Hilton 9th Edition Chap 001

Chapter 1
The Changing Role of Managerial Accounting in a Dynamic Business Environment
McGraw-Hill/Irwin
Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Define Managerial Accounting
Managerial accounting is the process of Identifying Measuring Analyzing Interpreting Communicating information
1-2
Managing Resources, Activities, and People

An organization . . .
Directing
Acquires Resources
Organized set of activities
Decision Making
Controlling
Planning
Hires People
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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 organizations goals. Measuring performance of activities, managers, and other employees. Assessing the organizations competitive position.
1-4
Managerial versus Financial Accounting

Financial Accounting Interested parties, outside the organization. Required and must conform to generally accepted accounting principles. Regulated by the Financial Accounting Standards Board, and, to a lesser degree, the Securities and Exchange Commission. Source of Data The organization's basic accounting system, plus Almost exclusively drawn from the organization's various other sources, such as rates of effective basic accounting system, which accumulates products manufactured, physical quantities of financial information. material and labor used in production, occupancy rates in hotels and hospitals, and average take-off delays in airlines. Nature of Reports and Reports often focus on subunits within the Reports focus on the enterprise in its entirety. Procedures organization, such as departments, divisions, Based almost exclusively on historical transaction geographical regions, or product lines. Based on a data. combination of historical data, estimates, and projections of future events.
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Managerial Accounting Users of Information Managers, within the organization. Regulation Not required and unregulated, since it is intended only for management.
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 staff position supports and assists line positions. Example: A cost accountant in the manufacturing plant.
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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
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Treasurer
Responsible for raising capital and safeguarding the organizations assets. Supervises relationships with financial institutions. Work with investors and potential investors. Manages investments. Establishes credit policies. Manages insurance coverage
1-8
Internal Auditor
Responsible for reviewing accounting procedures, records, and reports in both the controllers and the treasurers area of responsibility. Expresses an opinion to top management regarding the effectiveness of the organizations accounting system.
1-9
Major Themes in Managerial Accounting

Behavioral Issues Costs and Benefits
Information and Incentives
Evolution and Adaptation
Managerial Accounting
1-10
Cost Management Systems

Objectives
Measure the cost of resources consumed. Identify and eliminate nonvalue-added costs. Determine efficiency and effectiveness of major activities. Identify and evaluate new activities that can improve performance.
Cost Management System
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Strategic Cost Management and the Value Chain

Product Design Production Research and Development Securing raw materials and other resources
Marketing
Distribution Customer Service

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Start
Ethical Climate of Business

The corporate scandals experienced over the last few years have shown us that unethical 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.
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Managerial Accounting as a Career

Professional Organizations
Institute of Management Accountants (IMA)
Publishes Management Accounting and research studies.
Administers Certified Management Accountant program
Develops Standards of Ethical Conduct for Management Accountants

1-14
Professional Ethics
Competence Confidentiality Integrity Credibility
1-15

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Chapter 1

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Define Managerial Accounting

Managing Resources, Activities, and People

Organized set of activities

How Managerial Accounting Adds Value to the Organization

Managerial versus Financial Accounting

Line and Staff Positions

Major Themes in Managerial Accounting

Information and Incentives

Evolution and Adaptation

Cost Management Systems

Cost Management System

Strategic Cost Management and the Value Chain

Distribution Customer Service

Ethical Climate of Business

Managerial Accounting as a Career

Publishes Management Accounting and research studies.

Administers Certified Management Accountant program

Develops Standards of Ethical Conduct for Management Accountants

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