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Chapter 1

The Changing Role of Managerial Accounting in a Global Business Environment

McGraw-Hill/Irwin

Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Define Managerial Accounting Managerial accounting is the process of  Identifying  Measuring  Analyzing  Interpreting  Communicating information 1-2 .

. . Directing Acquires Resources Organized set of activities Decision Making Controlling Planning Hires People 1-3 . Activities.Managing Resources. and People An organization .

• Motivating managers and other employees towards organization’s goals. activities. and other employees. managers. 1-4 .How Managerial Accounting Adds Value to the Organization • Providing information for decision making and planning. • Assessing the organization’s competitive position. • Assisting managers in directing and controlling activities. • Measuring performance of subunits.

Internal Users Financial Accounting Published financial statements and other financial reports. External Users 1-5 .Managerial versus Financial Accounting Accounting System (accumulates financial and managerial accounting data in the cost accounting system) Managerial Accounting Information for decision making. planning. and controlling an organization’s operations.

estimates. to a lesser degree. lines. Based on a combination of 1-6 historical data. financial information. divisions. the Securities and Exchange Commission.Managerial versus Financial Accounting Managerial Accounting Users of Information Managers. exclusively on historical geographical regions. Source of Data The organization's basic Almost exclusively drawn from the accounting system. physical quantities of material and labor used in production. such as rates of system. outside the organiz Required and must conform to generally accepted accounting principles. or product transaction data. and . occupancy rates in hotels and hospitals. Based almost departments. Regulated by the Financial Accounting Standards Board. plus various organization's basic accounting other sources. and. which accumulates effective products manufactured. and average take-off delays Nature of Reports Reports often focus on subunits Reports focus on the enterprise in and Procedures within the organization. such as its entirety. within the organization. Financial Accounting Interested parties. Regulation Not required and unregulated. since it is intended only for management.

– Example: A cost accountant in the manufacturing plant. 1-7 .Line and Staff Positions • A line position is directly involved in achieving the basic objectives of an organization. • A staff position supports and assists line positions. – Example: A production supervisor in a manufacturing plant.

Major Themes in Managerial Accounting Behavioral Issues Costs and Benefits Information and Incentives Evolution and Adaptation Managerial Accounting 1-8 .

Manufacturing Firms Product Life Cycles Time-Based Competition Emergence of New Industries Global Competition Focus on the Customer Cross-Functional Teams Change Information and Communication Technology Just-in-Time Inventory Total Quality Management Continuous Improvement 1-9 .Evolution and Adaptation in Managerial Accounting E-Business Service vs.

Cost Management System 1-10 .Cost Management Systems Objectives Measure the cost of resources consumed. Identify and eliminate non-value-added costs.

Cost Management System 1-11 .Cost Management Systems Objectives Determine efficiency and effectiveness of major activities. Identify and evaluate new activities that can improve performance.

Strategic Cost Management and the Value Chain Product Design Production Research and Development Securing raw materials and other resources Marketing Distribution Customer Service 1-12 Start .

Restrictions or barriers that impede progress toward an objective 1-13 .Theory of Constraints A sequential process of identifying and removing constraints in a system.

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. there will likely be more reforms in corporate governance and accounting. In addition to Sarbanes-Oxley. 1-14 .

Administers Certified Management Accountant program Develops Standards of Ethical Conduct for Management Accountants 1-15 .Managerial Accounting as a Career Professional Organizations Institute of Management Accountants (IMA) Publishes Management Accounting and research studies.

Professional Ethics Competence Confidentiality Integrity Credibility 1-16 .

End of Chapter 1 1-17 .

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