Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 1 The Changing Role of Managerial Accounting in a Dynamic Business Environment

1-2 Managerial accounting is the process of Identifying Measuring Analyzing Interpreting Communicating information Define Managerial Accounting

1-3 Managing Resources, Activities, and People An organization... Acquires Resources Hires People Organized set of activities Organized set of activities Decision Making Decision Making Planning Directing Controlling

1-4 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 organization’s goals. Measuring performance of activities, managers, and other employees. Assessing the organization’s competitive position. Providing information for decision making and planning. Assisting managers in directing and controlling activities. Motivating managers and other employees towards organization’s goals. Measuring performance of activities, managers, and other employees. Assessing the organization’s competitive position.

1-5 Managerial versus Financial Accounting

1-6 A staff position supports and assists line positions. –Example: A cost accountant in the manufacturing plant. A staff position supports and assists line positions. –Example: A cost accountant in the manufacturing plant. Line and Staff Positions A line position is directly involved in achieving the basic objectives of an organization. –Example: A production supervisor in a manufacturing plant. A line position is directly involved in achieving the basic objectives of an organization. –Example: A production supervisor in a manufacturing plant.

1-7 Controller 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 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

1-8 Treasurer Responsible for raising capital and safeguarding the organization’s assets. –Supervises relationships with financial institutions. –Work with investors and potential investors. –Manages investments. –Establishes credit policies. –Manages insurance coverage Responsible for raising capital and safeguarding the organization’s assets. –Supervises relationships with financial institutions. –Work with investors and potential investors. –Manages investments. –Establishes credit policies. –Manages insurance coverage

1-9 Internal Auditor Responsible for reviewing accounting procedures, records, and reports in both the controller’s and the treasurer’s area of responsibility. –Expresses an opinion to top management regarding the effectiveness of the organizations accounting system. Responsible for reviewing accounting procedures, records, and reports in both the controller’s and the treasurer’s area of responsibility. –Expresses an opinion to top management regarding the effectiveness of the organizations accounting system.

1-10 Major Themes in Managerial Accounting ManagerialAccounting Information and Incentives Information and Incentives Costs and Benefits Costs and Benefits Evolution and Adaptation Evolution and Adaptation Behavioral Issues Behavioral Issues

1-11 Objectives ÊMeasure the cost of resources consumed. ËIdentify and eliminate non- value-added costs. ¸Determine efficiency and effectiveness of major activities. ¹Identify and evaluate new activities that can improve performance. Objectives ÊMeasure the cost of resources consumed. ËIdentify and eliminate non- value-added costs. ¸Determine efficiency and effectiveness of major activities. ¹Identify and evaluate new activities that can improve performance. Cost Management Systems Cost Management System

1-12 ProductDesignProductDesign ResearchandDevelopmentResearchandDevelopment Strategic Cost Management and the Value Chain Securing raw materials and other resources Securing raw materials and other resources ProductionProduction MarketingMarketing DistributionDistribution CustomerServiceCustomerService Start

1-13 Ethical Climate of Business The corporate scandals experienced over the last few years have shown us that u nethical 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.

1-14 Managerial Accounting as a Career Professional Organizations Institute of Management Accountants (IMA) Publishes Management Accounting and research studies.Publishes Management Accounting and research studies.Administers Certified Management AccountantprogramAdministers Certified Management AccountantprogramDevelops Standards of Ethical Conduct for Management AccountantsDevelops Standards of Ethical Conduct for Management Accountants

1-15 Professional Ethics 4Competence 4Confidentiality 4Integrity 4Credibility