MAS 1 – LESSON 1 3.

Confidentiality
4. Objectivity (Credibility)
Management – Process of planning, organizing and controlling tasks
to achieve or meet the goals of organization.
Functions of Management:
1. Planning – Process of setting short & long term goals &
objectives of the company
2. Organizing/Directing – Tackling activities of management
3. Controlling – Performance Evaluation
4. Decision Making – Inherent
Management Accounting VS. Financial Accounting
Area Financial Acctg Management Acctg

Users of Information Internal & External Internal

(Exclusively)
(Primarily) (SPFS)
(GPFS)
Restrictive Guidelines PFRS/PAS/GAAP None
(non-regulatory)
Type of information Monetary Monetary & Non-
Monetary
Emphasis of Report Reliability (Precision) Relevance (timeliness)
Information Source Internal Data Internal & External
Data
Focus of Analysis Business as a Whole Various Segments
Frequency of Periodic Whenever Needed
Reporting
Time Orientation Historical Projected (Primary) &
Historical
*Note: GPFS –General-Purpose Financial Statements (aggregated in nature)
SPFS –Specific-Purpose Financial Statements (detailed in nature)

Line Position – People in the organization who are directly

responsible for achieving organizational goals. Managers with line
authority exercises downward authority or the authority to give
command.
Staff Position – individuals / groups in an organization who provide
services and advice to line managers. Persons with staff authority
exercise an upward or lateral authority
Controller Treasurer
 Reporting & Interpreting  Provision of Capital
Data  Investor Relations
 Tax Administration  Short-Term Financing
 Government Reporting  Banking & Custody of Funds
 Management Audit  Credit & Collections
 Internal Audit  Investments & Insurance
 Economic Appraisal
 Protection of Assets

Standards for Ethical Conduct for Management Accountants:

(CICO)
1. Competence
2. Integrity
 MAS 1 – LESSON 2
Cost-Volume-Profit Analysis – is a systematic examination of the
relationships among costs, cost driver and profit.
CVP Analysis Assumptions:
1. Selling price is constant
2. Costs are linear and can be accurately divided into variable
(constant per unit) and fixed (constant in total) elements.
3. In multiproduct companies, the sales mix is constant
4. In manufacturing companies, inventories do not change (units
produced = units sold)
Contribution Margin Income statement – helpful to managers in
judging the impact on profits of changes in selling price, cost, or
volume. The emphasis is on cost behavior
Profit = (Sales – Variable Expenses) – Fixed Expenses;
Sales xxx
Less: Variable costs xxx
Contribution Margin xxx
Less: Total fixed costs xxx
Net Operating Margin xxx

Contribution Margin (CM) - the amount remaining from sales

revenue after variable expenses have been deducted.
CM= Sales – Variable Cost
CM ratio = CM / Sales
Contribution approach – a means of expressing on a per-unit basis
*Note – by dividing the Fixed expenses by the CM/unit, you will get the breakeven
point in units
– by dividing the fixed expenses by the CM ratio, you will get the breakeven
point in pesos

Break-even Point – the sales volume level (in pesos/units) where

total revenue equals total costs
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