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4) Variable costing
Overview: Absorption and variable costing
Income comparison of absorption and variable costing
Advantages of variable costing and the contribution approach
Overview of Course
5) Cost-Volume-Profit (CVP) relationships
The Equation Method; Contribution Margin Method; Graphical Method
Break-even analysis/point: in units and dollars
The margin of safety
The concept of sales mix
Assumptions of CVP analysis
8) Variance Analysis
The need for standard costs; setting standard costs
Using standard costs to calculate variances
Direct material, direct labour, variable and fixed overhead variances
Analyze variances
Journal entries to record variances
Overview of Course
9) Flexible budgets
Static vs flexible budgets
Characteristics of a flexible budget
Developing the flexible budget
CHAPTER 1
1-8
Define Managerial Accounting
Identifying
Measuring
Analyzing
Interpreting
Communicating information
1-9
Learning Objective 2
1-10
Managing Resources, Activities, and
People
An organization . . .
Directing
Controlling Planning
Hires People
1-11
Learning Objective 3
1-12
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
organizations goals.
Measuring performance of subunits, activities, managers, and
other employees.
Assessing the organizations competitive position.
1-13
The Balanced Scorecard
How do we Financial Perspective
look to Goals Measures
In which
owners? activities
must we
excel?
Customer Perspective Operations Perspective
Goals Measures Goals Measures
How do
customers
see us?
How can we
Innovation Perspective continue to
Goals Measures improve?
1-14
Strategy and Management Accounting
Management accounting helps answer important questions
such as:
1-16
Managerial versus Financial Accounting
Accounting System
(accumulates financial and
managerial accounting data in the
cost accounting system)
1-20
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.
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Learning Objective 6
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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.
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Treasurer
Responsible for raising capital and safeguarding the organizations
assets.
Supervises relationships with financial institutions.
Work with investors and potential
investors.
Manages investments.
Establishes credit policies.
Manages insurance coverage.
1-24
Internal Auditor
Responsible for reviewing accounting procedures, records, and reports
in both the controllers and the treasurers area of responsibility.
Expresses an opinion to top
management regarding the
effectiveness of the
organizations accounting
system.
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Learning Objective 7
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Strategic Cost Management and the Value
Chain
Product
Design
Production
Research
and
Development Marketing
Securing raw
materials and Distribution
other resources
Customer
Start Service
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Learning Objective 8
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Capacity
Theoretical Capacity is the upper limit on the amount of
goods or services if everything works perfectly.
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Cost Management Systems
Objectives
Measure the cost of
resources consumed.
Identify and eliminate
non-value-added costs.
Cost
Management
System
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Cost Management Systems
Objectives
Determine efficiency and
effectiveness of major
activities.
Identify and evaluate new
activities that can improve Cost
performance. Management
System
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Learning Objective 9
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Managerial Accounting as a Career
Professional Organizations
Develops
Publishes Administers
Standards of
Management Certified
Ethical
Accounting Management
Conduct for
and research Accountant
Management
studies. program
Accountants
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Learning Objective 10
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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.
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IMA Codes of Professional Ethics
Competence
Confidentiality
Integrity
Credibility (being
objective)
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to gain credibility
End of Chapter 1
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