1

Introduction to
Managerial Accounting

2007 Pearson Education Canada

Slide 1-1

Management Accounting for Managers

Management accounting exists because
managers require information to make decisions
Primary focus of management accounting is
towards users within an organization
Management accounting does not exist to
generate data, but it exists because managers
require information for decisions
Framework for Management Accounting
Strategic Planning

Focus on organizations objectives

Management Control

Effectiveness and efficiency of resource use

Operational Control

Effectiveness and efficiency of tasks

2007 Pearson Education Canada

Slide 1-2

Frameworks for Management Accounting

OPERATIONAL
CONTROL

Structured
SemiStructured

MANAGEMENT
CONTROL

STRATEGIC
PLANNING

Accounts receivable

Budget analysis

Tanker fleet mix

Order entry

Short-term
forecasting

Warehouse and
factory location

Inventory reordering
Inventory control

Engineered costs
Variance analysis

Mergers and acquisitions

Production scheduling
Bond trading
Cash management

Overall budget
Budget preparation

Capital acquisition analysis

New product planning

Sales and production

R and D planning

Unstructured PERT COST systems

2007 Pearson Education Canada

Slide 1-3

Management Decision Process

1. Identify the problem.
2. Perform the necessary quantitative and
qualitative analyses.
3. Identify alternative solutions to the problem.
4. Evaluate the alternative solutions.
5. Recommend one of the alternative solutions.
6. Implement the recommendation.
2007 Pearson Education Canada

Slide 1-4

Management
Major Means:
Accounting Information

Major Ends:
Helping Decisions

1. Problem-solving
information

1. Managers for long-range

planning and special decisions

2. Attention-directing
information

2. Managers for planning and

controlling routine operations

3. Scorekeeping
information

3. Outsiders for investors, tax

collectors, regulators & others

2007 Pearson Education Canada

Slide 1-5

Planning and Controlling

Planning
Evaluation

Action

Planning involves setting objectives and the

means to their attainment
What is desired?
When and how is it to be accomplished?
How is success to be evaluated?
Controlling involves the implementation of plans
and the use of feedback to monitor achievements
2007 Pearson Education Canada

Slide 1-6

Product Life Cycle

The various stages through which a product passes,
from conception and development through
introduction into the market through maturation and,
finally, withdrawal from the market
Sales
over
Typical
Product
Life
Cycle
Product
Development
2007 Pearson Education Canada

Introduction
to Market

Mature
Market

Phase-Out
of Product
Slide 1-7

The Value Chain

Value chain is the set of business functions that add value

to the products or services of an organization
Research
and
Development
Product
& Service
Process
Design

Customer
Service

CUSTOMER
FOCUS
Distribution

Production
Marketing

2007 Pearson Education Canada

Slide 1-8

Distinctions Between Management

Accounting and Financial Accounting
Management
Accounting

Financial
Accounting

Organization managers

External parties

Costs versus benefits

G.A.A.P.

Behavioural
Implications

Influence on managerial
behaviour

Measurement of
economic activity

Time Focus

Future orientation

Past orientation

Time Span

Flexible

Less flexible

Reports

Detailed

Summary reports

Less sharply defined

More sharply defined

Primary Users
Choices

Activities
2007 Pearson Education Canada

Slide 1-9