1. Introduction to Management Accounting
28th September 2012

2. Thought of the Day…..
“The only person who never makes a mistake is the person who never does anything”
Theodore Roosevelt

3. What we will learn today:
What management accounting is
What management accountants do
What budgeting is
Why budgets are prepared
How sales budgets and production budgets are prepared

4. Management Accounting
According to the Chartered Institute of Management Accountants (CIMA), Management Accounting is "the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of information used by management to plan, evaluate and control within an entity and to assure appropriate use of and accountability for its resources. Management accounting also comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies and tax authorities"(CIMA Official Terminology).

5. Sound boring??

6. It’s not!!!

7. Management Accounting is everywhere

10. Budgeting
A Budget is a financial plan of future costs and revenues for a definite period of time.

11. Budgeting Sales Budget
Sky Ltd manufactures two products: Wind and Rain. The expected sales for each unit for the year ended 31/12/2012 are budgeted at:
Wind Rain
Sales are expected to be 3,500 units 6,000units
Selling Price €10 €5

12. Budgeting Sales Budget Wind Rain Expected Sales 3,500 units
Expected Selling Price
€10 €5
Sales Value
€35,000
€30,000

13. Budgeting
Production Budget.
Shows how many units need to be produced.

14. The amount of units to be produced is NOT necessarily the same as the number of sales units. It depends on how many units we already have(Opening Stock), and how many extra units we want to have left over (Closing Stock)

15. Production Budget Wind and Rain Example
Stocks of finished goods are expected to be:
Wind Rain
Opening Stock
Closing Stock

16. Recap Questions What is management accounting? What is budgeting?
Why are budgets prepared ?
What is a sales budget?
What is a production budget?