1 of 37

1

PowerPoint Presentation by

Gail B. Wright�Professor Emeritus of Accounting�Bryant University

© Copyright 2007 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star Logo, and South-Western are trademarks used herein under license.�

MANAGERIAL ACCOUNTING

8TH EDITION

BY

HANSEN & MOWEN

1 INTRODUCTION

2 of 37

LEARNING OBJECTIVES

2

LEARNING GOALS

After studying this chapter, you should be able to:

3 of 37

LEARNING OBJECTIVES

  1. Discuss the need for management accounting information.
  2. Differentiate between management accounting & financial accounting.
  3. Provide a brief historical description of management accounting.

3

Continued

4 of 37

LEARNING OBJECTIVES

  1. Identify the current focus of management accounting.
  2. Describe role of management accountants in an organization.
  3. Explain importance of ethical behavior for managers, management accountants.
  4. List 3 forms of certification available to management accountants.

4

Click the button to skip Questions to Think About

5 of 37

QUESTIONS TO THINK ABOUT:�Scenarios

5

Who uses management accounting information?

6 of 37

QUESTIONS TO THINK ABOUT:�Scenarios

6

For what purposes is management accounting information used?

7 of 37

QUESTIONS TO THINK ABOUT:�Scenarios

7

Should management accounting information provide both financial & nonfinancial information?

8 of 37

QUESTIONS TO THINK ABOUT:�Scenarios

8

What organizations need a management accounting information system?

9 of 37

9

1

Discuss the need for management accounting information.

LEARNING OBJECTIVE

10 of 37

MANAGEMENT ACCOUNTING: Objectives

10

  • Costing services, products, other objectives of interest to management;
  • Planning, controlling, evaluating, & continuous improvement;
  • Decision making.

LO 1

11 of 37

INFORMATION NEEDS: �Costing & Decision Making

11

EXHIBIT 1-1

LO 1

INPUTS

PROCESSES

OUTPUTS

USERS

Economic Events

Collecting, Measuring, Storing, Analyzing, Reporting, Managing

Special Reports, Product Costs, Customer Costs, Budgets, Performance Reports, Personal Communication

12 of 37

INFORMATION NEEDS: �The Management Process

  • Planning
    • Detailed actions to achieve a particular end
  • Controlling
    • Monitoring plan implementation & employing corrective action when necessary
  • Decision making
    • Choosing among competing alternatives

​

12

LO 1

13 of 37

13

2

Differentiate between management accounting & financial accounting.

LEARNING OBJECTIVE

14 of 37

14

Financial accounting is for external users and follows restrictive rules and regulations.

Managerial accounting is for internal users (managers) who plan, control, and make decisions.

LO 2

15 of 37

A COMPARISON:�Management vs. Financial Accounting

15

EXHIBIT 1-2

LO 2

16 of 37

16

3

Provide a brief historical description of management accounting.

LEARNING OBJECTIVE

17 of 37

17

Do you know when accounting for managerial decision making began?

LO 3

18 of 37

MANAGERIAL ACCOUNTING HISTORY

  • Beginnings between 1880 and 1925
    • Pre-1915, management accounting focused on product costing, that is, what products provided best profit
  • 1925 to 1950, emphasis on inventory costing systems
    • Improvements to inventory costing in 1950s and 1960s
    • 1980s recognized need for improvements in management accounting

18

LO 3

19 of 37

19

4

Identify the current focus of management accounting.

LEARNING OBJECTIVE

20 of 37

20

Do you know what the current focus for managerial accounting is?

LO 4

21 of 37

CURRENT FOCUS

  • Need for innovation and relevant produces:
    • Activity based management
      • ABC Improves accuracy of assigning costs
    • Customer orientation
      • Strategic positioning to maintain competitive advantage
      • Value chain framework to focus on customer value
    • Cross functional perspective
      • Understand importance of value chain from manufacturing to marketing to distribution to customer service

21

Continued

LO 4

22 of 37

CURRENT FOCUS

  • Need for innovation and relevant produces (cont.)
    • Total quality management emphasized continuous improvement
    • Time becomes a competitive advantage for the firm who an compress the value chain
    • Improving efficiency for profit performance
    • E-business for cost reduction

22

LO 4

23 of 37

23

What does a value chain look like?

How does it work?

LO 4

24 of 37

INDUSTRIAL VALUE CHAIN

24

EXHIBIT 1-3

LO 4

A value chain combines the output of several firms sequentially to meet customer needs.

25 of 37

25

Industrial value chain is critical for strategic cost management. It links value-creating activities from raw materials to disposal of final product by end-use customers.

LO 4

26 of 37

26

5

Describe the role of the management accountant.

LEARNING OBJECTIVE

27 of 37

SARBANES-OXLEY

  • Enhanced the role of the management accountant by
    • Tightening regulation of corporate governance
    • Establishing controls over management
    • Raising importance of management’s assessment of internal controls

27

LO 5

28 of 37

28

How many roles for a management accountant can you name?

LO 5

29 of 37

ORGANIZATIONAL CHART (Partial)

29

EXHIBIT 1-4

LO 5

30 of 37

30

6

Explain importance of ethical behavior for managers & management accountants.

LEARNING OBJECTIVE

31 of 37

MANAGEMENT ACCOUNTING:�Designed for Profit Maximization

31

“The objective of profit maximization should be constrained by the requirement that profits be achieved through legal and ethical means.”1

1Hansen & Mowen, 2007, p. 17

LO 6

32 of 37

SUPPORT FOR ETHICAL BEHAVIOR

  • Company codes of conduct
  • Sarbanes-Oxley requirements
  • IMA standards of conduct for management accountants ensure that management accountants maintain
    • Competence
    • Confidentiality
    • Integrity
    • Objectivity
    • Ability for conflict resolution

32

LO 6

33 of 37

33

7

List 3 forms of certification available to management accountants.

LEARNING OBJECTIVE

34 of 37

34

What does “certification” mean for an accountant?

What certifications are available to management accountants?

LO 7

35 of 37

CERTIFICATION

  • Signifies the accountant has met requirements for
    • Education
    • Experience
  • Signifies the accountant has passed a qualifying examination

35

LO 7

36 of 37

3 CERTIFICATIONS

  • CMA (Certified Management Accountant)
    • Meets needs for knowledge of economics, financial & managerial accounting, decision analysis & information systems
  • CPA (Certified Public Accountant)
    • Meets needs for knowledge of external auditor
  • CIA (Certified Internal Auditor)
    • Meets specialized needs in internal auditing yet similar to knowledge of management accountant

36

LO 7

37 of 37

37

THE END

CHAPTER 1