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Managerial Accounting:
An Introduction To Concepts, Methods, And Uses
9th Edition
Maher, Stickney and Weil
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Chapter 1
Overview and Basic Concepts
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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.
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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)
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Compare Financial & Managerial Accounting
Financial Accounting
Managerial Accounting
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Discuss Implementing Strategies
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Review Misuses of Accounting Information
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Key Financial Players
President and
Chief Operating Officer
Industrial Department
Staff and Administrative Departments
Finance Vice-President
OtherVice-Presidents
Including Engineering,Legal, Employee Relations
Treasurer Controller Internal Audit
CostAccounting
FinancialReporting
Tax
Partial Organizational Chart
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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
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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
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Define the Following Basic Cost Concepts (Slide 1 of
4)
A cost
Opportunity cost
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Basic Cost Concepts (Slide
2 of 4)
Distinguish between a cost and an expense
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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
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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
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Income Statement For External Reporting
Sales Revenue $400,000
Less Cost of Goods Sold 210,000
Gross Margin $190,000
Less Mktg. & Admin Exp. 80,000
Net Income Before Taxes $110,000
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Contribution Margin Format Income Statement
Sales Revenue $400,000
Less Variable Costs:
Variable Cost of Sales $160,000
Variable Mktg & Admin 8,000 168,000
Contribution Margin $232,000
Less Fixed Costs:
Fixed Cost of Sales $50,000
Fixed Mktg & Admin 72,000 122,000
Net Income Before Taxes $110,000
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Match Terms & Definitions
Cost
Expense
Cost Object
Direct Cost
Opportunity Cost
Indirect Cost
The return that could not be realized from the best forgone alternative use of a resource
A cost charged against revenue
Costs not directly related to a cost object
Any item for which a manager wants to measure a cost
Costs directly related to a cost object
A sacrifice of resources
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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
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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
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Describe the Value Chain
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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
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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