1. CHAPTER © jsnyderdesign / iStockphoto 1 ACCOUNTING AS A TOOL FOR MANAGEMENT

2. WHAT IS MANAGERIAL ACCOUNTING Unit 1.1 11. Unit 1.2Unit 1.3 © Tomwang112 / iStockphoto

3. 1 WHAT IS MANAGERIAL ACCOUNTING? The process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of financial information used by management to plan, evaluate, and control within an organization and to assure appropriate use of and accountability for its resources. Institute of Management Accountants, Statement on Management Accounting #1A, 1981 The process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of financial information used by management to plan, evaluate, and control within an organization and to assure appropriate use of and accountability for its resources. Institute of Management Accountants, Statement on Management Accounting #1A, 1981

4. 1 AGAIN I ASK, WHAT IS MANAGERIAL ACCOUNTING? A profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization’s strategy. Institute of Management Accountants, Statement on Management Accounting, Definition of Management Accounting, 2008 A profession that involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization’s strategy. Institute of Management Accountants, Statement on Management Accounting, Definition of Management Accounting, 2008

5. 1 IN SIMPLER TERMS…

6. 1 ► An internal rather than external focus ► Lack of mandated rules ► Focus on operating segments ► Focus on the future ► Emphasis on timeliness MANAGERIAL ACCOUNTING vs. FINANCIAL ACCOUNTING

7. 1 WHAT DO MANAGERS DO? ► Planning ► Controlling ► Evaluating ► Decision Making

8. 1 PLANNING IS…

9. 1 CONTROLLING IS…

10. 1 EVALUATING IS…

11. 1 DECISION MAKING IS…

12. 1 MANAGER PRACTICE SESSION 1 ► What is your plan (goal) for the course? ► How will you control your day-to-day operations? ► How will you evaluate your performance? ► What decisions will you make? Think of yourself as the manager in your approach to this managerial accounting course.

13. DIFFERENT STRATEGIES DIFFERENT INFORMATION Unit 1.112. Unit 1.2 Unit 1.3 © Tomwang112 / iStockphoto

14. 1 STRATEGY DETERMINES INFORMATION NEEDS ► An organization needs to set strategies first and then determine the information required to monitor achievement of those strategies ► Different strategies require different information sets Product differentiation vs. low-cost production Market share: build, hold, harvest, or divest ► Many tools are available to provide this information and assist in decision making activities

15. 1 THE BALANCED SCORECARD ► Developed in the early 1990s to provide a multidimensional assessment of strategic achievement ► Measures go beyond traditional financial indicators of success

16. 1 SUPPLY CHAIN MANAGEMENT ► A network of trading partners (customers and suppliers) ► From raw material creation to end user ► Get the right products to the right location, in the right quantities, at the right time, at the right cost SUPPLIERORGANIZATIONCUSTOMER

17. 1 IDENTIFYING A SUPPLY CHAIN Identify the supply chain trading partners involved in getting your textbook for this course into your hands. Tree Farm Logging Company Transportation Company Paper Company Printing Company Bookstore YOU

18. 1 JUST-IN-TIME (JIT) INVENTORY ► An inventory management philosophy that attempts to minimize the amount of inventory on hand ► Requires frequent deliveries of small lots of materials ► Requires a complementary quality program since there is no extra inventory to replace defective components

19. 1 ENTERPRISE RESOURCE PLANNING (ERP) SYSTEMS ► An information system that integrates the organization’s data into a single system ► Facilitates the sharing of information across the organization to support decision making activities

20. ETHICAL CONSIDERATIONS IN MANAGERIAL ACCOUNTING Unit 1.113. Unit 1.2 Unit 1.3 © Tomwang112 / iStockphoto

21. 1 WHAT IS ETHICAL BEHAVIOR? ► Knowing right from wrong, and then doing the right thing ► Ethical behavior is not necessarily the same thing as legal behavior ► Unethical behavior can result in catastrophic results ► Top managers in the organization must model ethical behavior for the rest of the organization

22. 1 IMA STATEMENT OF ETHICAL PROFESSIONAL PRACTICE ► Overarching principles: Honesty, Fairness, Objectivity, Responsibility ► Four standards Competence Confidentiality Integrity Credibility ► Steps to resolve ethical conflict

23. 1 UNETHICAL BEHAVIOR IS AROUND Sources: Ethics Resource Center, National Business Ethics Survey: How Employees View Ethics in Their Organizations 1994–2005, 2007 National Business Ethics Survey: An Inside View of Private Sector Ethics, 2009 National Business Ethics Survey: Ethics in the Recession, 2011 National Business Ethics Survey: Workplace Ethics in Transition.