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Chapter 1

Chapter 1. The Changing Role of Managerial Accounting in a Dynamic Business Environment. Learning Objective 1. Define Managerial Accounting. Managerial accounting is the process of Identifying Measuring Analyzing Interpreting Communicating information. Learning Objective 2.

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Chapter 1

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  1. Chapter 1 The Changing Role of Managerial Accounting in a Dynamic Business Environment

  2. Learning Objective1

  3. Define Managerial Accounting • Managerial accounting is the process of • Identifying • Measuring • Analyzing • Interpreting • Communicating information

  4. Learning Objective2

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

  6. Learning Objective3

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

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

  9. Learning Objective4

  10. 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. Financial Accounting Published financial statements and other financial reports. External Users Internal Users

  11. Managerial versus Financial Accounting

  12. Learning Objective5

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

  14. Learning Objective6

  15. 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

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

  17. Internal Auditor Responsible for reviewing accounting procedures, records, and reports in both the controller’s and the treasurer’s area of responsibility. • Expresses an opinion to topmanagement regarding theeffectiveness of theorganizations accountingsystem.

  18. Learning Objective7

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

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

  21. Cost Management Systems Objectives • Measure the cost of resources consumed. • Identify and eliminate non-value-added costs. CostManagementSystem

  22. Cost Management Systems Objectives • Determine efficiency and effectiveness of major activities. • Identify and evaluate new activities that can improve performance. CostManagementSystem

  23. Learning Objective8

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

  25. Theory of Constraints A sequential process of identifying and removing constraintsin a system. Restrictions or barriers that impedeprogress toward an objective

  26. Learning Objective9

  27. 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, there will likely be more reforms in corporate governance and accounting.

  28. Learning Objective10

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

  30. Professional Ethics • Competence • Confidentiality • Integrity • Credibility

  31. End of Chapter 1

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