Professional Documents
Culture Documents
Inc.
Introduction to
Managerial
Accounting
CHAPTER 1
OBJECTIVE 1
Managers Responsibilities
Planning:
Setting goals and
objectives
Decision
Making
Directing:
Overseeing day-today operations
Feedback
Controllin
g:
Evaluating results
of operations
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Inc.
Planning
Setting goals and objectives for the
organization and determining how to achieve
them
Examples of strategic goals:
Generate more sales by opening new
stores
Reduce labour costs by improving
operating efficiencies
Plans may be translated into budgets
Copyright 2015 Pearson Canada
Inc.
Directing
Overseeing organizations day-to-day operations
Examples:
Using daily/weekly sales reports to adjust
marketing decisions
Using product cost reports to adjust raw
material usage
Setting the work schedule for employees
Controlling
Evaluating results of operations against plans
and making adjustments as needed
Examples:
Comparing budgeted sales with actual sales
and take corrective action
Comparing budgeted product costs against
actual product costs and take corrective action
Ensure actual results meet planned results
Copyright 2015 Pearson Canada
Inc.
Decision Making
Management is continually making
decisions while it plans, directs, and
controls operations
Examples:
Location of new stores
Prices of product offerings
Choice of suppliers
Hiring and firing employees
Copyright 2015 Pearson Canada
Inc.
OBJECTIVE 2
Managerial
Financial
Primary users
Internal
External
Purpose of
information
Plan, direct,
control, decide
Users make
investing and
lending decisions
Primary
accounting
product
Internal reports
useful to
management
General purpose
financial
Statements
What is
included?
Defined by
management
Determined by
ASPE or IFRS
10
Managerial
Financial
Underlying basis
of information
Internal and
external
transactions,
focus on future
Based on
historical
transactions with
external parties
Emphasis
Data must be
relevant
Data must be
reliable and
objective
Business unit
Segments of the
business
Company as a
whole
Prepared how
often?
Depends on
management
needs
Annually and
quarterly
11
Managerial
Financial
Verification
Internal audit
External audit
Information
requirements
No formal
requirement only
best practices
Public companies
must issue
audited financial
statements
Impact on
employee
behaviour
Careful
consideration
Adequacy of
disclosure
12
OBJECTIVE 3
13
Organizational Structure
Board of
Directors
Audit
Committee
Chief Executive
Officer
Chief Operating
Officer
Vice Presidents
of Various
Operations
Chief Financial
Officer
Treasurer
Controller
Internal Audit
14
Impact of technology
Ensuring accurate financial records
Planning, analyzing, and interpreting
accounting data
Providing decision support
15
16
OBJECTIVE 4
17
Professional Accounting
Designations in Canada
Certified Management Accountant (CMA)
Chartered Accountant (CA)
Certified General Accountant (CGA)
Chartered Public Accountant (CPA)
Merger of the three legacy designations
18
Management Accounting
Ethics
Professional Competence
Confidentiality and
Transparency
Credibility
Credibility in
in Performance
Performance of Duties
Integrity
of Decisions
First level bullet
Managemen
t Accountant
must comply
with five
ethical
standards
19
Ethical Behaviour
Means doing the right thing,
regardless of consequences
Examples of unethical behaviour
Allowing reimbursement of false expense
reports
Manipulating income
Performing tasks not qualified to perform
20
21
Honesty
Fairness
Objectivity
Responsibility
22
OBJECTIVE 5
23
24
25
International Financial
Reporting Standards
(IFRS)
As a result of globalization,
consistent reporting standards are
needed worldwide
Canada has adopted IFRS from
January 2011
Current IFRS information:
www.IFRS.com
Copyright 2015 Pearson Canada
Inc.
26
Shifting Economy
North American economies have shifted
away from manufacturing toward service
Service companies now make up the
largest sector of the Canadian economy
Since the economy has shifted away
from manufacturing, so has managerial
accounting
27
28
29
E-commerce
An important means of supply-chain
management
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Inc.
30
OBJECTIVE 6
31
Lean Production
A philosophy and business strategy
of manufacturing without waste
Lowers costs
Increases competitive position
Incorporates a JIT inventory focus
32
Characteristics of a
Lean Production System
Production occurs in self-contained
cells
Broad employee roles
Small batches produced just in time
Shortened set-up times
Shortened manufacturing cycle
times
Emphasis on quality
Copyright 2015 Pearson Canada
Inc.
33
34
OBJECTIVE 7
35
Cost of Quality
Framework
Identify costs as one of four
categories
Prevention costs
Appraisal costs
Internal failure costs
External failure costs
36
Appraisal Costs
Inspection of
materials
Other examples?
37
Appraisal Costs
Inspection of
Training employees
materials
Evaluating suppliers
Inspection of WIP
Using better
Inspection of final
materials
product
Preventive
Employee
maintenance
evaluations
Improved
Product testing
equipment
Cost of inspection
Redesign the
equipment
product
Redesign theCopyright 2015 Pearson Canada
Inc.
process
38
External Failure
Costs
Warranty costs
Other examples?
39
Cost of downtime
Rework
Excessive scrap
Cost of rejected
units
Disposal of rejects
Machine
breakdowns
External Failure
Costs
Warranty costs
Service cost at
customer site
Sales returns
Product liability
claims
Cost of recalls
Lost profit from lost
customers
Reputation
40