MANAGEMENT ACCOUNTING AND CONTROL

I. PART 1: MANAGEMENT CONTROL SYSTEMS

a) INTRODUCTION

Financial accounting
 follow strict rules and cost information is very important in establishing that.

 In cost accounting: how much it cost us to produce product or offer a service

- ….

- Direct costs (cost tracing) and indirect costs (cost allocation)

It depends on the cost project. There is no golden method that allows us
to make it precise and accurate (approximative)

- Variable and fixed

Difference between manufacturing companies and hotels in terms of costs
(i.e., variable versus fixed costs).
Depend on how the cost structure looks like it has huge impact on how we
manage the company

- Step Costs

What is management control:

Instrument that managers can use to Increase the likelihood of employees to
work in the best interest of the company. That is the motivation through the
interest of employees (organization culture raise in salary, bonus etc.)

3 issues:
- Lack of directions (what to do, what is expected)
- Lack of motivation
- Personal limitations (not qualified)

There are different tools and not just one: organization related instruments, HR
instrument, planning instrument, monitoring instrument and information
instrument.

Management needs these control systems to organize the resources and take
important decision, define goals and formulate a strategy on how to achieve the
goal and analyze the results afterwards.

 The control can be on the actions, the results and people (they can be
combined)

- Which reasons speak for and against an application of the controllability

principles?
Only responsible for what the manager can influence
 Can be perceived as unfair in certain situation

- Situation: two tasks, both routine in nature only one task is incentivized:

People controls:
- Find the right people for the right job

b) STRATEGIC CONTROL
c) PERFORMANCE …

II. Part 2 : managerial acccounting