Upload
ritoban-sengupta
View
224
Download
0
Embed Size (px)
Citation preview
8/6/2019 Ch01-Role of Cost Acct
1/53
The Accountants Role
in the Organization
8/6/2019 Ch01-Role of Cost Acct
2/53
1 - 2
Describe how cost
accounting supports
management accounting
and financial accounting.
8/6/2019 Ch01-Role of Cost Acct
3/53
1 - 3
Management Accounting
It measures and reports financial and
nonfinancial information that helpsmanagers make decisions to fulfill the
goals of an organization.
8/6/2019 Ch01-Role of Cost Acct
4/53
1 - 4
Financial Accounting
Its focus is on reporting to external parties.
It provides financial statements based on
generally accepted accounting principles.
It measures and records business transactions.
8/6/2019 Ch01-Role of Cost Acct
5/53
1 - 5
Cost Accounting
It provides information for both management
accounting and financial accounting.It measures and reports financial
and nonfinancial data.
8/6/2019 Ch01-Role of Cost Acct
6/53
1 - 6
Cost Management
It describes the activities of managers in
planning and control of costs.
It is a key part of general management
strategies and their implementation.
It includes the continuous reduction of costs.
8/6/2019 Ch01-Role of Cost Acct
7/53
1 - 7
Understand how management
accountants affect
strategic decisions.
8/6/2019 Ch01-Role of Cost Acct
8/53
1 - 8
Strategic Cost Management
Developing strategy
Building resources and capabilities
Implementing strategy
8/6/2019 Ch01-Role of Cost Acct
9/53
1 - 9
Strategic Cost Management
Current
Assets
Long-Term
Productive
Assets
Intangible
Assets
Building resources and capabilities
8/6/2019 Ch01-Role of Cost Acct
10/53
1 - 10
Distinguish between the
planning and control
decisions of managers.
8/6/2019 Ch01-Role of Cost Acct
11/53
1 - 11
Planning and ControllingManagement Decision Management Accounting System
Planning
Control
Performance
Evaluation
Budgets
AccountingSystem
PerformanceReports
Fee
db
ac
k
8/6/2019 Ch01-Role of Cost Acct
12/53
1 - 12
Planning and Controlling
What is planning?
Setting
goals
Predicting
results
Deciding how
to attain goals
8/6/2019 Ch01-Role of Cost Acct
13/53
1 - 13
Planning and Controlling
What is control?
Deciding
andtaking
actions
Deciding on
performanceevaluation
and feedback
8/6/2019 Ch01-Role of Cost Acct
14/53
1 - 14
Planning and Controlling
What are budgets?
They are
quantitative
expressionsof a proposed
plan of action.
They aid in the
coordination
andimplementation
of the plan.
8/6/2019 Ch01-Role of Cost Acct
15/53
1 - 15
Planning and Controlling
What are performance reports?
These are reports that
compare actual resultswith budgeted amounts.
8/6/2019 Ch01-Role of Cost Acct
16/53
1 - 16
Performance Report Example
Budget Actual Variance
Revenues $59,000 $60,000 $1,000 F
Cost of goods sold 42,000 43,400 1,400 U
Wages 6,700 7,000 300 U
General 1,300 900 400 FFixed costs 5,000 5,000 0
Operating income $ 4,000 $ 3,700 $ 300 U
Boone Shop, July 2003
8/6/2019 Ch01-Role of Cost Acct
17/53
1 - 17
Performance Report Example
Actual cost of goods sold were
72% of revenues instead of the budgeted 71%.Budget % Actual %
Revenues $59,000 100 $60,000 100
Cost of goods sold 42,000 71 43,400 72Gross margin $17,000 29 $16,600 28
8/6/2019 Ch01-Role of Cost Acct
18/53
1 - 18
Feedback
This involves managers examining past performance
and systematically exploring alternative ways tomake better informed decisions in the future.
8/6/2019 Ch01-Role of Cost Acct
19/53
1 - 19
Distinguish among the problem-
solving, scorekeeping, and
attention-directing roles of
management accountants.
