PowerPoint Authors:Susan Coomer Galbreath, Ph.D., CPACharles W. Caldwell, D.B.A., CMAJon A. Booker, Ph.D., CPA, CIACynthia J. Rooney, Ph.D., CPA

Managerial Accounting: An OverviewChapter 01

McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

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Financial and Managerial Accounting: Seven Key Differences

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Work of Management

Planning

Decision Making

Controlling

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Planning

Establish Goals.

Specify How Goals Will Be Achieved.

Develop Budgets.

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ControllingThe control function gathers feedback to

ensure that plans are being followed.

Feedback in the form of performance reportsthat compare actual results with the budgetare an essential part of the control function.

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Decision MakingDecision making involves making a selection among

competing alternatives.

What should we be selling?

Who should we be serving?

How should we execute?

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Certified Management Accountant

A management accountantwho has the necessary qualifications

and who passes a rigorous professional exam earns the right to be known as a

Certified Management Accountant (CMA).

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Strategic Management SkillsA strategy

is a “game plan”that enables a company

to attract customersby distinguishing itself

from competitors.

The focal point of acompany’s strategy should

be its target customers.

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Enterprise Risk Management

A process usedA process usedby a company toby a company to

proactively identifyproactively identifyand manage risk.and manage risk.

Once a company identifies its risks, perhaps themost common risk management tactic is to reduce

risks by implementing specific controls.

Should I try to avoid the risk, accept the risk, or

reduce the risk?

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Process Management

Business functions making up the value chainBusiness functions making up the value chain

Product Customer R&D Design Manufacturing Marketing Distribution Service

A businessprocess is a series of

steps that are followed in order tocarry out some task in

a business.

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Lean Production

Customer places an order

Create Production Order

Generate component requirements

Production begins as parts arrive

Goods delivered when needed

Components are ordered

Lean Production is often called Just-In-Time (JIT) production.

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A constraint (also called a bottleneck) is anything that prevents you from getting more of what you want.

The Theory of Constraints (TOC) is based on the observation that effectively managing the constraint is the

key to success.

The constraint in a system is determinedThe constraint in a system is determinedby the step that has theby the step that has the smallest smallest capacity.

Theory of Constraints

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Measurement SkillsA good manager compliments an understanding of

strategy, risks, and business processes with

data-driven analysis.

The key to effective analysis is to understand that the question you are addressing defines what you

measure and how you analyze the data.

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Measurement Skills

Controlling

Planning

DecisionMaking

The primary purpose of this course is to teach measurement skills that managers

use to support planning, controlling, and decision making

activities.

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End of Chapter 01