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Management Accounting
Course Teacher
Dr. Mohammed Mehadi Masud Mazumder
Ph.D. (Tohoku University, Japan), ACMA, MBA(DU)

Email: masudmehadi@yahoo.com

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Course
Objectives
Class Time
This course seeks to give an understanding of the ways in

which management accountants can provide relevant

information for a variety of decisions to be made in managing
any organization.

Learning
outcomes
Class Time
On completion of this course, students should be able to apply
and interpret various management accounting tools and
techniques appropriate to different management activities and
decisions.

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Pre-requisite
Class Time
This course is designed to introduce Management Accounting

to the students who already have basic knowledge in financial

accounting.

Learning Activity Summary

1.
2.
3.
4.
5.
6.
7.
8.
9.

Introduction and overview of Management Accounting.

Cost Terms, Concepts and Classifications
Cost BehaviorAnalysis & use
Cost-VolumeProfit Relationships
Flexible Budget & Overhead analysis
Activity Based Costing & Activity Based Management
Relevant Costs & Decision Making
Segment reporting & Decentralization
Additional issues

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Learning Resources
Managerial Accounting R. H. Garrison, E.W. Noreen, &

P.C. Brewer, McGraw-Hill.

Introduction to Management Accounting C.T. Horngren
& G. L. Sundem, Prentice-Hall

Additional Readings
Various additional materials will be assigned and discussed in

the class rooms. The necessary materials will be delivered in

advance.

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Components of Assessment
Class participation
Assignments
Projects
Presentation
Quiz
Midterm test
Final exam

The letter grades & scales of this course will be

based on the university rules.
Any missed exam/test/paper/assignment will earn
zero point.

Todays
trend
Todaysbusiness
Business
Trends
Global competition
Time-based competition
Advanced information systems
E-Commerce
Just-in-Time management

Total Quality Management

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Accounting
Accounting is an information system which provides

information for users' decision making.

Management
Management is the process of reaching organizational goals

by working with and through people and other organizational

resources.

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The Three Management

Management
Functions Functions
Questions asked:
What do I want to do?
How can I do it?
Am I getting it done?
How well did I do it?

Management functions:
Planning for the future
(Strategic)
Planning for the future
(Operational)
Directing and Motivating
Evaluation and Control

1-14

Planning
Identify
alternatives.

Select alternative that does

the best job of furthering
organizations objectives.
Develop budgets to guide
progress toward the
selected alternative.

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1-15

Directing and Motivating

Directing and motivating involves managing day-to-day
activities to keep the organization running smoothly.
Employee work assignments.
Routine problem solving.
Conflict resolution.
Effective communications.

1-16

Controlling
The control function ensures
that plans are being followed.
Feedback in the form of performance reports
that compare actual results with the budget
are an essential part of the control function.

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1-17

Planning and Control Cycle

Formulating longand short-term plans
(Planning)
Comparing actual
to planned
performance
(Controlling)

Decision
Making

Begin

Implementing
plans (Directing
and Motivating)

Measuring
performance
(Controlling)

Management Accounting
Managerial accounting is concerned with providing

information to managersthat is, the people inside an

organization who plan, organise/direct and control its
operations.

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Management Accounting
Management Accounting combines Accounting, Finance and

Management with leading edge techniques needed to drive

successful businesses.
-for day to day operating decisions
- for long-range strategic decisions

Management vs. Financial Accounting

Two main streams of Accounting

- Financial Accounting
- Management Accounting

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Distinguish between financial accounting

and management accounting

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Management Accounting and

Financial Accounting
Primary Users
Financial

Management

External

Internal

Investors, Creditors,

Managers of the business

Government authorities

22

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Management Accounting and Financial

Accounting
Purpose of Information
Financial
Help investors and creditors
make investment and credit
decisions

Management
Help managers plan and control
business operations

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Management Accounting and Financial

Accounting
Focus and Time Dimension of the Information
Financial
Relevance and reliability
Focus on the past

Management
Relevance
Focus on future

24

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Management Accounting and Financial

Accounting
Type of Report
Financial
Financial statements
restricted by GAAP
Audited by independent
Auditor

Management
Internal reports restricted by
cost-benefit analysis
Not required

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Management Accounting and Financial

Accounting
Scope of Information
Financial Accounting

Management Accounting

Summary reports primarily

Detailed reports on parts of the

on the company as a whole

On quarterly or annual basis

company
Often on daily or weekly basis

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Management Accounting and Financial

Accounting
Behavioral
Financial
Concern about adequacy of
disclosure
Behavioral implications are
secondary

Management
Concern about how reports
will affect employee behavior

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Evolution of Management Accounting

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Evolution of Management Accounting

The International Federation of Accountants (IFAC, 1998)

identified four stages in which management Stage 1 Prior to 1950, the focus was on cost
determination and financial control, through the use
cost accounting technologies.
Stage 2 By 1965, the focus had shifted to the provision of
information for management planning and control,
through the use of technologies such as decision analysis and
responsibility accounting.

Cont.
Stage 3 By 1985, attention was focused on the reduction

of waste in resources used in business processes,

through the use of process analysis and cost management
technologies.
Stage 4 By 1995, attention had shifted to the generation or

creation of value through the effective use of

resources, through the use of technologies, which examine
the drivers of customer value, shareholder value and
organizational innovation.

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