goal of managerial accounting the goal of managerial accounting is to provide the information...
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Goal of Managerial AccountingGoal of Managerial AccountingGoal of Managerial AccountingGoal of Managerial Accounting
The goal of Managerial Accounting is to provide the information managers need for planning, control, and decision making.
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PlanningPlanningPlanningPlanning
Planning Budgets for Planning
– Profit Budget– Cash-Flow Budget– Production Budget
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ControlControlControlControl
Control Performance Reports for Controls Management by Exception
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Decision MakingDecision MakingDecision MakingDecision Making
The profitability and survival of a company depends on how well managers make decisions.
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Planning and Control Planning and Control ProcessProcess
Planning and Control Planning and Control ProcessProcess
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A Comparison of Managerial A Comparison of Managerial and Financial Accountingand Financial Accounting
A Comparison of Managerial A Comparison of Managerial and Financial Accountingand Financial Accounting
Internal versus External Users
Need to Use GAAP
Detail of Information
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A Comparison of Managerial A Comparison of Managerial and Financial Accountingand Financial Accounting
A Comparison of Managerial A Comparison of Managerial and Financial Accountingand Financial Accounting
Emphasis on Nonmonetary Information
Emphasis on the Future
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Cost TerminologyCost TerminologyCost TerminologyCost Terminology
Variable Costs Change in proportion to changes in
volume or activity
Fixed Costs Do not change in response to
changes in volume or activity
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Cost TerminologyCost TerminologyCost TerminologyCost Terminology
Sunk Costs Costs incurred in the past that are
not relevant to present decisions
Opportunity Costs Values of benefits foregone when
selecting on alternative over another
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Cost TerminologyCost TerminologyCost TerminologyCost Terminology
Direct Costs Directly traceable to a product,
activity, or department
Indirect Costs Cannot be directly traced to a
product, activity, or department
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Direct and Indirect CostDirect and Indirect CostDirect and Indirect CostDirect and Indirect Cost
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Cost TerminologyCost TerminologyCost TerminologyCost Terminology
Controllable Costs Can be influenced by management
Noncontrollable Cost Cannot be influenced by
management
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Study Break #1Study Break #1Study Break #1Study Break #1
Which of the following is most likely to be a variable cost?a. Depreciationb. Cost of materialsc. Rentd. Advertising
Answer:b. Cost of materials
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Study Break #2Study Break #2Study Break #2Study Break #2
Which of the following is most likely to be a fixed cost?a. Cost of materialsb. Rentc. Assembly labor costd. Commissions
Answer:b. Rent
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Study Break #3Study Break #3Study Break #3Study Break #3
Costs incurred in the past are:a. Opportunity costsb. Direct costsc. Sunk costsd. Variable costs
Answer:c. Sunk costs
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Two Key Ideas in Managerial Two Key Ideas in Managerial AccountingAccounting
Two Key Ideas in Managerial Two Key Ideas in Managerial AccountingAccounting
Key Idea #1:
Decision making relies on incremental analysis Incremental Revenue Incremental Cost
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You Get What you Measure!You Get What you Measure!You Get What you Measure!You Get What you Measure!
Key Idea #2:You get what you measure!
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Information Age and Information Age and Managerial AccountingManagerial AccountingInformation Age and Information Age and
Managerial AccountingManagerial Accounting Value Chain
Software Systems Enterprise Resource Planning
Systems (ERP) Supply Chain Management Systems
(SCM) Customer Relationship
Management Systems (CRM)
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Value Chain for Milano Value Chain for Milano ClothiersClothiers
Value Chain for Milano Value Chain for Milano ClothiersClothiers
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Impact of SCMImpact of SCMImpact of SCMImpact of SCM
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Ethical ConsiderationsEthical ConsiderationsEthical ConsiderationsEthical Considerations
Ethical and Unethical Behavior Sarbanes-Oxley Act
A Framework for Ethical Decision Making
IMA Statement of Ethical Professional Practice
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Seven Question FrameworkSeven Question FrameworkSeven Question FrameworkSeven Question Framework
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Managerial Accounting Managerial Accounting PositionsPositions
Managerial Accounting Managerial Accounting PositionsPositions
Controller
Treasurer
Chief Information Officer (CIO)
Chief Financial Officer (CFO)
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Organizational ChartOrganizational ChartOrganizational ChartOrganizational Chart
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Example Exercise #1Example Exercise #1Example Exercise #1Example Exercise #1 In the past year, Williams Mold & Machine
had sales of $8,000,000 and total production costs of $6,000,000. In the coming year, the company believes that sales ad production can be increased by 30%, but this will require adding a second production shift to work from 4:00 PM to 1:00 AM.
1. Indicate three production costs that are likely to increase because of adding a second production shift.
2. What production cost most likely will not increase when the second shift is added?
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Example Exercise #1 Example Exercise #1 SolutionSolution
Example Exercise #1 Example Exercise #1 SolutionSolution
Three production costs Material costs, workers’ salaries,
and benefits are all likely to increase
Which production cost most likely will not increase? Depreciation of the building will not
increase
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CFO in JapanCFO in JapanCFO in JapanCFO in Japan
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Making Business DecisionsMaking Business DecisionsMaking Business DecisionsMaking Business Decisions
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