The Changing Role of Managerial Accounting in A Dynamic Business Environment

Chapter 1
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
1-2
Managing Resources, Activities, and
People
An organization . . .
Directing
Acquires Resources Decision

Organized set Making
of activities
Controlling Planning
Hires People
1-3
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.
1-4
Managerial versus Financial Accounting
Accounting System
(accumulates financial and
managerial accounting data in the
cost accounting system)
Managerial Accounting Financial Accounting

Information for decision Published financial
making, planning, and statements and other
controlling an financial reports.
organization’s
operations.
Internal External
Users Users
1-5
Line and Staff Positions
 A line position is directly  A staff position supports and
involved in achieving the basic assists line positions.
objectives of an organization.  Example: A cost accountant in
 Example: A production the manufacturing plant.
supervisor in a manufacturing
plant.
1-6
Controller
The chief managerial and financial accountant is responsible for:
 Supervising accounting personnel.
 Preparation of information and reports, managerial and
financial.
 Analysis of accounting information.
 Planning and decision making.
1-7
Treasurer
Responsible for raising capital and safeguarding the organization’s
assets.
 Supervises relationships with financial institutions.
 Work with investors and potential
investors.
 Manages investments.
 Establishes credit policies.
 Manages insurance coverage
1-8
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 top
management regarding the
effectiveness of the
organization’s accounting
system.
1-9
Strategic Cost Management and the Value
Chain
Product
Design
Production
Research
and
Development Marketing
Securing raw
materials and Distribution
other resources
Customer
Start Service
1-10
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.
1-11
Cost Management Systems
Objectives
Measure the cost of
resources consumed.
Identify and eliminate
non-value-added costs.
Cost
Management
System
1-12
Cost Management Systems
Objectives
Determine efficiency and
effectiveness of major
activities.
Identify and evaluate new
activities that can improve Cost
performance. Management
System
1-13
Managerial Accounting as a Career
Professional Organizations
Institute of Management Accountants (IMA)
Develops
Publishes Administers
Standards of
Management Certified
Ethical
Accounting Management
Conduct for
and research Accountant
Management
studies. program
Accountants
1-14
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.
1-15
Professional Ethics
Competence
Confidentiality
Integrity
Credibility
1-16

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Chapter 1

The Changing Role of

Managerial accounting is the process of

Acquires Resources Decision

Managerial Accounting Financial Accounting

 Practical capacity allows for normal occurrences such as

Institute of Management Accountants (IMA)

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