CHAPTER 1 Managerial Accounting

Efficiency

-Improving efficiency is a vital concern -both fin and non fin measures of efficiency are needed -cost is a critical measure of efficiency -for these efficiency measures to be of use, costs must be properly defined, measured, and assigned -production of output must be related to the inputs required, and the overall financial effect of productivity changes should be calculated

Managerial Conduct and Ethical Conduct

-The objective of profit maximization should be constrained by the requirement that profits be achieved through legal and ethical means -pays to treat all constituents with honesty and loyalty in long run

Company "Codes of Ethical Conduct" or "Codes of Conduct"

-code promotes ethical behavior by managers and employees -all very similar -important codes are integrity, performance of duties, and compliance with the law -uniformly prohibit kickbacks and improper gifts, insider trading, misappropriation of corporate information and assets

Customer Orientation

-customer value is a key focus -firms can establish a competitive advantage by creating better "customer value" for the same or lower cost than competitors

1) Certificate in Management Accounting

-meets specific needs of man accts -4 areas are emphasized in qualifying examination for the CMA 1)economics, finance, and management 2)financial accounting and reporting 3)management reporting, analysis, and behavioral issues 4)Decision analysis and information systems

2) Certificate in Public Accounting

-oldest and most well known cert. in accting -provides minimal qualification for external auditors -only a CPA is permitted by law to serve as an external auditor -CPAs must pass a national examination and be license in state of which they practice -Managerial Accountants also hold this certificate

Managerial Accounting

-produces information for internal users, such as managers, executives, and workers -for future use -identifies, collects, measures, classifies, and reports financial and non financial information to internal users in planning, controlling, and decision making

Financial Accounting

-provides information for external users (investors, customers, suppliers, government agencies, and labor unions) -is historical -must follow rules defined by SEC, FASB, IASB

Role of the Managerial Accountant

-role is one of support -assist those who are responsible for carrying out an organization's basic objectives -Staff Positions ie -controller -treasurer

3) Certificate in Internal Auditing

-specialized certification ofr internal auditing/accounting -two years experience before examination

Time as a competitive element

-time is crucial in all phases of value chain -firms reduce "time to market" by compressing design, implementation, and production cycles -deliver products or services quickly by eliminating nonvalue-added time (ie time it takes to load product onto dock) -decreasing nonvalue-added time appears to go hand in hand with increasing quality (?)

Certification (3 major forms for mang accts)

1) Certificate in Management Accounting 2) Certificate in Public Accounting 3) Certificate in Internal Auditing -each offers advantages to managerial accountants

Total Quality Management

1) Continuous improvement is the continual search for ways to increase the overall efficiency and productivity of activities by reducing waste, increasing quality, and managing costs 2)ie-manufactures strive to create and environment that will enable workers to manufacture perfect products 3) companies attempt to increase organizational value by eleminating wasteful activities that exist throughout the value chain

Current Focus of Managerial Accounting (important uses)

1) New methods of estimating product and service cost and profitability 2)Understanding customer orientation 3)Evaluating the business from a cross-functional perspective 4)Providing information useful in improving total quality management

Four Key Performance Measures to make decisions by managerial accountants

1) customer satisfaction 2)Average time btw placement and shipment for different shipment methods 3)profitability of different customer types 4)Worldwide customer trends

Standards of Ethical Conduct for Managerial Accountant

AICPA and IMA are ethical standards for accountants -biggest challenge is 1) recognizing a dilemma has risen and 2) knowing the correct action to take to rectify the dilemma

Strategic Positioning

Effective cost information can help increase customer value: -cost leadership -superior products through differentiation

Treasurer

In large companies, is responsible for the finance function

(strategic positioning) Superior products through differentiation

Increase customer value by providing something to customers not provided by competitors (ie Best Buy's Geek Squad)

Planning

Management activity where there is a detailed formulation of actions to achieve a particular end 1) Setting Objective (improve quality) 2)Identify methods to achieve those objectives (supplier evaluation program)

Staff Positions

Positions that are supportive in nature and have only "indirect responsibility" for an organization's basic objectives

Line Positions

Positions that have "direct responsibility" for the basic objectives of an organization

(strategic positioning) Cost Leadership

Provide the same or better value to customers at a lower cost than competitors

Controlling (monitoring)

The managerial activity of monitoring a plan's implementation and taking corrective action as needed Process of comparing actual performance to expected performance to understand what needs to be fixed

Decision Making (why CEOs are paid so high?)

The process of choosing among competing alternatives

Customer Value

is the difference between what a customer receives (tangible and intangible benefits) and what the customer gives up when buying a product or service (cost of purchase

Meaning of Managerial Accounting

provide info for: -planning org's actions -controlling org's actions -making effective decisions

Controller

supervises all accounting functions and reports directly to the general manager and chief operating officer

Value Chain (what creates customer value)

the value chain is the set of activities required to design, develop, produce, market, and deliver products and services, and provide support services to customers