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Copyright

2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Chapter 1

The Changing Roleof Managerial

Accounting in a

Global BusinessEnvironment

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Copyright

2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Learning

Objective

1

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1-3

Managerial accounting is the process of

Identifying

Measuring

Analyzing

Interpreting Communicating information

Define Managerial Accounting

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2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Learning

Objective

2

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Managing Resources, Activities,

and People

1-5

An organization . . .

Acquires Resources

Hires People

Organized set

of activities

Decision

Making

Planning

Directing

Controlling

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Copyright

2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Learning

Objective

3

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1-7

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 organizations goals.

Measuring performance of subunits, activities,managers, and other employees.

Assessing the organizations competitive position.

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1-8

The Balanced Scorecard

Financial PerspectiveGoals Measures

Customer Perspective

Goals Measures

Operations Perspective

Goals Measures

Innovation Perspective

Goals Measures

How do welook to

owners?

How do

customers

see us?How can we

continue to

improve?

In which

activities

must we

excel?

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Managerial versus Financial

Accounting

1-10

Accounting System

(accumulates financial and

managerial accounting data in the

cost accounting system)

Managerial Accounting

Information for decision

making, planning, and

controlling anorganizations

operations.

Financial Accounting

Published financial

statements and other

financial reports.

Internal

Users

External

Users

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Managerial versus Financial Accounting

1-11

Managerial Accounting Financial Accounting

Users of Information

Managers, within the organization. Interested parties, outside the orga

Regulation Not required and unregulated,

since it is intended only for

management.

Required and must conform to

generally accepted accounting

principles. Regulated by the

Financial Accounting Standards

Board, and, to a lesser degree,

the Securities and Exchange

Commission.

Source of Data The organization's basic

accounting system, plus various

other sources, such as rates of

effective products manufactured,

physical quantities of material and

labor used in production,

occupancy rates in hotels and

hospitals, and average take-off

delays

Almost exclusively drawn from the

organization's basic accounting

system, which accumulates

financial information.

Nature of Reports

and Procedures

Reports often focus on subunits

within the organization, such as

departments, divisions,

geographical regions, or product

lines. Based on a combination of

Reports focus on the enterprise in

its entirety. Based almost

exclusively on historical

transaction data.

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2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Learning

Objective

5

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Line and Staff Positions

1-13

A staff position supportsand assists line positions.

Example: A costaccountant in the

manufacturing plant.

A line position is directlyinvolved in achieving the

basic objectives of an

organization.

Example: Aproduction

supervisor in a

manufacturing plant.

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Learning

Objective

6

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Controller

1-15

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

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Internal Auditor

1-17

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 theeffectiveness of the

organizations accounting

system.

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2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Learning

Objective

7

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Evolution and Adaptation in

Managerial Accounting

1-20

E-Business

Service vs.

Manufacturing Firms

Emergence of New

Industries

Global Competition

Focus on the Customer

Cross-Functional Teams

Product Life Cycles

Time-Based

CompetitionInformation and

Communication

Technology

Just-in-Time Inventory

Total Quality Management

Continuous Improvement

hange

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Cost Management Systems

1-21

ObjectivesMeasure the cost of

resources consumed.

Identify and eliminatenon-value-added

costs.Cost

Management

System

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Cost Management Systems

1-22

ObjectivesDetermine efficiency

and effectiveness of

major activities.Identify and evaluate

new activities thatcan improve

performance.

Cost

Management

System

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2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Learning

Objective

8

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Strategic Cost Management and

the Value Chain

1-24

Product

Design

Research

and

Development

Securing raw

materials andother resources

Production

Marketing

Distribution

Customer

ServiceStart

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Theory of Constraints

1-25

A sequential process of identifying and

removing constraintsin a system.

Restrictions or barriers that impede

progress toward an objective

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Copyright

2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Learning

Objective

9

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Ethical Climate of Business

1-27

The corporate scandals experienced over the lastfew years have shown us thatunethical behaviorin business is wrong in a moral sense and can be

disastrous in the economy. In addition to

Sarbanes-Oxley, there will likely be more reformsin corporate governance and accounting.

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Copyright

2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Learning

Objective10

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Managerial Accounting as a

Career

1-29

Professional Organizations

Institute of Management Accountants (IMA)

Publishes

Management

Account ing

and research

studies.

Administers

Cert i f ied

Management

Accountant

program

Develops

Standards of

EthicalConduct for

Management

Accountants

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Professional Ethics

1-30

Competence

ConfidentialityIntegrity

Credibility

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End of Chapter 1