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1. Forecasting and planning 2. Performance Evaluation 3. Cost determination, pricing and cost management 4. Operations
1. Forecasting and planning 2. Performance Evaluation 3. Cost determination, pricing and cost management 4. Operations
1.
Forecasting and planning
2.
Performance Evaluation
3.
Cost determination, pricing
and cost management
4.
Operations control and
management
5.
Incremental decision making
6.
Financial Reporting
7.
Motivation of managers
Forecasting and Planning 1. It means planning for the future. 2. The bases are historical data
Forecasting and Planning
Forecasting and Planning
  • 1. It means planning for the future.

2.

The

bases

are

historical

data

to

understand PAST RELATIONSHIP.

  • 3. This is in the form of BUDGET for it sets a plan of actions for the coming year.

4.

This

plan

or

budget

motivates

managers to achieve and creates a basis for evaluating actual results.

Forecasting and Planning 1. It means planning for the future. 2. The bases are historical data
Performance Evaluation 1. After decisions have been made and action taken, actual results flow in (and
Performance Evaluation 1. After decisions have been made and action taken, actual results flow in (and
Performance Evaluation
1.
After decisions have been made
and action taken, actual results
flow in (and reported in the
financial reports).
2.
Comparing actual plan to actual
results.
EVALUA
TION
3.
Differences helps evaluate the
performance of managers, business
segments, or even the entire firm.
4.
It will give insights where changes
will be made.
FORECASTING / BUDGETING By using FINANCIAL REPORTS
FORECASTING / BUDGETING By using FINANCIAL REPORTS
FORECASTING
/ BUDGETING
By using
FINANCIAL
REPORTS
COST DETERMINATION, PRICING, AND COST MANAGEMENT 1. The focus here is “WHAT IS THE TRUE COST
COST DETERMINATION, PRICING, AND COST MANAGEMENT
COST DETERMINATION, PRICING, AND COST MANAGEMENT
  • 1. The focus here is “WHAT IS THE TRUE COST OF A PRODUCT OR

SERVICE”?

  • 2. COST DETERMINATION is also known as Product Costing.
    3. PRICING can be market based or cost based.

  • 4. COST MANAGEMENT is finding

ways to control more efficiently the activities that incur costs.

PROFIT MAXIMIZATI ON INCREASE IN SELLING PRICE TO INCREASE REVENUE MINIMIZATION OF COSTS
PROFIT
MAXIMIZATI
ON
INCREASE IN
SELLING PRICE
TO INCREASE
REVENUE
MINIMIZATION OF COSTS
Operations Control and Improvement 1. By using various accounting tools, we can measure how well operating
Operations Control and Improvement
Operations Control and Improvement

1. By using various accounting tools, we can measure how well operating activities were managed.

  • 2. Accounting tools include FLEXIBLE BUDGETS, STANDARD COSTS, and COST CONTROL CHARTS that allow managers to monitor operating activities.

CONTINUOUS IMPROVEMENT STRATEGY It examines every aspect of a process and of entire process for increased
CONTINUOUS
IMPROVEMENT
STRATEGY
It examines every aspect
of a process and of entire
process for increased
efficiency, cost reduction,
and higher quality.
Incremental Decision Making This is the evaluation of the decision’s costs and benefits (COST-BENEFIT RELATIONSHIP). What
Incremental Decision Making
Incremental Decision Making
This is the evaluation of the decision’s costs and benefits (COST-BENEFIT RELATIONSHIP). What accounting information is
This is the evaluation of the decision’s
costs and benefits (COST-BENEFIT
RELATIONSHIP).
What accounting
information is needed?
1.
Where and when to sell and at
what price
Each decision has specific
information needs, an
2.
3.
Whether to make or buy
Where to use resources
analysis format and decision
rules. Future incremental
revenues and costs are
4.
Whether a segment should be
added or deleted
RELEVANT; Past costs are
IRRELEVANT.
FINANCIAL REPORTING Financial results are reported to both internal and external users. Financial statements are important
FINANCIAL REPORTING
FINANCIAL REPORTING

Financial

results

are

reported

to

both

internal and external users.

Financial statements are important

internally as indicators of how segments of

the business and THEIR MANAGERS are performing.

The performance of managers is measured

in the light of how investors, shareholders, creditors, tax authorities, and, in the public sector, voters view their results.

