Chapter 1 - The changing role of managerial accounting in a dynamic business environment. After completing this chapter, you should be able to: Define managerial accounting and describe its role in the management process; explain four fundamental management processes that help organizations attain their goals; list and describe five objectives of managerial accounting activity;...
Chapter The Changing Role of Managerial Accounting in a Dynamic Business Environment Copyright © 2014 McGraw-Hill Education All rights reserved No reproduction or distribution without the prior written consent of McGraw-Hill Education Define Managerial Accounting Managerial accounting is the process of Identifying Measuring Analyzing Interpreting Communicating information 12 Managing Resources, Activities, and People An organization Directing Acquires Resources Hires People Organized Organized set set of of activities activities Controlling Decision Making Planning 13 How Managerial Accounting Adds Value to the Organization Providing Providinginformation informationfor for decision decisionmaking makingand and planning planning Assisting Assistingmanagers managersin indirecting directingand andcontrolling controlling activities activities Motivating Motivatingmanagers managersand andother other employees employeestowards towards organization’s organization’sgoals goals Measuring Measuringperformance performanceof of subunits, subunits, activities, activities, managers, managers, and andother other employees employees Assessing Assessingthe theorganization’s organization’scompetitive competitiveposition position 14 Managerial versus Financial Accounting Accounting Accounting System System (accumulates (accumulates financial financial and and managerial managerial accounting accounting data data in in the the cost cost accounting accounting system) system) Managerial Managerial Accounting Accounting Information Information for for decision decision making, making, planning, planning, and and controlling controlling an an organization’s organization’s operations operations Internal Users Financial Financial Accounting Accounting Published Published financial financial statements statements and and other other financial financial reports reports External Users 15 Line and Staff Positions A A line lineposition positionis isdirectly directly involved involvedin inachieving achievingthe the basic basicobjectives objectivesof of an an organization organization Example: Example: A A production production A A staff staff position positionsupports supportsand and assists assistsline linepositions positions Example: Example: A A cost cost accountant accountantin inthe the manufacturing manufacturingplant plant supervisor supervisorin inaa manufacturing manufacturingplant plant 16 Controller The Thechief chief managerial managerial and andfinancial financial accountant accountantis is responsible responsiblefor: for: Supervising Supervisingaccounting accountingpersonnel personnel Preparation Preparationof of information informationand andreports, reports,managerial managerial and and financial financial Analysis Analysisof of accounting accountinginformation information Planning Planningand anddecision decisionmaking making 17 Treasurer Responsible Responsiblefor forraising raisingcapital capital and andsafeguarding safeguardingthe the organization’s organization’sassets assets Supervises Supervisesrelationships relationshipswith withfinancial financial institutions institutions Work Workwith withinvestors investorsand andpotential potential investors investors Manages Managesinvestments investments Establishes Establishescredit creditpolicies policies Manages Managesinsurance insurancecoverage coverage 18 Internal Auditor Responsible Responsiblefor forreviewing reviewingaccounting accountingprocedures, procedures,records, records,and and reports reportsin inboth boththe thecontroller’s controller’sand andthe thetreasurer’s treasurer’sarea areaof of responsibility responsibility Expresses Expressesan anopinion opinionto totop top management managementregarding regardingthe the effectiveness effectivenessof of the the organization’s organization’saccounting accounting system system 19 Strategic Cost Management and the Value Chain Product Product Design Design Research Research and and Development Development Securing Securing raw raw materials materials and and other other resources resources Start Production Production Marketing Marketing Distribution Distribution Customer Customer Service Service 110 Capacity Theoretical Capacity is the upper limit on the amount of goods or services if everything works perfectly Practical capacity allows for normal occurrences such as cash register downtime and cashier fatigue or illness 111 Cost Management Systems Objectives Objectives Measure Measurethe thecost costof of resources resourcesconsumed consumed Identify Identifyand andeliminate eliminate non-value-added non-value-addedcosts costs Cost Management System 112 Cost Management Systems Objectives Objectives Determine Determineefficiency efficiency and andeffectiveness effectivenessof of major major activities activities Identify Identifyand andevaluate evaluate new newactivities activitiesthat thatcan can improve improveperformance performance Cost Management System 113 Managerial Accounting as a Career Professional Organizations Institute of Management Accountants (IMA) Publishes Publishes Management Management Accounting Accounting and and research research studies studies Administers Administers Certified Certified Management Management Accountant Accountant program program Develops Develops Standards Standards of of Ethical Ethical Conduct Conduct for for Management Management Accountants Accountants 114 Ethical Climate of Business The Thecorporate corporatescandals scandalsexperienced experiencedover over the thelast lastfew few years yearshave haveshown shownus usthat thatunethical unethical behavior behavior in inbusiness business is iswrong wrongin ina amoral moral sense senseand andcan canbe bedisastrous disastrousin inthe the economy economy In Inaddition additionto to Sarbanes-Oxley, Sarbanes-Oxley, there therewill will likely likely be bemore morereforms reformsin incorporate corporategovernance governanceand and accounting accounting 115 Professional Ethics Competence Confidentiality Integrity Credibility 116 ... 1? ?4 Managerial versus Financial Accounting Accounting Accounting System System (accumulates (accumulates financial financial and and managerial managerial accounting accounting data data in in... accountingpersonnel personnel Preparation Preparationof of information informationand andreports, reports ,managerial managerial and and financial financial Analysis Analysisof of accounting accountinginformation... accountinginformation information Planning Planningand anddecision decisionmaking making 1? ?7 Treasurer Responsible Responsiblefor forraising raisingcapital capital and andsafeguarding safeguardingthe