Management Accounting Consultancy Report


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

[email protected]

(03) 99052338

Lectures – Week 1-7 & 12

Dr Leona Wiegmann


[email protected]

(03) 99034556

Lectures – Week 8-11


Other Teaching Staff

Dr John Ko

Deputy Chief Examiner and Tutor

[email protected]

(03) 99034148

Mr. Paul Yap


[email protected]

(03) 99052374

Ms. Anushya Edward


[email protected]

Ms. Liyan Zhang


[email protected]

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.

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%
TOTAL 100%

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

Student responsibilities:

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)

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
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

Whole semester

Night before exam

During 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)).

Tutorial One

Reflection on ‘Cost Savings in Gulf-Air’

Some housekeeping….


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

Management Accounting

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?

Some history….

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”


Customer value

The value that a customer places on particular features of a product or service

Shareholder value

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….

Financial accounting:

The practice of preparing and reporting accounting information for parties outside the organisation

Management Accounting:

Focuses on the information needs of managers inside the organisation.


Shareholder reports

Financial statements

News releases

Other stakeholder reports

Credit reports

Inventory reports for suppliers

Government reports

Tax returns

Cost reports

Support organisational strategies

Capital budgets

Product development

Analysis of potential acquisitions

Support operating plans

Operating budgets

Analysis of product mix

Cash flow plan

Monitor and motivate

Actual vs planned performance

Bonus computations

Supplier quality

Financial Acc Information

Management Acc Information

MA processes and techniques help to….

Formulate and implement strategy

Improve competitive advantage

through process improvement and

cost management

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

Mission statement:

Defines the purpose and boundaries of the organisation

Objectives (or goals):

The specific aims of the organisation

Often quantified

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


Competitive advantage

Advantages of one business over another that are difficult to imitate, achieved by

Cost leadership

Economies of production

Superior process technologies

Tight cost control

Product differentiation

Superior quality

Customer service

Delivery performance

Product features


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?


Strategic planning

Long-term planning

Deciding how a business competes within its chosen market

Strategy implementation

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?

Not much!!

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

Influenced by:

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

CPA Australia

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


Professional behaviour


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