2. Goal of Managerial Accounting
The goal of Managerial Accounting is to provide the information managers need for planning, control, and decision making.

3. Planning Planning Budgets for Planning Profit Budget Cash-Flow Budget
Production Budget

4. Control Control Performance Reports for Controls
Management by Exception

5. Decision Making
The profitability and survival of a company depends on how well managers make decisions.

6. Planning and Control Process

7. A Comparison of Managerial and Financial Accounting
Internal versus External Users
Need to Use GAAP
Detail of Information

8. A Comparison of Managerial and Financial Accounting
Emphasis on Nonmonetary Information
Emphasis on the Future

9. Cost Terminology Variable Costs Fixed Costs
Change in proportion to changes in volume or activity
Fixed Costs
Do not change in response to changes in volume or activity

10. Cost Terminology Sunk Costs Opportunity Costs
Costs incurred in the past that are not relevant to present decisions
Opportunity Costs
Values of benefits foregone when selecting on alternative over another

11. Cost Terminology Direct Costs Indirect Costs
Directly traceable to a product, activity, or department
Indirect Costs
Cannot be directly traced to a product, activity, or department

12. Direct and Indirect Cost

13. Cost Terminology Controllable Costs Noncontrollable Cost
Can be influenced by management
Noncontrollable Cost
Cannot be influenced by management

14. Study Break #1
Which of the following is most likely to be a variable cost?
Depreciation
Cost of materials
Rent
Advertising
Answer:
b. Cost of materials

15. Study Break #2
Which of the following is most likely to be a fixed cost?
Cost of materials
Rent
Assembly labor cost
Commissions
Answer:
b. Rent

16. Study Break #3 Costs incurred in the past are: Answer:
Opportunity costs
Direct costs
Sunk costs
Variable costs
Answer:
c. Sunk costs

17. Two Key Ideas in Managerial Accounting
Decision making relies on incremental analysis
Incremental Revenue
Incremental Cost

18. You Get What you Measure!
Key Idea #2:
You get what you measure!

19. Information Age and Managerial Accounting
Value Chain
Software Systems
Enterprise Resource Planning Systems (ERP)
Supply Chain Management Systems (SCM)
Customer Relationship Management Systems (CRM)

20. Value Chain for Milano Clothiers

21. Impact of SCM

22. Ethical Considerations
Ethical and Unethical Behavior
Sarbanes-Oxley Act
A Framework for Ethical Decision Making
IMA Statement of Ethical Professional Practice

23. Seven Question Framework

24. Managerial Accounting Positions
Controller
Treasurer
Chief Information Officer (CIO)
Chief Financial Officer (CFO)

25. Organizational Chart

26. Example Exercise #1
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 sales ad production can be increased by 30%, but this will require adding a second production shift to work from 4:00 PM to 1:00 AM.
Indicate three production costs that are likely to increase because of adding a second production shift.
What production cost most likely will not increase when the second shift is added?

27. Example Exercise #1 Solution
Three production costs
Material costs, workers’ salaries, and benefits are all likely to increase
Which production cost most likely will not increase?
Depreciation of the building will not increase

28. CFO in Japan

29. Making Business Decisions

30. Copyright
© 2007 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.