MOTIVATION OF MANAGERS This is the least important. Messages are some blunt, some others tempered by
MOTIVATION OF MANAGERS This is the least important. Messages are some blunt, some
MOTIVATION OF MANAGERS
This is the least important.
Messages
are
some blunt, some
MOTIVATION OF MANAGERS This is the least important. Messages are some blunt, some others tempered by

others tempered

by

motivate,

encourage,

intent

and

strong performances.

sent through

accounting numbers some subtle,

harsh, and

to

reward

1. The financial goal of the firm is to: • Maximize thee long-term wealth of shareholders,
  • 1. The financial goal of the firm is to:

Maximize thee long-term wealth of shareholders, or Maximize the present value of shareholders’ future cash flows from the firm.

  • 2. Corporate

managers,

on

the

other hand, have a strong interest on profits.

At a minimum, management must use its resources in a manner that attains desired goal in
At
a
minimum,
management must
use its resources in a
manner
that
attains
desired
goal
in
a
efficient manner.
TOP MANAGEMENT MIDDLE MANAGEMENT LOWER MANAGEMENT Generally face unstructured and semi- structured problems common strategic planning.
TOP MANAGEMENT MIDDLE MANAGEMENT LOWER MANAGEMENT
TOP
MANAGEMENT
MIDDLE
MANAGEMENT
LOWER MANAGEMENT

Generally face unstructured and semi-

structured problems common strategic planning.

to

Deals with semi-structured problems

relating primarily to obtaining and using resources effectively and efficiently.

Faces more structured tasks. Their

information needs are detailed, time dependent, and reported routinely.

GLOBALIZATION 1. This is being world-wide in scope or application. 2. This can also be defined
GLOBALIZATION 1. This is being world-wide in scope or application. 2. This can also be defined
GLOBALIZATION
1.
This is being world-wide in scope or application.
2.
This can also be defined as becoming universal.
GLOBALIZATION 1. This is being world-wide in scope or application. 2. This can also be defined
GLOBALIZATION 1. This is being world-wide in scope or application. 2. This can also be defined
VALUE CHAIN and VALUE ADDED 1. Value Chain looks strategically at each part of the firm’s
VALUE CHAIN and VALUE ADDED 1.
VALUE CHAIN and VALUE ADDED
1.

Value Chain looks strategically at each part of the firm’s operations and asks what key contribution each part makes to the competitive strength of the firm as a whole.

VALUE CHAIN and VALUE ADDED 1. Value Chain looks strategically at each part of the firm’s
2.
2.

Value Added is the increase in the worth of the firm, its products, and its activities.

VALUE CHAIN and VALUE ADDED 1. Value Chain looks strategically at each part of the firm’s
VALUE CHAIN and VALUE ADDED 1. Value Chain looks strategically at each part of the firm’s
VALUE CHAIN and VALUE ADDED 1. Value Chain looks strategically at each part of the firm’s
QUALITY ASSURANCE Ways or means to ensure that high quality of output is achieved, whether in
QUALITY ASSURANCE
QUALITY ASSURANCE

Ways or means to ensure that high quality of output is achieved, whether in terms of products , services or management.

  • 1. Total Quality Management Program (TQM)

  • 2. Quality Circles (QC)

  • 3. Continuous improvement program

  • 4. Employee empowerment processes

TECHNICAL EVOLUTION It the impacted mostly companies. 1. manufacturing Computer Aided Design (CAD). This is the
TECHNICAL EVOLUTION It the
TECHNICAL EVOLUTION
It
the

impacted

mostly

companies.

1.
1.
TECHNICAL EVOLUTION It the impacted mostly companies. 1. manufacturing Computer Aided Design (CAD). This is the

manufacturing

Computer Aided Design (CAD).
Computer
Aided
Design
(CAD).

This

is

the

use

of high-quality

graphics and software to create new

products

or

to

change

existing

products.

2. Computer Aided Manufacturing (CAM). Machines or entire
2.
Computer
Aided
Manufacturing
(CAM).
Machines
or
entire

production lines

are

run

and

coordinated by computers.

TECHNICAL EVOLUTION Management Information System (MIS). It allows information to be literally on the desktop of
TECHNICAL EVOLUTION Management Information System (MIS). It allows information to be literally on the desktop of
TECHNICAL EVOLUTION
Management Information
System
(MIS).
It
allows
information to be literally on
the
desktop
of
every
managers.
MANAGEMENT COMPLEXITY DOWSIZING. • Also known as “rightsizing” . • Common approach to large companies. •
MANAGEMENT COMPLEXITY DOWSIZING.
MANAGEMENT COMPLEXITY
DOWSIZING.

Also known as “rightsizing”. Common approach to large companies. To remove the entire layers of management and to make the organization “lean and mean”.

BENCHMARKING •
BENCHMARKING

A method of comparing operations, costs, productivity with world

class performers in those areas.

