1. McGraw-Hill/Irwin Slide 1 McGraw-Hill/Irwin Slide 1 Lecturer Name: 吉伟莉 Mobile Phone: 13807098035 Email: jiweili18@sohu. com jiweili18@sohu. com

2. Slide 2 You may be advised to follow three steps as follows: Step 1: Prepare (before class)—Skim- read through Study Text chapters, check new words in your dictionary Step 2: Attend all sessions—Take brief notes(Don’t copy slides word by word, just mark key points on your textbook) Step 3: Review (after class)——Read through detailed contents, attempt all questions and exercises attached to each chapter.

3. Slide 3 Course Administration and Home Study Daily attendance register Home study --Home study is vital for this paper --Reading assignment required --Question practice essential Don’t be Late & Switch off Mobile Phones

4. Slide 4 Students will be expected to undertake their own study and to take responsibility for their own learning outcomes. Make an effort not to get behind in this course. Each new topic builds upon concepts covered in the previous topics. Hence, if you do not keep up on a weekly basis you will find it difficult at the end of the semester.

5. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1-5 Introduction to Cost Accounting Maryanne M. Mowen and Don R. Hansen

6. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1-6 Introduction to Cost Management 1

7. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1-7 Financial Accounting Versus Management Accounting: A Systems Framework Accounting information systems Financial accounting Produces outputs for external users. Follows rules and conventions such as those set by the SEC and FASB. Creates outputs such as financial statements. Cost management accounting Produces outputs for internal users. Designed to cost services, products and other objects. Is used in planning and control and decision making. Criteria and formats set internally. Outputs include reports, schedules and analyses. 1

8. Financial accounting Management Accounting Cost Accounting Defined, periodic reports Objective & verifiable Historical Objectivity & reliability Infinite/customised reports Present & Future Focus Relevance & Timeliness Financial accounting & cost management accounting

9. Financial accounting Management accounting Legal requirement √× UsersExternal and internal Internal PrecisionTrue and fair As accurate as possible for the users needs RulesGAAP No rules govern them but some established techniques used ReportingPast date Past and present data to make decisions about future ScopeWhole organisation Segments/divisions or whatever is needed by the business FrequencyAnnualAs required

10. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1-10 Cost management accounting information system Two major subsystems Cost accounting information system Assigns costs to individual products and services. Assists external financial reporting by valuing inventories and determining cost of sales. These assignments must conform to external rules. Operational control information system Provides accurate and timely feedback concerning performance. Improve profit by increasing customer value. 1

11. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Factors Affecting Cost Management Global Competition The new competitive environment has increased the demand not only for more cost information but also for more accurate information. Vastly imported transportation and communication has led to a global market for many manufacturing and service firms. 1-11 2

12. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1-12 Factors Affecting Cost Management Growth of the Service Industry 2 As the traditional industries has declined in importance, the service sector of the economy has increased in importance. Deregulation of many services has increased competition in the service industry.

13. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1-13 Factors Affecting Cost Management Advances in Information Technology 2 Computers are used to monitor and control operations. The result is an operational system that is fully integrated with marketing and accounting data. Increased ability to accurately cost products because of advances in tools. Emergence of e-commerce Internet trading Electronic data interchange Bar coding

14. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1-14 Factors Affecting Cost Management Advances in Management Environment 2 The theory of constraints is a method used to continuously improve manufacturing activities and nonmanufacturing activities. Just-in-time manufacturing is a demand-pull system that strives to produce a product only when it is needed and only in the quantities demanded by customers. Computer-integrated manufacturing is the automation of the manufacturing environment.

15. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1-15 Factors Affecting Cost Management Customer Orientation 2 Firms are competing not only in terms of technology and manufacturing, but in the speed of delivery and response to deliver value to the customer. Companies must also satisfy the needs of internal customers, such as staff functions exist to support line functions. New Product Development Management recognizes that a high proportion of production costs are committed during the development and design stage of a new product. The requirement to control cost encourages the use of target costing and activity-based management.

16. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1-16 Factors Affecting Cost Management Total Quality Management 2 Continual improvement and elimination of waste are the two foundation principles that govern a state of manufacturing excellence. A philosophy of total quality management, in which managers strive to create an environment that will enable organizations to manufacture perfect products, has replaced the acceptable quality attitudes of the past.

17. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1-17 Factors Affecting Cost Management Time as a Competitive Element 2 Time is the crucial element in all phases of the value chain. Decreasing non-value-added time appears to go hand- in-hand with increasing quality. Efficiency While quality and time are important, improving these dimensions without corresponding improvements in financial performance may be futile, if not fatal.

18. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1-18 The Role of the Management Accountant 3 Line positions are positions that have direct responsibility for the basic objectives of an organization. Staff positions are positions that are supportive in nature and have only indirect responsibility for an organization’s basic objectives.

19. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1-19 The Role of Today’s Cost and Management Accountant 3 Partial Organizational Chart: Manufacturing Company

20. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Role of Today’s Cost and Management Accountant The Controller  Financial reports  SEC reporting  Tax planning and reporting  Performance reporting  Internal auditing  Budgeting  Accounting systems and internal controls The Treasurer  Collection of cash  Monitoring of cash payments  Monitors cash availability  Short-term investments  Short and long-term borrowing  Issuing of capital stock 1-20 3

21. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1-21 Information for Planning, Controlling, Continuous Improvement, and Decision Making 3 Planning is the detailed formulation of future actions to achieve a particular end. Planning requires setting objectives and identifying methods to achieve those objectives. Controlling is the managerial activity of monitoring a plan’s implementation and taking corrective action as needed. Feedback is information that can be used to evaluate or correct the steps being taken to implement a plan.

22. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1-22 Information for Planning, Controlling, Continuous Improvement, and Decision Making 3 Continuous improvement is required in a dynamic environment if a firm is to remain competitive or to establish a competitive advantage. Decision making is the process of choosing among competing alternatives

23. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1-23 Accounting and Ethical Conduct 4 Benefits of Ethical Behavior Can create customer and employee loyalty Avoid litigation costs

24. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1-24 Accounting and Ethical Conduct 4 Standards of Ethical Conduct for Management Accountants Competence Confidentiality Integrity Credibility

25. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1-25 Certification 5 CMA: One of the main purposes of the CMA was to establish management accounting as a recognized, professional discipline, separate from the profession of public accounting. CPA: The responsibility of a CPA is to provide assurance concerning the reliability of financial statements. CIA: The focus of the CIA is to recognize competency in internal auditing rather than external auditing as with the CPA.

26. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1-26 Certification 5 1)Business analysis 2)Management accounting and reporting 3)Strategic management 4)Business applications Four areas emphasized on the CMA exam:

27. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1-27 End of Chapter 1