8/6/2019 Ch01-Role of Cost Acct
20/53
1 - 20
Problem Solving
This involves comparative analysis
for decision making.This role asks: Of the several alternatives
available, which is the best?
8/6/2019 Ch01-Role of Cost Acct
21/53
1 - 21
Scorekeeping
This involves accumulating data and
reporting reliable results toall levels of management.
This role asks: How is the business doing?
8/6/2019 Ch01-Role of Cost Acct
22/53
1 - 22
Attention Directing
This involves helping managers
properly focus their attention.This role asks: Which opportunities and
problems should be emphasized first.
Attention directing should focus on allopportunities to add value to an organization,
not just cost-reduction opportunities.
8/6/2019 Ch01-Role of Cost Acct
23/53
1 - 23
Identify four themes managers
need to consider for
attaining success.
8/6/2019 Ch01-Role of Cost Acct
24/53
1 - 24
Key Themes in Management
Decision Making
Customer Focus
Value Chainand
Supply ChainAnalysis
Key Success Factors:Cost and Efficiency,
Time, Quality,Innovation
ContinuousImprovement
andBenchmarking
8/6/2019 Ch01-Role of Cost Acct
25/53
1 - 25
Customer Focus
The challenge facing managers is to continue
investing sufficient (but not excessive)resources in customer satisfaction
such that profitable customers
are attracted and retained.
The challenge facing managers is to continue
investing sufficient (but not excessive)resources in customer satisfaction
such that profitable customers
are attracted and retained.
8/6/2019 Ch01-Role of Cost Acct
26/53
1 - 26
Value Chain and
Supply Chain Analysis
This theme has two related aspects:
1. Treat each of the business functions in the valuechain as an essential and valued contributor.
1. Treat each of the business functions in the value
chain as an essential and valued contributor.
2. Integrate and coordinate the efforts of all businessfunctions in addition to developing the capabilities
of each individual business function.
2. Integrate and coordinate the efforts of all businessfunctions in addition to developing the capabilities
of each individual business function.
8/6/2019 Ch01-Role of Cost Acct
27/53
1 - 27
Value Chain and
Supply Chain Analysis
Supply chain describes the flow of goods,
services, and information from cradle to grave,regardless of whether those activities occur in
the same organization or other organizations.
Supply chain describes the flow of goods,
services, and information from cradle to grave,regardless of whether those activities occur in
the same organization or other organizations.
8/6/2019 Ch01-Role of Cost Acct
28/53
1 - 28
Key Success Factors
These are operational factors that directly affect
the economic viability of the organization.
Cost organizations
are under continuouspressure to reduce costs.
Cost organizations
are under continuouspressure to reduce costs.
Quality customers
are expecting higherlevels of quality.
Quality customers
are expecting higherlevels of quality.
8/6/2019 Ch01-Role of Cost Acct
29/53
1 - 29
Key Success Factors
Time organizations are under pressure to
complete activities faster and to meet
promised delivery dates more reliably.
Time organizations are under pressure to
complete activities faster and to meetpromised delivery dates more reliably.
Innovation there is now heightened recognition
that a continuing flow of innovative productsor services is a prerequisite to the ongoing
success of most organizations.
Innovation there is now heightened recognition
that a continuing flow of innovative productsor services is a prerequisite to the ongoing
success of most organizations.
8/6/2019 Ch01-Role of Cost Acct
30/53
1 - 30
Continuous Improvement
and Benchmarking
Continuous improvement by competitors creates
a never-ending search for higher levels ofperformance within many organizations.
Continuous improvement by competitors creates
a never-ending search for higher levels ofperformance within many organizations.
8/6/2019 Ch01-Role of Cost Acct
31/53
1 - 31
Describe the set of business
functions in the value chain.
8/6/2019 Ch01-Role of Cost Acct
32/53
1 - 32
Value Chain
The term value chain refers to the sequence of
business functions in which usefulness is addedto the products or services of an organization.
The term value is used because as the usefulness
of the product or service is increased, so is its valueto the customer.
