Management Accounting Consultancy Reporthermanmala27_
Chapter 1 Management accounting: information for creating value and managing resources
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Welcome to ACC/ACF2200!
Dr Maleen Z. Gong
Chief Examiner and Lecturer
Lectures – Week 1-7 & 12
Dr Leona Wiegmann
Lectures – Week 8-11
Other Teaching Staff
Dr John Ko
Deputy Chief Examiner and Tutor
Mr. Paul Yap
Ms. Anushya Edward
Ms. Liyan Zhang
Introduce the unit
Discuss briefly the assessment tasks
Learn what management accounting is
Highlight how management accounting is very different to financial accounting
What we’re going to do today……
An introductory management accounting unit that focuses on the types of cost information that can be produced to assist managers and other employees within organisations with planning, control, and decision making.
ACC/ACF2200: Introduction to Management Accounting
What do management accountants (MA’s) do in the workplace?
Support managers in the process of making decisions
Identify problems and help solve them
Apply accounting concepts and techniques to real world problems
Explain accounting concepts and techniques to managers who are not trained in accounting
What does this mean to you as a management accounting student?
You must develop a strong ability to apply accounting techniques to real life problems.
You must let go of any rote learning mentality
You must gain and improve excellent analytical skills through constant practice
You must be patient! You may not be good at this straight away but with enough practice and effort every week, you will improve.
How is this unit assessed?
Please note the Assessment Tasks below are ONLY relevant for ACC/ACF2200 students. If you are enrolled in ACB2220, please refer to ACB2220 Moodle site for your assessment tasks and consult the ACB2220 Chief Examiner Dr John Ko for further details.
|ASSESSMENT TASK||DUE DATE||VALUE|
|Online quizzes||Saturday each week from Week 2 - 11||10%|
|Individual assignment||by 5pm Thursday 6th of May (Week 9)||30%|
|Individual video presentation||by 5pm Thursday 13th of May (Week 10)||10%|
|Final examination||To be advised||50%|
Tutorials: Preparation and Participation
(for ACC/ACF2200 students ONLY)
Tutorials will run in four stages:
Brief over the key learning points of relevant chapter
Students practise on in-class tutorial question/s
Tutor discusses in-class tutorial question/s
Tutor discusses homework questions
Study relevant textbook chapter
Complete homework questions
Read in-class tutorial question/s prior to attending class
Be proactive in class discussion and seeking feedback and help with your work
Please read the following on Moodle carefully:
Unit schedule and planned tutorial activities
ACC/ACF2200_S1_2021_Unit Schedule and Planned Tutorial Activities
(for ACC/ACF2200 students ONLY)
|WEEK STARTING||DATE||LECTURE TOPIC||READINGS||HOMEWORK QUESTIONS (TUTORIAL)||IN_CLASS QUESTION/S (TUTORIAL)|
|1||01 MARCH||Introduction to Management Accounting||Chapter 1||Case study of Gulf Air||Case study of Gulf Air|
|2||08 MARCH||Cost terms, concepts and classifications||Chapter 2||1.5, 1.6, 1.26, 1.27||1.32|
|3||15 MARCH||Cost behaviour, cost drivers and cost estimation||Chapter 3||2.5, 2.6, 2.7, 2.22, 2.33||2.39 & 2.40|
|4||22 MARCH||Product costing systems||Chapter 4||3.3, 3.9, 3.11, 3.26, 3.27||3.42|
|5||29 MARCH||Process costing systems||Chapter 5||4.4, 4.11, 4.22, 4.26, 4.40||4.43|
|IN-SEMESTER BREAK 2nd APRIL – 9th APRIL|
|6||12 APRIL||A closer look at overhead costs||Chapter 7||5.8, 5.9, 5.10, 5.27, 5.37||5.38|
|7||19 APRIL||Activity-based costing (ABC)||Chapter 8||7.1, 7.9, 7.21, 7.22, 7.32,||7.40 & 7.41|
|8||26 APRL||Pricing and product mix decisions||Chapter 20||8.2, 8.9, 8.11, 8.35, 8.45||8.37|
|9||03 MAY||Relevant costs for decision making||Chapter 19||20.1, 20.12, 20.18, 20.26, 20.27||20.44|
|10||10 MAY||Cost volume profit analysis||Chapter 18||19.9, 19.14, 19.29, 19.36||19.34|
|11||17 MAY||Capital expenditure decisions||Chapter 21||18.2, 18.5, 18.26, 18.33, 18.38||18.43|
|12||24 MAY||Course overview||21.23, 21.24, 21.27, 21.28, 21.30||21.29|
Night before exam
Why did Gulf-Air implement aggressive cost-control?
How did Gulf-Air cut costs?
(Please note: This question doesn’t ask you to list what costs were cut (you will do this in the next question – Q3). Instead it asks how costs were cut – i.e. what techniques were used?)
What costs were cut?
Besides cost, what other factors were taken into consideration?
