1. Welcome to ACF 231 Management Accounting
Lecturer:
Cynthia Fortin, CPA, CMA
Wechat: cynthia
Repository for all documents:

2. Prologue ACF 231 Management Accounting
Introduction to Managerial Accounting, Brewer, Garrison,Noreen
Power Points from website - adapted by Cynthia Fortin, CPA, CMA

3. Learn techniques MANAGERS use to produce timely and relevant information to make sound business decisions.

4. What does Management Accounting do?
Measures and reports information to help managers make decisions
Internal reporting
Future oriented
Examples of financial information – Name the statements
Examples of non-financial information – Cost of operating a plant, offering a service
What kind of decisions – Commissions to be paid to sales people, schedule production, purchasing decisions,
Examples of goals
Who are the internal users and type of reports: sales rep, production supervisors, senior managers

5. Managers use Managerial Accounting
Choose
Communicate
Implement
1-2

6. Financial Accounting
Measures and records business transactions and provides financial statements that are based on generally accepted accounting principles (GAAP) and/or IFRS
Focuses on external parties
Reports on what happened in the past – Historical based
Managers are responsible for the financial statements issued to investors, government regulators, and other parties outside the organization
Name external parties: investors, government regulators, banks, unions, suppliers, customers, etc.
1-3

7. Users Time Frequency On demand Source
Financial Accounting
Managerial Accounting
Users
External
Internal
Time
Past
Future
Frequency
Month/Q/Yr
On demand
Source
Objective
Relevant

8. Quality Precise Timely Purpose Communicate Make decisions Required
Financial Accounting
Managerial Accounting
Quality
Precise
Timely
Purpose
Communicate
Make decisions
Required
Mandatory -
Rules
GAAP/IFRS

9. Measurement Skills Planning
The primary purpose of this course is to lecture measurement skills that managers use to support
Controlling
The primary purpose of this course is to teach you measurement skills that managers use every day to support their planning, controlling, and decision-making activities.
Decision
Making

10. Plan Control What do managers do? Make sound Decisions
Managerial accounting helps managers carry out three main activities – planning, controlling, and decision making.
Make sound
Decisions

11. How will goals be achieved? Action plan
Planning
Establish goals.
How will goals be achieved? Action plan
Planning involves establishing goals and specifying how to achieve them. Plans are often accompanied by a budget. A budget is a detailed plan for the future that is usually expressed in formal quantitative terms. Five examples of planning activities include (1) estimating the advertising revenues for a future period, (2) estimating the total expenses for a future period, including the salaries of all actors, news reporters, and sportscasters, (3) planning how many new television shows to introduce to the market, (4) planning each television show’s designated broadcast time slot, and (5) planning the network’s advertising activities and expenditures. Five examples of planning activities include (1) estimating the advertising revenues for a future period, (2) estimating the total expenses for a future period, including the salaries of all actors, news reporters, and sportscasters, (3) planning how many new television shows to introduce to the market, (4) planning each television show’s designated broadcast time slot, and (5) planning the network’s advertising activities and expenditures.
Develop Budgets.

12. Gathers actual results
Controlling
Gathers actual results
to compare to the plans
Controlling involves gathering feedback to ensure that the plan is being properly executed or modified as circumstances change. Part of the control process includes preparing performance reports. A performance report compares budgeted to actual results to improve future performance. Five examples of controlling activities include (1) comparing the actual number of viewers for each show to its viewership projections, (2) comparing the actual costs of producing a made-for-television movie to its budget, (3) comparing the revenues earned from broadcasting a sporting event to the costs incurred to broadcast that event, (4) comparing the actual costs of running a production studio to the budget, and (5) comparing the actual cost of providing global, on-location news coverage to the budget.

13. Choose between alternatives
Decision Making
Choose between
alternatives
Decision making involves selecting a course of action from competing alternatives.
Many managerial decisions revolve around answering three questions:
a. What should we be selling?
b. Who should we be serving?
c. How should we execute?

14. Going about creating value
Value Chain
Product Service
Process
Design
Research
and
Development
Customer
Service
Production
Marketing
Distribution
1-10

15. Going about creating value
Value Chain
Product Service
Process
Design
Research
and
Development
Customer
Service
Production
Marketing
Distribution
1-10

16. Traditional Manufacturing
Store Inventory
Produce Goods in Anticipation of Sales
Traditional manufacturing methods organize work departmentally and encourage those departments to maximize their output even if it exceeds customer demand and bloats inventories.
Make Sales from Finished Goods Inventory

17. Lean Production Customer places an order Create Production Order
Generate component requirements
Lean Production is a management approach that organizes resources such as people and machines around the flow of business processes and that only produces units in response to customer orders.
Lean Production is often called Just-in-Time (JIT) production because products are only made in response to customer orders and they are completed just-in-time to be shipped to customers. Because lean thinking only allows production in response to customer orders, the number of units produced tends to equal the number of units sold.
The lean approach also results in fewer defects, less wasted effort, and quicker customer response times than traditional production methods.
Production begins as parts arrive
Goods delivered when needed
Components are ordered

18. Understand the problem to know what data to analyze and measure
data-driven analysis
The question you are trying to answer defines what you’ll measure and how you analyze it.
Consider the following examples.

19. Measurement Skills
What net income should my company report to its stockholders?
If the question you wish to answer is what net income should my company report to its stockholders, then you’ll be measuring and reporting historical financial data that complies with applicable rules.
If you are trying to determine how your company is serving its customers, then you’ll be measuring and analyzing mostly nonfinancial, process-oriented data.
If you want to predict whether your company will need to borrow money, then your measurement efforts will focus on estimating future cash flows.
Report historical data that complies with GAAP/IFRS

20. How will my company serve its customers?
Measurement Skills
How will my company serve its customers?
If the question you wish to answer is what net income should my company report to its stockholders, then you’ll be measuring and reporting historical financial data that complies with applicable rules.
If you are trying to determine how your company is serving its customers, then you’ll be measuring and analyzing mostly nonfinancial, process-oriented data.
If you want to predict whether your company will need to borrow money, then your measurement efforts will focus on estimating future cash flows.
Measure and analyze mostly nonfinancial, process-oriented data.

21. Will my company need to borrow money?
Measurement Skills
Will my company need to borrow money?
If the question you wish to answer is what net income should my company report to its stockholders, then you’ll be measuring and reporting historical financial data that complies with applicable rules.
If you are trying to determine how your company is serving its customers, then you’ll be measuring and analyzing mostly nonfinancial, process-oriented data.
If you want to predict whether your company will need to borrow money, then your measurement efforts will focus on estimating future cash flows.
Measure and analyze estimated future cash flows.