Chapter The Changing Role of Managerial Accounting in a Dynamic Business Environment McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc All rights reserved Learning Objective McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc All rights reserved Define Managerial Accounting Managerial accounting is the process of  Identifying  Measuring  Analyzing  Interpreting  Communicating information Learning Objective McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc All rights reserved Managing Resources, Activities, and People An organization Directing Acquires Resources Hires People Organized Organized set set of of activities activities Controlling Decision Making Planning Learning Objective McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc All rights reserved How Managerial Accounting Adds Value to the Organization •• Providing Providing information information for for decision decision making making and and planning planning •• Assisting Assisting managers managers in in directing directing and and controlling controlling activities activities •• Motivating Motivating managers managers and and other other employees employees towards towards organization’s organization’s goals goals •• Measuring Measuring performance performance of of subunits, subunits, activities, activities, managers, managers, and and other other employees employees •• Assessing Assessing the the organization’s organization’s competitive competitive position position The Balanced Scorecard How we look to owner’s? Financial Perspective Goals Measures In which activities must we excel? Customer Perspective Goals Measures Operations Perspective Goals Measures How customers see us? Innovation Perspective Goals Measures How can we continue to improve? Learning Objective McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc All rights reserved Managerial versus Financial Accounting Accounting Accounting System System (accumulates (accumulates financial financial and and managerial managerial accounting accounting data data in in the the cost cost accounting accounting system) system) Managerial Managerial Accounting Accounting Information Information for for decision decision making, making, planning, planning, and and controlling controlling an an organization’s organization’s operations operations Internal Users Financial Financial Accounting Accounting Published Published financial financial statements statements and and other other financial financial reports reports External Users Internal Auditor Responsible Responsible for for reviewing reviewing accounting accounting procedures, procedures, records, records, and and reports reports in in both both the the controller’s controller’s and and the the treasurer’s treasurer’s area area of of responsibility responsibility –– Expresses Expresses an an opinion opinion to to top top management management regarding regarding the the effectiveness effectiveness of of the the organizations organizations accounting accounting system system Learning Objective McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc All rights reserved Major Themes in Managerial Accounting Behavioral Behavioral Issues Issues Costs Costs and and Benefits Benefits Information Information and and Incentives Incentives Evolution Evolution and and Adaptation Adaptation Managerial Accounting Evolution and Adaptation in Managerial Accounting E-Business Product Life Cycles Time-Based Competition Service vs Manufacturing Firms Emergence of New Industries Global Competition Focus on the Customer Cross-Functional Teams Change Information and Communication Technology Just-in-Time Inventory Total Quality Management Continuous Improvement Cost Management Systems Objectives Objectives Measure Measure the the cost cost of of resources resources consumed consumed Identify Identify and and eliminate eliminate non-value-added non-value-added costs costs Cost Management System Cost Management Systems Objectives Objectives Determine Determine efficiency efficiency and and effectiveness effectiveness of of major major activities activities Identify Identify and and evaluate evaluate new new activities activities that that can can improve improve performance performance Cost Management System Learning Objective McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc All rights reserved Strategic Cost Management and the Value Chain Product Product Design Design Research Research and and Development Development Securing Securing raw raw materials materials and and other other resources resources Start Production Production Marketing Marketing Distribution Distribution Customer Customer Service Service Theory of Constraints A sequential process of identifying and removing constraints in a system Restrictions Restrictions or or barriers barriers that that impede impede progress progress toward toward an an objective objective Learning Objective McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc All rights reserved Ethical Climate of Business The The corporate corporate scandals scandals experienced experienced over over the the last last few few years years have have shown shown us us that that unethical nethical behavior behavior in in business business is is wrong wrong in in aa moral moral sense sense and and can can be be disastrous disastrous in in the the economy economy In In addition addition to to Sarbanes-Oxley, Sarbanes-Oxley, there there will will likely likely be be more more reforms reforms in in corporate corporate governance governance and and accounting accounting Learning Objective 10 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc All rights reserved Managerial Accounting as a Career Professional Organizations Institute of Management Accountants (IMA) Publishes Publishes Management Management Accounting Accounting and and research research studies studies Administers Administers Certified Certified Management Management Accountant Accountant program program Develops Develops Standards Standards of of Ethical Ethical Conduct Conduct for for Management Management Accountants Accountants Professional Ethics Competence Confidentiality Integrity Credibility End of Chapter [...]