Chapter 1

The Changing Role of Managerial Accounting in a Dynamic Business Environment


Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objective 1


Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.

Define Managerial Accounting

Managerial accounting is the process of  Identifying  Measuring  Analyzing  Interpreting  Communicating information

All rights reserved.Learning Objective 2 McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies. Inc. .

Directing Acquires Resources Organized set of activities Decision Making Controlling Planning Hires People .Managing Resources. and People An organization . . . Activities.

All rights reserved.Learning Objective 3 McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies. . Inc.

• Motivating managers and other employees towards organization’s goals. . • Assessing the organization’s competitive position. and other employees. • Assisting managers in directing and controlling activities. managers. • Measuring performance of activities.How Managerial Accounting Adds Value to the Organization • Providing information for decision making and planning.

The Balanced Scorecard How do we look to owner’s? Financial Perspective Goals Measures In which activities must we excel? Customer Perspective Goals Measures How do customers see us? Operations Perspective Goals Measures Innovation Perspective Goals Measures How can we continue to improve? .

All rights reserved. .Learning Objective 4 McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies. Inc.

Managerial versus Financial Accounting Accounting System (accumulates financial and managerial accounting data in the cost accounting system) Managerial Accounting Information for decision making. planning. Internal Users Financial Accounting Published financial statements and other financial reports. External Users . and controlling an organization’s operations.

to a lesser degree. and average take-off delays in airlines. within the organization. such as rates of effective basic accounting system. Source of Data The organization's basic accounting system. Managerial Accounting Users of Information Managers. plus Almost exclusively drawn from the organization's various other sources. combination of historical data. Based almost exclusively on historical transaction geographical regions. Nature of Reports and Reports often focus on subunits within the Reports focus on the enterprise in its entirety. . outside the organization. and. or product lines. the Securities and Exchange Commission. Procedures organization. Required and must conform to generally accepted accounting principles. Based on a data. material and labor used in production. divisions. physical quantities of financial information. Regulated by the Financial Accounting Standards Board. estimates. which accumulates products manufactured. occupancy rates in hotels and hospitals. Regulation Not required and unregulated.Managerial versus Financial Accounting Financial Accounting Interested parties. and projections of future events. such as departments. since it is intended only for management.

. Inc. All rights reserved.Learning Objective 5 McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies.

– Example: A cost accountant in the manufacturing plant. – Example: A production supervisor in a manufacturing plant. • A staff position supports and assists line positions. .Line and Staff Positions • A line position is directly involved in achieving the basic objectives of an organization.

.Learning Objective 6 McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies. All rights reserved. Inc.

Controller The chief managerial and financial accountant responsibility for: – Supervising accounting personnel – Preparation of information and reports. managerial and financial – Analysis of accounting information – Planning and decision making .

– Establishes credit policies. – Supervises relationships with financial institutions. – Work with investors and potential investors.Treasurer Responsible for raising capital and safeguarding the organization’s assets. – Manages investments. – Manages insurance coverage .

and reports in both the controller’s and the treasurer’s area of responsibility. records.Internal Auditor Responsible for reviewing accounting procedures. . – Expresses an opinion to top management regarding the effectiveness of the organizations accounting system.

All rights reserved. . Inc.Learning Objective 7 McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies.

Major Themes in Managerial Accounting Behavioral Issues Costs and Benefits Information and Incentives Evolution and Adaptation Managerial Accounting .

Manufacturing Firms Emergence of New Industries Global Competition Focus on the Customer Cross-Functional Teams Computer-Integrated Manufacturing Product Life Cycles Time-Based Competition Change Information and Communication Technology Just-in-Time Inventory Total Quality Management Continuous Improvement .Evolution and Adaptation in Managerial Accounting E-Business Service vs.

Cost Management Systems Objectives Measure the cost of resources consumed. Cost Management System . Identify and eliminate non-value-added costs.

Identify and evaluate new activities that can improve performance.Cost Management Systems Objectives Determine efficiency and effectiveness of major activities. Cost Management System .

Inc. .Learning Objective 8 McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies. All rights reserved.

Strategic Cost Management and the Value Chain Product Design Production Research and Development Securing raw materials and other resources Marketing Distribution Customer Service Start .

Theory of Constraints A sequential process of identifying and removing constraints in a system. Restrictions or barriers that impede progress toward an objective .

All rights reserved. .Learning Objective 9 McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies. Inc.

. there will likely be more reforms in corporate governance and accounting.Ethical Climate of Business The corporate scandals experienced over the last few years have shown us that unethical behavior in business is wrong in a moral sense and can be disastrous in the economy. In addition to Sarbanes-Oxley.

Learning Objective 10 McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies. Inc. . All rights reserved.

Administers Certified Management Accountant program Develops Standards of Ethical Conduct for Management Accountants .Managerial Accounting as a Career Professional Organizations Institute of Management Accountants (IMA) Publishes Management Accounting and research studies.

Professional Ethics Competence Confidentiality Integrity Credibility .

End of Chapter 1 .

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