Download Managerial Accounting: An Introduction To Concepts, Methods, And

Managerial
Accounting:
An Introduction To Concepts,
Methods, And Uses
9th Edition
Maher, Stickney and Weil
Chapter 1
Overview and Basic
Concepts
Learning Objectives (Slide 1 of 2)
 Distinguish between managerial &
financial accounting.
 Understand how managers can use
accounting information to implement
strategies.
 Identify the key financial players in the
organization.
 Understand managerial accountants’
professional environment and ethical
responsibilities.
 Master the concept of cost.
Learning Objectives (Slide 2 of 2)




Compare and contrast income statements
prepared for managerial use and those
prepared for external reporting.
Describe how managerial accounting
supports modern production environments.
Understand the importance of effective
communication between accountants and
users of managerial accounting
information.
Understand the ethical standards that
comprise the Institute of Management
Accountants’ Code of Ethics. (Appendix 1.1)
Compare Financial
& Managerial Accounting
Financial
Accounting
Managerial
Accounting
Discuss Implementing
Strategies
Review Misuses of
Accounting Information
Key Financial Players
Partial Organizational Chart
President and
Chief Operating Officer
Industrial
Department
Staff and
Administrative
Departments
Finance
Vice-President
Other
Vice-Presidents
Including Engineering,
Legal, Employee Relations
Treasurer
Controller
Internal Audit
Cost
Accounting
Financial
Reporting
Tax
Professional Environment
(Slide 1 of 2)
Institute of Management Accountants
(IMA)
 Sponsors Certified Management Accountant
& Certified Financial Management programs
 Publishes a journal, policy statements and
research studies on accounting issues
Certified Public Accountant
Cost Accounting Standards Board
 Sets accounting standards for contracts
between the U.S. government and defense
contractors
Professional Environment
(Slide 2 of 2)
 Ethical issues, while always
important, have taken on added
significance due to recent
accounting failures
 The IMA has developed a Code of
Conduct mandating that
management accountants have a
responsibility to maintain the
highest levels of ethical conduct
Define the Following Basic
Cost Concepts (Slide 1 of 4)
 A cost
 Opportunity cost
Basic Cost Concepts (Slide 2 of 4)
 Distinguish between a cost and an
expense
Basic Cost Concepts (Slide 3 of 4)
 A cost object is any item for which
the manager wishes to measure
cost
 Differentiate between Direct and
Indirect Costs
Basic Cost Concepts (Slide 4 of 4)
 What is the distinction between
fixed and variable costs? It is
important since it affects strategic
decision-making
Income Statement For
External Reporting
Sales Revenue
Less Cost of Goods Sold
Gross Margin
$400,000
210,000
$190,000
Less Mktg. & Admin Exp.
80,000
Net Income Before Taxes
$110,000
Contribution Margin
Format Income Statement
Sales Revenue
$400,000
Less Variable Costs:
Variable Cost of Sales
Variable Mktg & Admin
$160,000
8,000
Contribution Margin
168,000
$232,000
Less Fixed Costs:
Fixed Cost of Sales
$50,000
Fixed Mktg & Admin
72,000
Net Income Before Taxes
122,000
$110,000
Match Terms & Definitions
Cost
Opportunity
Cost
The return that could not be
realized from the best forgone
alternative use of a resource
A cost charged against revenue
Expense
Costs not directly related to a
cost object
Cost Object
Any item for which a manager
wants to measure a cost
Direct Cost
Costs directly related to a cost
object
Indirect Cost
A sacrifice of resources
Managing Costs
 Be able to identify cost behavior & present costs in
this manner in order to effectively plan & manage
them
 Activity-based management (ABM) requires
understanding how the activities produce a product
& affect its cost, therefore by managing the
activities you can control its costs
 Effective cost control requires an understanding of
how producing a product involves activities & how
those activities cause costs to be incurred
 Activity-based management studies the need for
activities & whether they are operating efficiently
Value-Added Activities
Value-added activities increase the
product’s service to customers
 Managers try to eliminate non-value-added
activities to reduce costs without reducing
the product’s service potential to
customers
The value chain describes the linked set
of activities that add value to the
products or services of the
organization
Describe the Value Chain
Managerial Accounting in Modern
Production Environments
 Key developments that reshaped
Managerial Accounting include:
 Integrated information systems
 Web hosting
 Just-in-time and lean production
 Total Quality Management
 Theory of constraints
 Benchmarking and continuous
improvement
If you have any comments or suggestions concerning
this PowerPoint Presentation for Managerial
Accounting, An Introduction To Concepts, Methods,
And Uses please contact:
Dr. Michael Blue, CFE, CPA, CMA
[email protected]
Bloomsburg University of Pennsylvania