Kế toán tài chính 2 - Chapter 1: Managerial accounting in the information age

Prepared by Debby Bloom-Hill CMA, CFMCHAPTER 1Managerial Accounting in theInformation AgeSlide 1-2Managerial AccountingManagerial accounting is designed for internal usersThe goal of Managerial Accounting is to provide the information managers need forPlanningControlDecision makingSlide 1-3Learning objective 1: Explain the primary goal of managerial accounting and distinguish between financial and managerial accounting.PlanningPlanning is a key activity for all companiesCommunicates a company’s goals to employeesAids coordination of various functions such as sales and productionSpecifies the resources needed to achieve company goalsSlide 1-4Learning objective 1: Explain the primary goal of managerial accounting and distinguish between financial and managerial accounting.PlanningBudgets for planningProfit budgetIndicates planned incomeCash flow budgetIndicates planned cash inflows and outflowsProduction budgetIndicates the planned quantity of production and expected costsSlide 1-5Learning objective 1: Explain the primary goal of managerial accounting and distinguish between financial and managerial accounting.PlanningSlide 1-6Learning objective 1: Explain the primary goal of managerial accounting and distinguish between financial and managerial accounting.ControlOrganizations achieve control by:Evaluating managers to determine how their performance should be rewarded or punishedEvaluating operations to provide information as to whether they should be changed or notSlide 1-7Learning objective 1: Explain the primary goal of managerial accounting and distinguish between financial and managerial accounting.Planning and Control ProcessSlide 1-8Learning objective 1: Explain the primary goal of managerial accounting and distinguish between financial and managerial accounting.Sample Performance ReportSlide 1-9Learning objective 1: Explain the primary goal of managerial accounting and distinguish between financial and managerial accounting.Managerial vs Financial AccountingUnlike Financial Accounting, Managerial Accounting:Is directed at internal usersMay deviate from GAAPPresents more detailed informationMay present more nonmonetary informationPlaces more emphasis on the futureSlide 1-10Learning objective 1: Explain the primary goal of managerial accounting and distinguish between financial and managerial accounting.Cost TerminologyVariable CostsIncrease or decrease in proportion to changes in volume or activityMaterials and labor are generally considered to be variable costsSlide 1-11Learning objective 2: Define cost terms used in planning, control, and decision making.Cost TerminologyFixed CostsDo not change in response to changes in volume or activityDepreciation and rent are examples of fixed costsSlide 1-12Learning objective 2: Define cost terms used in planning, control, and decision making.Which of the following is most likely to be a variable cost?DepreciationCost of materialsRentAdvertisingAnswer:b. Cost of materialsSlide 1-13Learning objective 2: Define cost terms used in planning, control, and decision.Test Your Knowledge 1Which of the following is most likely to be a fixed cost?Cost of materialsRentAssembly labor costCommissionsAnswer:b. RentSlide 1-14Learning objective 2: Define cost terms used in planning, control, and decision making.Test Your Knowledge 2Cost TerminologySunk CostsCosts incurred in the pastNot relevant to present decisionsOpportunity CostsValues of benefits foregone when selecting one alternative over anotherSlide 1-15Learning objective 2: Define cost terms used in planning, control, and decision making.Costs incurred in the past are:Opportunity costsDirect costsSunk costsVariable costsAnswer:c. Sunk costsSlide 1-16Learning objective 2: Define cost terms used in planning, control, and decision making.Test Your Knowledge 3Cost TerminologyDirect and indirect costsDirect costs are directly traceable to a product, activity, or department, indirect costs are not traceableControllable and non-controllable costsA manager can influence controllable costs but cannot influence non- controllable costsSlide 1-17Learning objective 2: Define cost terms used in planning, control, and decision making.Direct and Indirect CostSlide 1-18Learning objective 2: Define cost terms used in planning, control, and decision making.In the past year, Williams Mold & Machine had sales of $8,000,000 and total production costs of $6,000,000. In the coming year, the company believes that production can be increased by 30%, but this will require adding a second shift to work from 4:00 pm to 1:00 am.Slide 1-19Test Your Knowledge 41. Indicate three production costs that are likely to increase because of adding a second production shift. Material costs, workers’ salaries, and benefits are all likely to increase. Learning objective 2: Define cost terms used in planning, control, and decision making.In the past year, Williams Mold & Machine had sales of $8,000,000 and total production costs of $6,000,000. In the coming year, the company believes that production can be increased by 30%, but this will require adding a second shift to work from 4:00 pm to 1:00 am.Slide 1-20Test Your Knowledge 5What production cost most likely will not increase when the second shift is added? Depreciation of the building will not increase. Learning objective 2: Define cost terms used in planning, control, and decision making.Two Key Ideas in Managerial AccountingSlide 1-21Learning objective 3: Explain the two key ideas in managerial accounting.Incremental AnalysisSlide 1-22Learning objective 3: Explain the two key ideas in managerial accounting.Incremental analysis:Differences in revenues and costs between alternatives are incrementalIncremental