Sales Revenue
Less Cost of Goods Sold
Gross Margin

$400,000
210,000
$190,000

Less Mktg. & Admin Exp.

80,000

Net Income Before Taxes

$110,000

Contribution Margin
Format Income Statement
Sales Revenue

$400,000

Less Variable Costs:

Variable Cost of Sales
Variable Mktg & Admin

$160,000
8,000168,000

Contribution Margin

$232,000

Less Fixed Costs:

Fixed Cost of Sales
Fixed Mktg & Admin
Net Income Before Taxes

$50,000
72,000122,000
$110,000

Match Terms & Definitions

Cost
Opportunity
Cost

The return that could not be

realized from the best forgone
alternative use of a resource
A cost charged against revenue

Expense

Costs not directly related to a

cost object

Cost Object

Any item for which a manager

wants to measure a cost

Direct Cost

Costs directly related to a cost

object

Indirect Cost

A sacrifice of resources

Managing Costs
Be able to identify cost behavior & present costs in
this manner in order to effectively plan & manage
them
Activity-based management (ABM) requires
understanding how the activities produce a product
& affect its cost, therefore by managing the activities
you can control its costs
Effective cost control requires an understanding of
how producing a product involves activities & how
those activities cause costs to be incurred
Activity-based management studies the need for
activities & whether they are operating efficiently

Value-Added Activities
Value-added activities increase the
products service to customers
Managers try to eliminate non-value-added
activities to reduce costs without reducing
the products service potential to
customers

The value chain describes the linked set

of activities that add value to the
products or services of the
organization

Describe the Value Chain

Managerial Accounting in Modern

Production Environments
Key developments that reshaped
Managerial Accounting include:
Integrated information systems
Web hosting
Just-in-time and lean production
Total Quality Management
Theory of constraints
Benchmarking and continuous
improvement

If you have any comments or suggestions concerning

this PowerPoint Presentation for Managerial
Accounting, An Introduction To Concepts, Methods,
And Uses please contact:
Dr. Michael Blue, CFE, CPA, CMA
blue@bloomu.edu
Bloomsburg University of Pennsylvania