1. Copyright © 2009 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

2. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Learning Objective 1

3. 1-3 Managerial accounting is the process of Identifying Measuring Analyzing Interpreting Communicating information Define Managerial Accounting

4. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Learning Objective 2

5. 1-5 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

6. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Learning Objective 3

7. 1-7 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 subunits, 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 subunits, activities, managers, and other employees. Assessing the organization’s competitive position.

8. 1-8 The Balanced Scorecard Financial Perspective Goals Measures Customer Perspective Goals Measures Operations Perspective Goals Measures Innovation Perspective Goals Measures How do we look to owner’s? How do customers see us? How can we continue to improve? In which activities must we excel?

9. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Learning Objective 4

10. 1-10 Managerial versus Financial Accounting Accounting System (accumulates financial and managerial accounting data in the cost accounting system) Accounting System (accumulates financial and managerial accounting data in the cost accounting system) Managerial Accounting Information for decision making, planning, and controlling an organization’s operations. Managerial Accounting Information for decision making, planning, and controlling an organization’s operations. Financial Accounting Published financial statements and other financial reports. Financial Accounting Published financial statements and other financial reports. InternalUsers ExternalUsers

11. 1-11 Managerial versus Financial Accounting

12. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Learning Objective 5

13. 1-13 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.

14. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Learning Objective 6

15. 1-15 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

16. 1-16 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

17. 1-17 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.

18. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Learning Objective 7

19. 1-19 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

20. 1-20 Evolution and Adaptation in Managerial Accounting E-Business Service vs. Manufacturing Firms Emergence of New Industries Global Competition Focus on the Customer Cross-Functional Teams Product Life Cycles Time-Based Competition Information and Communication Technology Just-in-Time Inventory Total Quality Management Continuous Improvement Change

21. 1-21 Objectives ÊMeasure the cost of resources consumed. ËIdentify and eliminate non-value-added costs. Objectives ÊMeasure the cost of resources consumed. ËIdentify and eliminate non-value-added costs. Cost Management Systems Cost Management System

22. 1-22 Objectives ¸Determine efficiency and effectiveness of major activities. ¹Identify and evaluate new activities that can improve performance. Objectives ¸Determine efficiency and effectiveness of major activities. ¹Identify and evaluate new activities that can improve performance. Cost Management Systems Cost Management System

23. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Learning Objective 8

24. 1-24 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

25. 1-25 Theory of Constraints identifying and removing constraints A sequential process of identifying and removing constraints in a system. Restrictions or barriers that impede progress toward an objective

26. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Learning Objective 9

27. 1-27 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.

28. Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Learning Objective 10

29. 1-29 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

30. 1-30 Professional Ethics 4Competence 4Confidentiality 4Integrity 4Credibility

31. 1-31 End of Chapter 1