240 likes | 511 Views
Cost Accounting. Dr. Baldwin University of Arkansas – Fort Smith Fall 2010. CHAPTER 1. The Accountant’s Role in the Organization. Accounting Disciplines. Financial Accounting focus on external users and GAAP rules Managerial Accounting –
E N D
Cost Accounting Dr. Baldwin University of Arkansas – Fort Smith Fall 2010
CHAPTER 1 The Accountant’s Role in the Organization
Accounting Disciplines • Financial Accounting • focus on external users and GAAP rules • Managerial Accounting – • focus on internal users and is not necessarily GAAP-driven. Also provides data for financial accounting. This includes: • Cost Accounting • Cost Management
Some Major Differences between Financial and Managerial Accounting Managerial Financial Communicate Financial Position Purpose External Stakeholders Internal Managers Primary Users Future Oriented Focus Past Oriented Rules GAAP Cost-benefit Time Span Varies Annual/Quarter
Strategy and Management Accounting • Strategy • specifies how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its objectives • Strategic Cost Management • focuses specifically on the cost dimension within the overall strategy
Strategy and Management Accounting • Accountants have become much more involved in strategy development. • It is consistent with their role in developing forward looking data. • They can provide relevant information about the sources of competitive advantage.
Strategy and Management Accounting • Management accounting helps answer questions such as: • Who are our most important customers? • What substitute products exist? • What is our critical resource? • Will we have enough cash to support our strategy?
Course Themes • Customer Focus • Key success factors • Cost and efficiency • Quality (TQM) • Time • Innovation • Continuous improvement • Value Chain & Supply Chain
Management Accounting and Value • Creating value is an important part of planning and implementing strategy • Value • is the usefulness a customer gains from a company’s product or service • Value Chain • is the sequence of business functions in which customer usefulness is added to products or services
Management Accounting and Value • The Value Chain: • Research and Development • Design • Production • Marketing • Distribution • Customer Service • Management accounting can provide information in each of these areas • Analysis can also include the supply chain
Supply Chain • Describes the flow of goods, services, and information from cradle to grave. • At the extreme, this can include the mining of raw materials to disposal of recycled products. • The supply chain may be spread out over many entities. • See page 8 for an example.
Key Success Factors • The dimensions of performance that customers expect, and that are key to the success of a company include: • Cost and efficiency • Quality • Time • Innovation
Planning and Control Systems • Planning • selects goals, predicts results, decides how to attain goals, and communicates this to the organization • Budget – the most important planning tool • Control • takes actions that implement the planning decision, decides how to evaluate performance, and provides feedback to the organization
Management Decisions: 5-Step Process • An accounting system must enable managers to work through issues to make decisions • Planning phase • Identify problems and uncertainties • Obtain information • Make predictions about the future • Choosing among alternatives • Control phase • Implement plans, Evaluate performance (scorekeeping and attention directing), and Provide feedback • Feedback is necessary to link the two types of activities Cost Accounting
Management Accounting Guidelines • Cost – benefit approach is commonly used: benefits generally must exceed costs as a basic decision rule • Behavioral and Technical Considerations • people are involved in decisions, not just dollars and cents • Different definitions of cost may be used for different applications
Management Accounting Roles • Problem Solver • Scorekeeper • Attention Director
Organizational Structure and the Management Accountant • A typical structure might include: • CEO • CFO • Controller – responsible for managerial and financial accounting • Treasury • Risk Management • Taxation • Internal Audit
CFO • oversees all financial operations • Controllership • Treasury • Risk management • Taxation • Investor relations • Internal audit Cost Accounting
Controller • The controller is primarily responsible for the financial and managerial accounting and reporting of information. • Requires • Technical and analytical competence • Behavioral and interpersonal skills Cost Accounting
Professional Ethics • The four standards of ethical conduct for management accountants as advanced by the Institute of Management Accountants: • Competence • Confidentiality • Integrity • Objectivity
Resolution Of Ethical Conflict • Discuss problem with supervisor and up the chain of command • If issue is still unresolved, discuss with an objective advisor. • Consult an attorney if necessary. • If unresolved, may need to resign Cost Accounting
End of Chapter 1 • Just a review of things you already learned in Managerial Accounting. • Now, let’s move forward!