1. © 2007 Pearson Education Canada Slide 1-1 1 Introduction to Managerial Accounting

2. © 2007 Pearson Education Canada Slide 1-2 Management Accounting for Managers Management accounting exists because managers require information to make decisions Primary focus of management accounting is towards users within an organization Management accounting does not exist to generate data, but it exists because managers require information for decisions Framework for Management Accounting Strategic Planning Management Control Operational Control Focus on organization’s objectives Effectiveness and efficiency of resource use Effectiveness and efficiency of tasks

3. © 2007 Pearson Education Canada Slide 1-3 Frameworks for Management Accounting OPERATIONALMANAGEMENTSTRATEGIC CONTROLCONTROLPLANNING Accounts receivableBudget analysisTanker fleet mix Order entryShort-termWarehouse and forecastingfactory location StructuredInventory reorderingEngineered costs Inventory controlVariance analysisMergers and acquisitions Semi- StructuredProduction schedulingOverall budgetCapital acquisition analysis Bond tradingBudget preparationNew product planning Cash management UnstructuredPERT COST systemsSales and productionR and D planning

4. © 2007 Pearson Education Canada Slide 1-4 Management Decision Process 1.Identify the problem. 2.Perform the necessary quantitative and qualitative analyses. 3.Identify alternative solutions to the problem. 4.Evaluate the alternative solutions. 5.Recommend one of the alternative solutions. 6.Implement the recommendation.

5. © 2007 Pearson Education Canada Slide 1-5 Management Major Means: Accounting Information 1.Problem-solving information 2.Attention-directing information 3.Scorekeeping information Major Ends: Helping Decisions 1.Managers for long-range planning and special decisions 2.Managers for planning and controlling routine operations 3.Outsiders for investors, tax collectors, regulators & others

6. © 2007 Pearson Education Canada Slide 1-6 Planning and Controlling Planning involves setting objectives and the means to their attainment What is desired? When and how is it to be accomplished? How is success to be evaluated? Controlling involves the implementation of plans and the use of feedback to monitor achievements Planning Action Evaluation

7. © 2007 Pearson Education Canada Slide 1-7 Product Life Cycle The various stages through which a product passes, from conception and development through introduction into the market through maturation and, finally, withdrawal from the market Product Development Introduction to Market Mature Market Phase-Out of Product Sales over Typical Product Life Cycle

8. © 2007 Pearson Education Canada Slide 1-8 The Value Chain Value chain is the set of business functions that add value to the products or services of an organization CUSTOMER FOCUS Research and Development Marketing Production Product & Service Process Design Distribution Customer Service

9. © 2007 Pearson Education Canada Slide 1-9 Distinctions Between Management Accounting and Financial Accounting Management Accounting Organization managers Costs versus benefits Influence on managerial behaviour Future orientation Flexible Detailed Less sharply defined Financial Accounting External parties G.A.A.P. Measurement of economic activity Past orientation Less flexible Summary reports More sharply defined Primary Users Choices Behavioural Implications Time Focus Time Span Reports Activities