Introduction to managerial

accounting
Expected outcomes from this course
After having taken this course, you have to be able
to:
• Understand how management accountants affect strategic
decisions
• Explain the features of CVP analysis and determine the
breakeven point and output level needed to achieve a target
operating income
• Distinguish between traditional and activity-based costing
systems (ABC)
• Describe what the master budget is and explain its benef its;
• Understand how the balanced scorecard helps achieve
strategic goals.
 Material Coverage
This course is divided into five sessions :

Session 1: Introduction to Managerial Accounting

Session 2: Break-Even Analysis
Session 3: Budgeting
Session 4: Decision-Making in Operational Management
Session 5: Strategy and Managerial Accounting
 Live class schedule
There are three live classes :

1.Today –Material 1 and Material 2

2.29th June - Material 3 and Material 4
3.06th July -Material 5
 Evaluation of “Introduction to managerial
accounting” course

Categories of assessment % and number of evaluation % of the Total

Mark

Preparatory assignment 5 evaluations, 2% each 10%

and Homework

Group assignment 1 evaluation, 30% 30%

Final exam 1 evaluation, 60% 60%

 Evaluation of “Introduction to managerial
accounting” course

Individuals assessments :
-Final exam, scheduled for mid-july
-Five short assessments
Short assessments' submission dates :

1.Homework one : Sunday, 18th june

2.Homework two : Sunday, 25th june
3.Home work three : Sunday, 02nd july
4.Homework four : Sunday, 09th july
5.Homework five : Sunday, 16th july
 Evaluation of “Introduction to managerial
accounting” course

Group evaluation :
Group case study, submission date, 09th of july
-Group of 4 students
 If you need help
-You can use Slack messenger
-You can send private message to me on Slack
or to everyone on the group
-For longer questions you can send me email
at : rumun.khan@edhec.com
Some important points from session
1 and 2
Flow of revenue and costs
Direct/ Indirect /Fixed /Variable cost
Direct/ Indirect /Fixed /Variable cost
 Break-even analysis
Break-even point (BEP): Quantity at which prof it = 0
Break-even analysis
Target Profit
 Integring uncertainties
At any given level of sales, operating leverage is
calculated as:
● Degree of Operating Leverage (OL)= Contribution
Margin (CTN) / Operating Income (OP).
OL = CTN/OP
Sensitivity of prof it to a change in sales.
Firms with high operating leverage have:
• rapid increases in prof its when sales expand
• rapid increases in losses when sales fall
• greater variability in cash f low
• greater risk
 Sensitivity of profit to a change in sales.

Example : 2 companies, same sales and prof it

Company 1 : Sales 3000 ; VC 300 ;Fixed costs 1000 ; Prof it 1700
Operating leverage = (3000-300)/1700 = 1.6

Company 2 : Sales 3000 ; VC 900 ; Fixed costs 400 ; Prof it 1700

Operating leverage = (3000-900)/1700 = 1.2
 Sensitivity of profit to a change in sales.

Exemple : If sales decrease by 10%

Company 1 : Profit decrease by 1.6*10 = 16%

Company 2 : Profit decrease by 1.2*10 = 12%

 Margin of Safety

Margin of Safety : it represents the difference between a

company's turnover and it's breakeven point
Margin of Safety = Turnover – BEP
Few elements on costs assignment
Few elements on costs assignment
Activity-Based Costing Systems
Activity-Based Costing Systems