I.K.

Gunarta

COST MANAGEMENT AND INVESTMENT Engineering Management Program

ITS Surabaya

AN OVERVIEW ik.gunarta@gmail.com
Mobile: 0811 372 068
 Organizations

 Types of organizations include manufactures, retailers, services

industries, agribusiness, nonprofit firms
 All organizations have goals – for example: growth, profit, quality,
leadership, etc.
 All organizations have information needs in the financial,
production, personnel, environmental, and legal areas. Managerial
accounting provides some of this information.
 All organizations have a management process, and managerial
accounting provides information and analytical tools to use in that
process.
Cost Management and Investment – I.K. Gunarta 2
 Managing Resources, Activities, and
People An organization . . .
Directing

Acquires Resources Decision

Organized set Making
of activities

Controlling Planning
Hires People
Managerial Accounting – I.K. Gunarta 3
 Managerial versus Financial Accounting
Accounting System
(accumulates financial and
managerial accounting data)

Managerial Accounting Financial Accounting

Information for decision Published financial
making, and control statements and other
of an organization’s financial reports.
operations.
Internal External
Users Users
Cost Management and Investment – I.K. Gunarta 4
 Managerial versus Financial Accounting
Managerial Accounting
Managers within company
Users of information
Regulation Not required because for internal
use only
Source of Data Basic accounting system plus
various other sources
Nature of Reports Reports often focus on subunits.
and Procedures Based on a combination of
historical data, estimates, and
projections of future events.
Cost Management and Investment – I.K. Gunarta
Financial Accounting
Interested outside parties
Required
Almost exclusively from the
basic accounting system
Reports focus on the enterprise
in its entirety. Based on
historical transactions.
5
 Line and Staff Positions
A line position is directly A staff position supports
involved in achieving of and assists line positions.
the basic objectives of an Example: A cost
organization. accountant in the
Example: A production manufacturing plant.
supervisor in a
manufacturing plant.

Managerial Accounting – I.K. Gunarta 6

 Controller

The chief managerial and financial accountant

responsibility for:

o Financial planning and analysis.

o Cost control.
o Financial reporting.
o Accounting information systems.

Cost Management and Investment – I.K. Gunarta 7

 Treasurer

Responsible for raising capital and safeguarding

the organization’s assets.

 Supervises relationships with financial institutions.

 Works with investors and potential
investors.
 Manages investments.
 Establishes credit policies.

Cost Management and Investment – I.K. Gunarta 8

 Internal Auditor

Responsible for reviewing the accounting procedures, records,

and reports in both the controller’s and the treasurer’s area of
responsibility.

Expresses an opinion to top

management regarding the
effectiveness of the
organization’s accounting
system.

Cost Management and Investment – I.K. Gunarta 9

 Role of Managerial Accountant

Organization Chart
Stockholders

Board of Directors

President

Controller Treasurer Vice President Vice President

Production Sales
Cost Management and Investment – I.K. Gunarta 10
 Evolution and Adaptation in Managerial
Accounting
Service Vs. Manufacturing Computer-Integrated
Firms Manufacturing
Information and
Emergence of New
Communication
Industries Change Technology
Global Competition Product Life Cycles
Total Quality
Focus on the Customer
Management
Cross-Functional Teams Time-Based Competition
Continuous Improvement Just-in-Time Inventory
Cost Management and Investment – I.K. Gunarta 12
 Cost Management Systems

Objectives
1. Measure the cost of resources consumed.
2. Identify and eliminate non-value-added costs.

Cost Management and Investment – I.K. Gunarta 13

 Cost Management Systems
Objectives
1. Measure the cost of
resources consumed.
2. Identify and eliminate
non-value-added costs.
Cost Management and Investment – I.K. Gunarta
3. Determine efficiency
and effectiveness of
major activities.
4. Identify and evaluate
new activities that can
improve performance.
14
 Strategic Cost Management and the Value
Chain
Product
Design
Production
Research
and
Development Marketing

Securing raw
materials and Distribution
other resources

Customer
Start Service

Cost Management and Investment – I.K. Gunarta 15

 Theory of Constraints

A sequential process of identifying and removing

constraints in a system.

Restrictions or barriers that impede

progress toward an objective

Cost Management and Investment – I.K. Gunarta 16

 Managerial Accounting as a Career

Professional Organizations

Institute of Management Accountants (IMA)

Develops
Publishes Administers
Standards of
Management Certified
Ethical
Accounting Management
Conduct for
and research Accountant
Management
studies. program
Accountants
Cost Management and Investment – I.K. Gunarta 17
 Professional Ethics

Ethical business practices build trust and promote loyal,

productive relationships with customers, employees and
suppliers.
Many companies have written codes of ethics which serve
as guides for employees to follow.

Cost Management and Investment – I.K. Gunarta 18

 Professional Ethics

Competence
Confidentiality
Integrity
Objectivity
Resolution of Ethical Conflict

Cost Management and Investment – I.K. Gunarta 19

End of Chapter 1

Cost Management and Investment – I.K. Gunarta 20