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ACCT5996

Management Accounting & Business Analysis

Seminar 1
Course Introduction

About me

Associate Professor Paul Andon


O: Q3094 | P: 9385 5821 | E: p.andon@unsw.edu.au
Consultation: Mondays, 4pm-6pm, during teaching weeks

ACCT5996: Management Accounting & Business Analysis

Introducing the course outline


Available from Moodle.
Your first source of information for this course.
Contains

relevant information about the structure of the


course and its requirements.
Familiarise yourself it will be assumed you are aware of its
contents.
Lets

now review some of the key elements of


the course outline.

ACCT5996: Management Accounting & Business Analysis

What is this course about?


This course examines the use of financial and nonfinancial information for the purpose of analysing
business
processes
to
achieve
superior
organisational performance. The course introduces
a number of management accounting tools and
quantitative techniques that can be used to analyse
how business processes consume resources, create
value for a firm and its customers, and how they
may be examined for improvement opportunities.
(Course Outline)
ACCT5996: Management Accounting & Business Analysis

Course structure and approach


Seminar preparation

and structure

Readings and seminar questions


3 hours, combined lecture and tutorial
Topics outlined in Course Schedule

Assessment
3

in-class quizzes (Weeks 4, 8 and 12)


10% each
Final examination (Exam Period) 70%

ACCT5996: Management Accounting & Business Analysis

Course materials
NEW BOOK: Langfield-Smith et al
Management Accounting: Information
for Creating and Managing Value (7th
edition)
Available from bookshop
Other readings (distributed separately)
Note: Photocopying textbooks is illegal.
You will not be allowed to attend class
with a photocopied textbook.

ACCT5996: Management Accounting & Business Analysis

Other important issues


Special consideration

UNSW policy will be strictly applied


Special consideration is not automatic
Special consideration is for illness or misadventure it is
not a second bite at the cherry.

Staff Consultation

Staff contact and consultation details are on Moodle


You are welcome to consult any ACCT5996 staff member
Be proactive in seeking assistance: dont leave it until its
too late

Email

Correspondence only through official UNSW account

ACCT5996: Management Accounting & Business Analysis

UNSW Business School


ACCT5996: Management Accounting & Business Analysis

Seminar 1
Basic Management
Accounting Concepts

Seminar objectives
1. Describe management accounting, its general
objectives, and its role in an organization
2. Define basic terms and concepts associated with
cost accounting systems and cost assignment.

ACCT5996: Management Accounting & Business Analysis

Mapping to the required readings


Seminar Objectives

L&S Chapters and Objectives

LO1

Textbook CH1: LO1.2, LO1.3, LO1.5, LO1.7,


LO1.8

LO2

Textbook CH2: LO2.1-LO2.10

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Keeping it Real: What is Mgmt Acctg?


Questions to think about:
- internal
1. What does it involve? - inform manager to make a good solution
2. What is it useful for? - decision making
3. How is it different
from financial
F
M
past
future
accounting? external
internal
regulation by standards not
4. What are some helpful MA tools?

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Management accounting definition


Processes and techniques that focus on the
effective and efficient use of organisational
resources to support managers in their
tasks of enhancing both customer value
and shareholder value.

achive the outcome

doing more thing with the same resource

Coca-cola management accounting:

HR
Financial resource
Products
technological resources
Physical resources

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Key management accounting priorities


Planning

Formulating the future direction


and resourcing of operations

Controlling

Putting mechanisms in place to


ensure that operations proceed
according to plan and that
objectives are achieved.

Decision making (infrequently inf)


Making value-adding choices that
drive business forward
the project also required a lot of additional information that was not available
from routine mgmt accounting reports (budgets, performance, produce reports)

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Management v financial accounting

3. climate may effect revenue, more cold drink and foods

Seminar Exercise 1 - E1.26 Page 29

4. short-term agency staff to reduce cost of insurance, ...

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Management accounting systems


Produce

the information required by managers to create


value and manage resources.
Components may include

Costing systems
Budgeting systems
Performance measurement systems
Cost management systems

Traditional versus modern

approaches

MAS

book p39

Responding to changes in the business environment

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Emphasis on costs
Why

do management accountants pay so much attention


to costs?

Historic focus on production costs


Ready availability of cost data
Importance of cost information

Non-financial

information is increasingly important in


modern management accounting systems

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Costs
What are they?

Resources given up to achieve a particular objective. Generally, costs are


incurred to obtain future benefits.
vt ra ngoi

Benefits extending beyond current period assets


Benefits confined to current period expenses
gii hn trong

Example:

I buy 300 pens for resale at $1 each


Cost = 300 x $1 each = $300

Assume 100 pens sold

COGS
Inventory

= $100 (expense)
= $200 (asset)

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Cost classifications
Traceability

direct

both, commonly variable

Behaviour

fixed

indirect(both fixed &variable)

Prime Costs

supervision, manufacturing based, not really involved in


manufacturing activities but affect manufacturing process

chi ph gc

Conversion Costs

Seminar Exercise 2: E2.21 Page 58


Seminar Exercise 3: E2.22 Page 58
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1.

Classifying costs by behaviour

variable and fix

Much

like people, to understand costs we also need to


appreciate how they behave.

Level of activity, and associated cost drivers 100 cans of Coca-cola or 1000 cans
=> sugar changes
Basic distinction: variable (changes in direction proportion to change in
activity) and fixed (remains unchanged despite change in activity)
We will explore this more next week cost of machine

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2.

Classifying costs: Traceability

ngun gc

direct or indirect

Measuring

cost objects is an important management


accounting function

Items for which management wants a separate measure of costs


e.g. products, projects, departments, customers, suppliers.

Direct

costs physically observable relationship between cost


and cost object.

e.g. Direct labour, various raw materials

Indirect

costs cannot be economically identified with or


traced to a cost object

e.g. supervision, inspection, handling, maintenance

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Keeping it real: IKEA and traceability

(direct or indirect)

handling
inspection

product design

maintenance

labour

Cost object
security

Direct costs
electricity

Indirect
costs

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3.

Classifying : Controllable/uncontrollable
Ideally,

managers should be held responsible only for costs


they can control or significantly influence

Important for motivating managers to properly improve performance

Some

costs are controllable in the long term but not in the


equipment lease= control long-term (10yr negotiated), short term
short term computing
(uncontrollable rental cost)

Depends on time period committed to for certain costs


not able to influence the price
charged by suppliers

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Classifying costs: Value chain


The value chain

A set of linked processes or activities that begins with acquiring


resources and ends with providing and supporting products and services
that customers value

Various cost classifications can be used within the upstream,

downstream and manufacturing areas


Seminar
Exercise 4:
E2.24
Page 59

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Classifying: Cost flows and financial records

period costs = costs are deducted as expenses during the current period
without ever being included in the value of stock held
product costs = identified with a finished product
as part of value stock
become expenses COGS only when the stock is sold

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To do list (for next week)


Read through the course outline.
Buy the text book ASAP.
Read through the prescribed readings.
Complete seminar questions (as provided on Moodle).

Once again WELCOME TO ACCT5996


I hope you find this an enjoyable and productive course.

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