1st Session

1
1st Session

• Strategic Management Accounting

2
Management Accounting Rise

• By 1925, virtually all management accounting
  practices used today had been developed
• Cost accounts for labour, material, and
  overheads
• Budgets for cash, income
• Flexible budgets
• Standard Costs and Variance Analysis
• Transfer Pricing
• Divisional Performance

3
Management Accounting Rise

• Most important management accounting innovation
  was the Return on Investment (ROI) measure.
• F. Donaldson Brown, the chief financial officer
  of Du Pont decomposed ROI into its components and
  demonstrated that the measure can be viewed as a
  combination of two of the efficiency measures
  operating ratio (return to sales) and
  stock-turnover (sales to assets) .

4
Management Accounting Fall

• Changing Business Scenario From stockholders to
  Stakeholders
• Lack of Support from Information Technology
• The Phenomena of Border less World
• Management thinking Paradigm shifts
• Lack of clarity among the professionals

5
Management Accounting Fall

• Dominance of Statutory accounting
• With more widespread public ownership of
  corporations,
• Periodic crises in capital markets
• Increased shareholders activism
• Increased role of Regulators
• Lack of synergy with other profession

6
Management Accounting to Strategic Management
Accounting

• .Realisation of the industry
• Internal accounting
• Responsibility Accounting
• Cut throat competition Increasing role of
  market
• Development in the literature SCM/ EVA/BSC
• Development in the Information Technology

7
Critical ChainBy Eliyahu M.Goldratt

• A prelude to the Course

8
Problem

• Two years of product development (Production)
• 6 months of product life cycle (Marketing)
• Very volatile stock market
• Stiff competition

9
Suggestions

• Back-ward integration
• Technology improvement
• Spin-off the activity
• Outsource
• Explore new markets (Extend the operation)
• Change financial evaluation indicators
• Reduce the process time

10
Class-Plan

• Responsibility Accounting
• Strategic Cost Management
• Financial Measures of Divisional Performance
• Transfer Pricing
• Financial Measures of Total Business Unit