MANAGEMENT ACCOUNTING It is a branch of accounting that meets managers’ information needs. It is designed
MANAGEMENT ACCOUNTING
MANAGEMENT ACCOUNTING

It is a branch of accounting that meets managers’ information needs.

It is designed to assist managers.

Managers must define which data are relevant for a particular purpose and which are not.

1. 2. Accountant an internal integral part of The Management maintains accounting records, prepares financial statements,

1.

2.

Accountant an internal integral part of
Accountant
an
internal
integral
part
of

The

Management

maintains accounting records,

prepares financial statements,

generates

managerial reports and

analyses, and coordinates budgeting efforts.

He

is

advisor,

an

consultant,

and

an

management.

Competence: Practitioners of management accounting and financial management have a responsibility to:  Maintain an appropriate

Competence:

Practitioners of management accounting and financial management have a responsibility to:

Maintain an appropriate level of professional competence by ongoing development of

their knowledge and skills.

Perform their professional duties in accordance with relevant laws, regulations and

technical standards.

Prepare complete and clear reports and recommendations after appropriate analysis

of relevant and reliable information

Confidentiality: Practitioners of management accounting and financial management have a responsibility to:  Refrain from disclosing

Confidentiality:

Practitioners of management accounting and financial management have a responsibility to:

Refrain from disclosing confidential information acquired in the course of their work

except when authorized, unless legally obligated to do so.

Inform subordinates as appropriate regarding the confidentiality of information

acquired in the course of their work and monitor their activities to assure the

maintenance of that confidentiality

Refrain from using or appearing to use confidential information acquired in the

course of their work for unethical or illegal advantage either personally or through

third parties.

Integrity: Practitioners of management accounting and financial management have a responsibility to:  Avoid actual or

Integrity:

Practitioners of management accounting and financial management have a responsibility to:

Avoid actual or apparent conflicts of interest and advise all appropria te parties of any

potential conflict.

Refrain from engaging in any activity that would prejudice their ability to carry out

their duties ethically.

Refuse any

gift,

favor, or hospitality that

would influence

or would

appear to

influence their actions.

Refrain

from

either

activity

or

passively

subverting

the

attainment

of

the

organization's legitimate and ethical objectives.

 

Recognize and and communicate professional limitations or other constraints that

would preclude responsible judgment or successful performance of an activity.

 

Communicate

unfavorable

as

well

as

favorable

information

and

professional

judgment or opinion.

Refrain from engaging or supporting any activity that would discredit the profession.

Objectivity: Practitioners of management accounting and financial management have a responsibility to:  Communicate information fairly

Objectivity:

Practitioners of management accounting and financial management have a responsibility to:

Communicate information fairly and objectively

Disclose fully all relevant information that could reasonably be expected to influence

an intended user's understanding of the reports, comments, and recommendations

presented.

Resolution of Ethical Conflicts: In applying the standards of ethical conduct, practitioners of management accounting andfinancial

Resolution of Ethical Conflicts:

In

applying

the

standards

of

ethical

conduct,

practitioners

of management

accounting andfinancial management may encounter problems in identifying unethical

behavior or in resolving an ethical conflict. When faced with significant ethical issues

practitioners of management accounting and financial management should follow the

established policies of the organization bearing on the resolution of such conflict. If these

policies do not resolve the ethical conflict, such practitioner should consider the following

course of action.

 Discuss such problems with immediate superior except when it appears that superior is involved, in

Discuss such problems with immediate superior except when it appears that superior

is involved, in which case the problem should be presented to the next higher

managerial level. If a satisfactory resolution cannot be achieved when the problem is

initially presented, submit the issue to the next higher managerial level.

If the immediate superior is the chief executive officer or equivalent, the acceptable

reviewing authority may be a group such as the audit committee, executive

committee, board of directors, board of trustees, or owners. Contact with a level

above the immediate superior should be initiated only with the superior's knowledge.

assuming the superior

is

not

involved.

Except

where legally prescribed,

communication of such problems to authorities or individuals not employed or

engaged by the organization is not considered appropriate.

 Clarify relevant ethical issues by confidential discussion with an objective adviser to obtain a better

Clarify relevant ethical issues by confidential discussion with an objective adviser to

obtain a better understanding of possible course of action

Consult your own attorney as to legal obligations and rights concerning the ethical

conflict.

If the ethical conflict still exists after exhausting all levels of internal review, there

may be no other recourse on significant matters than to resign from the organization

and to submit an informative memorandum to an appropriate representative of the

organization. After resignation, depending on the nature of the ethical conflict, it may

also be appropriate to notify other parties.