8/6/2019 Ch01-Role of Cost Acct
33/53
1 - 33
Value Chain
Management accountants provide
decision support for managers in thefollowing six business functions:
8/6/2019 Ch01-Role of Cost Acct
34/53
1 - 34
Value Chain
R & D Design Production
Marketing Distribution Service
Management Accounting
8/6/2019 Ch01-Role of Cost Acct
35/53
1 - 35
Value Chain Functions
Research and Development
It is the process that is conducted to generateand experiment with ideas related to new
products, services, or processes.
8/6/2019 Ch01-Role of Cost Acct
36/53
1 - 36
Value Chain Functions
It is the detailed planning and engineeringof products, services, or processes.
Design
8/6/2019 Ch01-Role of Cost Acct
37/53
1 - 37
Value Chain Functions
It is the acquisition, coordination, andassembly of resources to produce
a product or deliver a service.
Production
8/6/2019 Ch01-Role of Cost Acct
38/53
1 - 38
Value Chain Functions
It is the manner by which companiespromote and sell their products
or services to customers
or prospective customers.
Marketing
8/6/2019 Ch01-Role of Cost Acct
39/53
1 - 39
Value Chain Functions
It is the delivery of products orservices to the customer.
Distribution
8/6/2019 Ch01-Role of Cost Acct
40/53
1 - 40
Value Chain Functions
It is the after-sale support activitiesprovided to customers.
Service
8/6/2019 Ch01-Role of Cost Acct
41/53
1 - 41
Describe three ways
management accountants
support managers.
8/6/2019 Ch01-Role of Cost Acct
42/53
1 - 42
Key Guidelines
1. Cost-benefit approach
2. Full recognition of behavioral as well astechnical considerations
3. Using different costs for different purposes
8/6/2019 Ch01-Role of Cost Acct
43/53
1 - 43
Cost-Benefit Approach
A cost-benefit approach should be used in order
to spend resources if they promote decisionmaking that better attains organization goals
in relation to the costs of those resources.
8/6/2019 Ch01-Role of Cost Acct
44/53
1 - 44
Behavioral and Technical
Considerations
A management accounting system should have two
simultaneous missions for providing information:1. To help managers make wise economic decisions
2. To help managers and other employees to aim and
strive for goals of the organization
8/6/2019 Ch01-Role of Cost Acct
45/53
1 - 45
Different Costs for
Different Purposes
A cost concept used for the external reporting
purpose need not be the appropriate conceptfor the purpose of internal routine reporting
to managers.
8/6/2019 Ch01-Role of Cost Acct
46/53
1 - 46
Understand how cost management
accounting fits into an
organizations structure.
8/6/2019 Ch01-Role of Cost Acct
47/53
1 - 47
Line and Staff Relationships
Line managementis directly responsible for
attaining the objectives of the organization.Staff managementexists to provide advice
and assistance to line management.
8/6/2019 Ch01-Role of Cost Acct
48/53
1 - 48
Line and Staff Relationships
C o n t r A u d i T a x T r e a s R i s k
M a n a
I n v e s
R e l a t
C h i e f F i n a n c i
P r e s i d e n t
C h i e f O p e r a t i
C h a i r m a n
C h i e f E x e c u t i
B o a r d o f D
8/6/2019 Ch01-Role of Cost Acct
49/53
1 - 49
Line and Staff Relationships
* G l o b a l F i n a n c i a
* O p e r a t i o n s A d m
* P r o f i t a b i l i t y R e p
* I n v e n t o r y
* R o y a l t i e s
* G e n e r a l L e d g e r
* A c c o u n t s P a y a b
* S u b s i d i a r y a n d
E x a m p l e s o f F
C o n t r o l l e r
8/6/2019 Ch01-Role of Cost Acct
50/53
1 - 50
Understand what
professional ethics mean
to management accountants.
8/6/2019 Ch01-Role of Cost Acct
51/53
1 - 51
Professional Ethics
Confidentiality
Integrity
Objectivity
Competence
8/6/2019 Ch01-Role of Cost Acct
52/53
1 - 52
Ethical Guidelines
The Institute of Management Accountants (IMA)
is the largest association of managementaccountants in the United States.
The IMA has issued a Standards of Ethical
Conduct for Management Accountant.
8/6/2019 Ch01-Role of Cost Acct
53/53
Thank you