revenue minus incremental cost equals incremental profitYou Get What you Measure Performance measures greatly influence the behavior of managersSlide 1-23Learning objective 3: Explain the two key ideas in managerial accounting.Test Your Knowledge 6Jason Deen is the owner of Deen’s Custom Motorcycles. Recently, his cousin, Jake, crashed his bike and brought it in for repairs. Jason offered to fix the bike and charge his cousin for just the incremental costs.Which of the following is an incremental cost associated with the repair job?Depreciation on toolsSalary paid to the accountant at Deen’sRequired partsUtilities (e.g., heat and electricity)Answer: c. Required partsSlide 1-24Learning objective 3: Explain the two key ideas in managerial accounting.Information Age and Managerial AccountingAdvances in information technology have:Increased competition and also created opportunities and cost savings for firms that use information for strategic advantageImpacted information flows up and down the value chain (i.e. fundamental activities that a firm engages in to create value)Slide 1-25Learning objective 4: Discuss the impact of information technology on business processes and the interactions companies have with suppliers and customers.The Value ChainSlide 1-26Learning objective 4: Discuss the impact of information technology on business processes and the interactions companies have with suppliers and customers.Impact of Software Systems on the Value ChainEnterprise Resource Planning (ERP)Computerize inventory control and production planningSupply Chain Management (SCM)Organization of activities between a company and its suppliersCustomer Relationship Management (CRM)Manages information related to a variety of customer interactionsSlide 1-27Learning objective 4: Discuss the impact of information technology on business processes and the interactions companies have with suppliers and customers.Ethical and Unethical BehaviorExamples of unethical behaviorEnron managers mislead investors by hiding debt, i.e. Kenneth Lay, CEO, found guilty of fraudWorldCom overstated profitsBernard Ebbers, CEO, received a 25 year prison sentenceDennis Kozlowski, head of Tyco, was charged with avoiding taxesSam Waksal, cofounder of IMClone, was charged with insider tradingSlide 1-28Learning objective 5: Describe a framework for ethical decision making, and discuss the duties of the controller.Sarbanes-Oxley ActSlide 1-29Enacted by Congress in July 2002Requires CEO and CFO to certify that the financial statements do not contain any untrue statements or omissionsBans certain types of work by the company’s auditors to ensure their independenceLearning objective 5: Describe a framework for ethical decision making, and discuss the duties of the controller.Sarbanes-Oxley ActSlide 1-30Provides for longer jail sentences and larger fines for executives (i.e. fines up to $5 million and jail terms up to 20 years)Requires companies to report on the existence and reliability of internal controlsLearning objective 5: Describe a framework for ethical decision making, and discuss the duties of the controller.Framework for Ethical Decision MakingWhen evaluating a decision, ask:What decision alternatives are available?2. What individuals or organizations have a stake in the outcome of my decision?Will an individual or an organization be harmed by any of the alternatives?Which alternative will do the most good with the least harm?5. Would someone I respect find any of the alternatives objectionable?Slide 1-31Learning objective 5: Describe a framework for ethical decision making, and discuss the duties of the controller.Framework for Ethical Decision MakingAfter deciding on a course of action, but before taking action, ask:At a gut level, am I comfortable with the decision I am about to make?7. Will I be comfortable telling my friends and family about this decision?Slide 1-32Learning objective 5: Describe a framework for ethical decision making, and discuss the duties of the controller.Institute of Management Accountants (IMA)Slide 1-33Professional organization which focuses on management accounting:Developed Statement of Ethical Professional PracticeMaintains ethics helplinePublishes Strategic Finance and Management Accounting QuarterlyConducts comprehensive examination to test knowledge of management accountantsLearning objective 5: Describe a framework for ethical decision making, and discuss the duties of the controller.Controller as Top Management AccountantSlide 1-34ControllerPrepares reports to plan and evaluate company activitiesProvides information needed to make management decisionsFiles all financial accounting reports and tax filings with IRS and other tax agenciesCoordinates activities of external auditors Learning objective 5: Describe a framework for ethical decision making, and discuss the duties of the controller.Duties of OfficersSlide 1-35TreasurerManages cash and marketable securitiesPrepare cash forecastsObtains financing from banks and other lendersMaintain relationships with investors, banks, and other creditorsLearning objective 5: Describe a framework for ethical decision making, and discuss the duties of the controller.Duties of OfficersSlide 1-36Chief Information Officer (CIO)Responsible for information technology and computer systemsChief Financial Officer (CFO) Responsible for accounting and finance operationsLearning objective 5: Describe a framework for ethical decision making, and discuss the duties of the controller.Organizational Chart for the Controller’s OfficeSlide 1-37Learning objective 5: Describe a framework for ethical decision making, and discuss the duties of the controller.Decision MakingSlide 1-38Copyright © 2016 John Wiley & Sons, Inc. 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