... chief managerial managerial and and financial financial accountant accountant responsibility responsibility for: for: –– Supervising Supervising accounting accounting personnel personnel –– Preparation Preparation of of information information and and reports, reports, managerial managerial and and financial financial –– Analysis Analysis of of accounting accounting information information –– Planning... McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc All rights reserved Managerial Accounting as a Career Professional Organizations Institute of Management Accountants (IMA) Publishes Publishes Management Management Accounting Accounting and and research research studies studies Administers Administers Certified Certified Management Management Accountant Accountant program program... supervisor in in aa manufacturing manufacturing plant plant •• AA staff staff position position supports supports and and assists assists line line positions positions –– Example: Example: AA cost cost accountant accountant in in the the manufacturing manufacturing plant plant Learning Objective 6 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc All rights reserved Controller The The... Accounting Behavioral Behavioral Issues Issues Costs Costs and and Benefits Benefits Information Information and and Incentives Incentives Evolution Evolution and and Adaptation Adaptation Managerial Accounting Evolution and Adaptation in Managerial Accounting E -Business Product Life Cycles Time-Based Competition Service vs Manufacturing Firms Emergence of New Industries Global Competition Focus on the. .. unethical nethical behavior behavior in in business business is is wrong wrong in in aa moral moral sense sense and and can can be be disastrous disastrous in in the the economy economy In In addition addition to to Sarbanes-Oxley, Sarbanes-Oxley, there there will will likely likely be be more more reforms reforms in in corporate corporate governance governance and and accounting accounting Learning... area area of of responsibility responsibility –– Expresses Expresses an an opinion opinion to to top top management management regarding regarding the the effectiveness effectiveness of of the the organizations organizations accounting accounting system system Learning Objective 7 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc All rights reserved Major Themes in Managerial Accounting. .. Planning and and decision decision making making Treasurer Responsible Responsible for for raising raising capital capital and and safeguarding safeguarding the the organization’s organization’s assets assets –– Supervises Supervises relationships relationships with with financial financial institutions institutions –– Work Work with with investors investors and and potential potential investors investors.. .Managerial versus Financial Accounting Learning Objective 5 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc All rights reserved Line and Staff Positions •• AA line line position position is is directly directly involved involved in in achieving achieving the the basic basic objectives objectives of of an an organization organization –– Example: Example: AA production... –– Manages Manages investments investments –– Establishes Establishes credit credit policies policies –– Manages Manages insurance insurance coverage coverage Internal Auditor Responsible Responsible for for reviewing reviewing accounting accounting procedures, procedures, records, records, and and reports reports in in both both the the controller’s controller’s and and the the treasurer’s treasurer’s... Management and the Value Chain Product Product Design Design Research Research and and Development Development Securing Securing raw raw materials materials and and other other resources resources Start Production Production Marketing Marketing Distribution Distribution Customer Customer Service Service Theory of Constraints A sequential process of identifying and removing constraints in a system Restrictions ... Financial Accounting Accounting Accounting System System (accumulates (accumulates financial financial and and managerial managerial accounting accounting data data in in the the cost cost accounting. .. Supervising Supervising accounting accounting personnel personnel –– Preparation Preparation of of information information and and reports, reports, managerial managerial and and financial financial... Managerial Accounting as a Career Professional Organizations Institute of Management Accountants (IMA) Publishes Publishes Management Management Accounting Accounting and and research research