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Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill/Irwin
Topic 1
The Changing Role
of Managerial
Accounting in a
Global Business
Environment
Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin
Learning
Objective
1
1-3
Managerial accounting is the process of
Identifying
Measuring
Analyzing
Interpreting
Communicating information
Define Managerial Accounting
Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin
Learning
Objective
2
Managing Resources, Activities,
and People
1-5
An organization . . .
Acquires Resources
Hires People
Organized set
of activities
Decision
Making
Planning
Directing
Controlling
Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin
Learning
Objective
3
1-7
How Managerial Accounting
Adds Value to the Organization
Providing information for decision making and
planning.
Assisting managers in directing and controlling
activities.
Motivating managers and other employees
towards organizations goals.
Measuring performance of subunits, activities,
managers, and other employees.
Assessing the organizations competitive position.
1-8
The Balanced Scorecard
Financial Perspective
Goals Measures
Customer Perspective
Goals Measures
Operations Perspective
Goals Measures
Innovation Perspective
Goals Measures
How do we
look to
owners?
How do
customers
see us?
How can we
continue to
improve?
In which
activities
must we
excel?
Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin
Learning
Objective
4
Managerial versus Financial
Accounting
1-10
Accounting System
(accumulates financial and
managerial accounting data in the
cost accounting system)
Managerial Accounting
Information for decision
making, planning, and
controlling an
organizations
operations.
Financial Accounting
Published financial
statements and other
financial reports.

Internal
Users
External
Users
Managerial versus Financial Accounting
1-11
Managerial Accounting Financial Accounting
Users of Information
Managers, within the organization. Interested parties, outside the organization.
Regulation Not required and unregulated,
since it is intended only for
management.
Required and must conform to
generally accepted accounting
principles. Regulated by the
Financial Accounting Standards
Board, and, to a lesser degree,
the Securities and Exchange
Commission.
Source of Data The organization's basic
accounting system, plus various
other sources, such as rates of
effective products manufactured,
physical quantities of material and
labor used in production,
occupancy rates in hotels and
hospitals, and average take-off
delays
Almost exclusively drawn from the
organization's basic accounting
system, which accumulates
financial information.
Nature of Reports
and Procedures
Reports often focus on subunits
within the organization, such as
departments, divisions,
geographical regions, or product
lines. Based on a combination of
historical data, estimates, and
Reports focus on the enterprise in
its entirety. Based almost
exclusively on historical
transaction data.
Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin
Learning
Objective
5
Line and Staff Positions
1-13
A staff position supports
and assists line positions.
Example: A cost
accountant in the
manufacturing plant.
A line position is directly
involved in achieving the
basic objectives of an
organization.
Example: A
production
supervisor in a
manufacturing plant.
Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin
Learning
Objective
6
Controller
1-15
The chief managerial and financial accountant
responsibility for:
Supervising accounting personnel
Preparation of information and reports, managerial
and financial
Analysis of accounting information
Planning and decision making
Treasurer
1-16
Responsible for raising capital and safeguarding the
organizations assets.
Supervises relationships with financial institutions.
Work with investors and potential
investors.
Manages investments.
Establishes credit policies.
Manages insurance coverage
Internal Auditor
1-17
Responsible for reviewing accounting procedures,
records, and reports in both the controllers and the
treasurers area of responsibility.
Expresses an opinion to top
management regarding the
effectiveness of the
organizations accounting
system.
Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin
Learning
Objective
7
Major Themes in Managerial
Accounting
1-19
Managerial
Accounting
Information
and Incentives
Costs and
Benefits
Evolution and
Adaptation
Behavioral
Issues
Evolution and Adaptation in
Managerial Accounting
1-20
E-Business
Service vs.
Manufacturing Firms
Emergence of New
Industries
Global Competition
Focus on the Customer
Cross-Functional Teams
Product Life Cycles
Time-Based
Competition
Information and
Communication
Technology
Just-in-Time Inventory
Total Quality Management
Continuous Improvement
Change
Cost Management Systems
1-21
Objectives
Measure the cost of
resources consumed.
Identify and eliminate
non-value-added
costs.
Cost
Management
System
Cost Management Systems
1-22
Objectives
Determine efficiency
and effectiveness of
major activities.
Identify and evaluate
new activities that
can improve
performance.
Cost
Management
System
Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin
Learning
Objective
8
Strategic Cost Management and
the Value Chain
1-24
Product
Design
Research
and
Development
Securing raw
materials and
other resources
Production
Marketing
Distribution
Customer
Service
Start
Theory of Constraints
1-25
A sequential process of identifying and
removing constraints in a system.
Restrictions or barriers that impede
progress toward an objective
Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin
Learning
Objective
9
Ethical Climate of Business
1-27
The corporate scandals experienced over the last
few years have shown us that unethical behavior
in business is wrong in a moral sense and can be
disastrous in the economy. In addition to
Sarbanes-Oxley, there will likely be more reforms
in corporate governance and accounting.
Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin
Learning
Objective
10
Managerial Accounting as a
Career
1-29
Professional Organizations
Institute of Management Accountants (IMA)
Publishes
Management
Accounting
and research
studies.
Administers
Certified
Management
Accountant
program
Develops
Standards of
Ethical
Conduct for
Management
Accountants
Professional Ethics
1-30
Competence
Confidentiality
Integrity
Credibility
End of Chapter 1
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