What skills does a management/cost accountant need to embark on a cost-cutting project similar to Gulf-Air’s?
(Hint: It may be useful to watch the video uploaded on Moodle (Week 1)).
Reflection on ‘Cost Savings in Gulf-Air’
Please only attend the tutorial to which you are allocated
Questions about the unit or any topics within it can be posted on the forum under each week’s topic on Moodle
A pre-recorded lecture will be available on Moodle under each week’s topic by every Monday.
Please be aware of the policy regarding the use of Monash University coursework material
Further details are found on Moodle
Information for Creating and Managing Value
Langfield-Smith | Smith | Andon | Hilton| Thorne
Available now at the Campus bookstore
What is Management Accounting?
……and why is it important?
During the industrial revolution large manufacturers and producers needed information to measure their companies' performance.
These companies were privately-owned so accounting did not follow (financial) accounting standards.
Owners developed management accounting as a way to track the costs relating to the production of goods and services.
These methods became quite complex and laid the foundation for today’s cost accounting techniques
As competitors began entering economic markets and owners needed external financing for their companies, financial accounting was more important than management accounting.
In recent times….
Managers need information that is much more detailed than that found in financial reports to make decisions, solve problems, and plan for the future.
Contemporary management accounting techniques have developed to support new organisational structures, systems and practices, as a response to a rapidly changing business environment
What is management accounting?
“… the processes and techniques that focus on the effective and efficient use of organisational resources to support managers in their tasks of enhancing both customer value and shareholder value”
The value that a customer places on particular features of a product or service
The value that shareholders or owners place on a business
Management accounting systems produce the information required by managers to create value for customers and shareholders
Examples of management accounting information:
Estimates of the costs of producing goods and services
Information for planning and controlling operations
Information for measuring performance
Information for determining future plans and strategic direction
Difficult to extract this information from financial reports
How MA differs from Financial Accounting….
The practice of preparing and reporting accounting information for parties outside the organisation
Focuses on the information needs of managers inside the organisation.
Other stakeholder reports
Inventory reports for suppliers
Support organisational strategies
Analysis of potential acquisitions
Support operating plans
Analysis of product mix
Cash flow plan
Monitor and motivate
Actual vs planned performance
Financial Acc Information
Management Acc Information
MA processes and techniques help to….
Formulate and implement strategy
Improve competitive advantage
through process improvement and
Manage resources through systems of planning and control
Estimate the costs of an organisation’s inputs and outputs
Support the strategic and operational decision needs of managers
The desired future state or aspiration of an organisation
Used by senior managers
Defines the purpose and boundaries of the organisation
Objectives (or goals):
The specific aims of the organisation
Relates to a specific period of time
Management accounting and strategy
The direction that the organisation intends to take over the long term to meet its mission and achieve its objectives
Focus on ways to manage the organisation’s resources to create value for customers and shareholders
Advantages of one business over another that are difficult to imitate, achieved by
Economies of production
Superior process technologies
Tight cost control
Major decisions in formulating strategies
In what type of business will we operate in?
What products and services should we launch or discontinue?
What strategic alliances and business networks should we enter into?
What should we invest or divest in?
How should we compete in that business?
What systems and structures should we have in place to support our strategies?
Deciding how a business competes within its chosen market
Planning and managing the implementation of strategy
Performance measurement systems compare actual outcomes to budgets and other targets
New structures, new systems, new production processes, new marketing approaches, new human resource management policies
Two aspects to this….
Planning and controlling
Overlap with Financial Accounting?
Product costs are prepared to meet external reporting purposes
However….. different product costs may also be produced outside of the financial accounting system, to better meet managers’ decision-making needs
These costs may not comply with GAAP or accounting standards – FLEXIBILITY NEEDED
Different information for different purposes
High level of flexibility in MA….
Focus is on the needs of managers within the organisation
Managers’ information needs and the nature of the resources they manage
Differences in production and service technologies, organisational structure, organisational size, the external environment, level of sophistication of computer systems
Therefore, quite often….
….while accounting staff and processes may be found at the corporate level to help determine the organisation’s overall strategy, they are also found in operating divisions
Managers from other functional areas may also undertake management accounting activities, for example – customer service and warehouse managers
Cost accounting systems
We need ways of categorising, accumulating and analysing costs.
job costing systems
process costing systems
hybrid costing systems
activity-based costing systems
No two cost accounting systems are alike,
as organisations differ, so too do costing systems
Professional accounting organisations and ethics (Appendix)
In Australia, management accountants may join
Chartered Accountants Australia and New Zealand
Institute of Public Accountants
Chartered Institute of Management Accountants (CIMA)
Membership enables accountants to keep up to date with key developments.
Code of Ethics for Professional Accountants
Fundamental principles of the code
Professional competence and due care
Some slides contained in this presentation were adapted from:
Management Accounting: Information for managing and creating value 8e, Langfield-Smith, Smith, Andon, Hilton and Thorne
Copyright © 2018 McGraw-Hill Education (Australia) Pty Ltd