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Management Accounting: An

Overview

Management Accounting:
The process of identifying, measuring,
accumulating, analyzing, preparing,
interpreting, and communicating
information that helps managers fulfill
organizational objectives
Decisions supported by MA:

Pricing
Marketing
Investment
Division Performance Evaluation

Function of MA Information
Operational Control
Provide feedback information about the efficiency of tasks
performed
Product and Customer Costing
Measure the costs of resources used to produce a product
or service and to market and deliver the product/service to
customer
Management Control
Provide information on the performance of managers and
operating units
TOOLS:

Budgets (operating budget + capital budget)


Performance reports

Management Accounting Vs Financial


Accounting

Users
Freedom of Choice
Behavioral Implications
Time Focus
Time Span
Scope of Reports
Supporting Discipline

Organizations:
Institute of Management Accountant
VS
AICPA
CPA

CMA

Trends:
Shift from a manufactured-based to a
service-based company
2.
Increased global competition
3.
Advanced manufacturing technology
Recent Development:
Global business environment:
1.

Customer take charge


Competition Intensifies
live and let live live and let die
Change become constant

The New Paradigms

Customer focus strategy


Continous improvement
Organizational Systems
Quality of product depends on teamworks
cross-functional team
Result synergy

Forms learning
organization

Creates customer
value

The impacts on Management


Accounting

Value-added manufacturing
philosophy
Value-added efficiency concepts
Inventory management: just-in-time
and zero defect
Changes in cost behaviour concepts
Changes in product costing

Value-added manufacturing
philosophy

Each of manufacturing activity is


conducted to add the value of
products or services

Any activities that do not add the


value must be eliminated, and the
costs of those activities can not be
assigned to the cost of product.

Value-added Manufacturing

Cooper & Kaplan,


1991

Advanced Manufacturing Technology


Overarching Technology
Just in Time
Control

Total Quality

Planning:

Control:

Material requirement
Planning

Statistical Processing Control

Computer Integrated Manufacturing

Design:
Computer-aided design
Computer-aided engineering

Implementation:
Numerical control
Robotics
Flexible manufacturing system

Value-added efficiency
concepts
Efficiency is not just comparing output
and input
Throughput Time
=
Value-added time + Non value-added
time

Efficiency Concepts
VAT + NVAT
VAT

=1

PT
Throughput
Time

= MCE

Value-added Activity + Non-value Added


Activity
=
PT + IT + MT + Waiting/Storage Time

MCE = Manufacturing Cycle


Efficiency