Managerial Accounting: An Introduction To Concepts, Methods, And Uses

1
Managerial Accounting
An Introduction To Concepts, Methods, And Uses
9th Edition Maher, Stickney and Weil
2
Chapter 1

• Overview and Basic Concepts

3
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.

4
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)

5
Compare Financial Managerial Accounting

• Financial Accounting

• Managerial Accounting

6
Discuss Implementing Strategies
7
Review Misuses of Accounting Information
8
Key Financial Players
9
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

10
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

11
Define the Following Basic Cost Concepts (Slide 1
of 4)

• A cost
• Opportunity cost

12
Basic Cost Concepts (Slide 2 of 4)

• Distinguish between a cost and an expense

13
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

14
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

15
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

16
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

17
Match Terms Definitions
The return that could not be realized from the
best forgone alternative use of a resource
Cost
Opportunity Cost
A cost charged against revenue
Costs not directly related to a cost object
Expense
Cost Object
Any item for which a manager wants to measure a
cost
Direct Cost
Costs directly related to a cost object
Indirect Cost
A sacrifice of resources
18
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

19
Value-Added Activities

• Value-added activities increase the products
  service to customers
• Managers try to eliminate non-value-added
  activities to reduce costs without reducing the
  products service potential to customers
• The value chain describes the linked set of
  activities that add value to the products or
  services of the organization

20
Describe the Value Chain
21
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

22

• 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
• blue_at_bloomu.edu
• Bloomsburg University of Pennsylvania