Ch01 PPT Hongren CostAccounting 2e

Chapter 1
Management
accounting
in context
PowerPoint to accompany:
LEARNING OBJECTIVES
Explain the way in which cost accounting supports

management accounting and financial accounting
Explain the role of management accounting in

sustainability decisions
Explain the way in which management accountants

influence strategic decisions
Copyright 2014 Pearson Australia (a division of Pearson Australia Group Pty Ltd) 9781442563377/Horngren/Cost accounting/2e
LEARNING OBJECTIVES
Describe the set of business functions in the value chain
Identify the key success factors that customers expect

companies to meet
Explain the five-step decision-making process and its

role in management accounting
LEARNING OBJECTIVES
Describe three guidelines management accountants

follow to support managers
Describe how management accounting fits into an

organisations structure
Explain how professional ethics impacts on management

accountants decisions.
Management accounting, financial accounting

and cost accounting
Management accounting measures, analyses and reports

financial and non-financial information to help managers
make decisions to fulfill organisational goals. Management
accounting need not be GAAP compliant.
Financial accounting the focus is on reporting to external

users, including investors, creditors and governmental
agencies. Financial statements must be based on GAAP.
Management accounting, financial accounting

and cost accounting
Sustainability
Sustainability development that meets the needs of

the present without compromising the ability of future
generations to meet their own needs (Brundtland 1987).
Management accounting assists by:

identifying relevant costs and benefits
using activity-based costing
carrying out a cost-benefit analysis of sustainability
initiatives.
Strategic decisions and the management

accountant
Strategy specifies how an organisation matches its own

capabilities with the opportunities in the marketplace to
accomplish its objectives.
Strategic cost management describes cost

management that specifically focuses on strategic issues.

accountant
Management accounting helps answer important questions,
such as:
Who are our most important customers, and how do
we deliver value to them?
What substitute products exist in the marketplace, and
how do they differ from our own?
What is our critical capability?
Will we have enough cash to support our strategy, or will
we need to seek additional sources?

accountant web link
10
A case study on strategic decision-making can be

found at:
http://businesscasestudies.co.uk/cima/improvingstrategic-decision-making/
Value chain and supply chain analysis
11
Creating value is an important part of planning and

implementing strategy.
Value is the usefulness a customer gains from a

companys product or service.
12
Value chain is the sequence of business functions

in which customer usefulness is added to products
or services.
The value-chain consists of:

1. research and development
2. design
3. production
4. marketing
5. distribution
6. customer service.
13
14
Value chain and supply chain analysis web links
A YouTube video Value chain versus supply chain can be found

at: http://www.youtube.com/watch?v=mu9TWlcjNKk
And an article Value Chains Versus Supply Chains can be found at:
http://www.leadersnet.co.il/go/leadh/forums_files/7093946158.pdf
15

Key success factors
16
The dimensions of performance that customers expect,

and that are key to the success of a company, include:
cost and efficiency
quality
time
innovation.
Decision making, planning and control: the

five-step decision-making process
Planning comprises selecting goals, predicting results,

deciding how to attain goals, and communicating this to
the organisation:
17
a budget is the most important planning tool.
Control comprises taking actions that implement the

planning decisions, deciding how to evaluate performance,
and providing feedback to the organisation.
Decision making, planning and control: the

five-step decision-making process
18
Identify the problem.
Collect relevant information.
Determine possible courses of action and consider the

consequences of each.
Evaluate each possible course of action and select the

best one.
Implement the decision, evaluate performance, and

learn.
Key management accounting guidelines
19
Costbenefit approach is commonly used: as a basic decision

rule, benefits, generally, must exceed costs.
Behavioural and technical considerations: people are involved

in decisions, not just dollars and cents.
Different definitions of cost may be used for different

applications.
Management accountants in organisations
20
Professional Ethics
21
The fundamental principles of ethical conduct for

professional accountants, as advanced by the Chartered
Institute of Management Accountants, are:
integrity
objectivity
professional competence and due care
confidentiality
professional behaviour.
Professional Ethics web links
Case studies using ethical business strategies can be found at:

http://businesscasestudies.co.uk/cima/developing-ethical-businessstrategies/introduction.html
and at:
http://www.cimaglobal.com/Documents/Ethics/Good_People_Facilit
ator%27s_notes.pdf
An article Toward Professional Ethics in Business can be found at:

http://web.tepper.cmu.edu/ethics/bizethic.pdf
22

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Chapter 1

Explain the way in which cost accounting supports

Explain the role of management accounting in

Explain the way in which management accountants

Describe the set of business functions in the value chain

Identify the key success factors that customers expect

Explain the five-step decision-making process and its

Describe three guidelines management accountants

Describe how management accounting fits into an

Explain how professional ethics impacts on management

Management accounting, financial accounting

Management accounting measures, analyses and reports

Financial accounting the focus is on reporting to external

Management accounting, financial accounting

Sustainability development that meets the needs of

Management accounting assists by:

Strategic decisions and the management

Strategy specifies how an organisation matches its own

Strategic cost management describes cost

Strategic decisions and the management

Strategic decisions and the management

A case study on strategic decision-making can be

Value chain and supply chain analysis

Creating value is an important part of planning and

Value is the usefulness a customer gains from a

Value chain and supply chain analysis

Value chain is the sequence of business functions

The value-chain consists of:

Value chain and supply chain analysis

Value chain and supply chain analysis

Value chain and supply chain analysis web links

A YouTube video Value chain versus supply chain can be found

Value chain and supply chain analysis

The dimensions of performance that customers expect,

Decision making, planning and control: the

Planning comprises selecting goals, predicting results,

a budget is the most important planning tool.

Control comprises taking actions that implement the

Decision making, planning and control: the

Identify the problem.

Collect relevant information.

Determine possible courses of action and consider the

Evaluate each possible course of action and select the

Implement the decision, evaluate performance, and

Key management accounting guidelines

Costbenefit approach is commonly used: as a basic decision

Behavioural and technical considerations: people are involved

Different definitions of cost may be used for different

Management accountants in organisations

The fundamental principles of ethical conduct for

Professional Ethics web links

Case studies using ethical business strategies can be found at:

An article Toward Professional Ethics in Business can be found at:

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