m anagerial accounting and business environment chapter one

MANAGERIAL ACCOUNTING AND BUSINESS ENVIRONMENT

CHAPTER ONE

DIFFERENCE BETWEEN FINANCIAL AND MANAGERIAL ACCOUNTING

Financial Managerial Reports for Users Reports for Decision Mks Past Activities Future Activities Comparison Relevance Accuracy Fast Information Entire Organization Segments

BS, IN, CF, SE Dept, Cust, Vend, Empl, Pro YES GAAP NO GAAP External Reports Reports when

needed

TRADITIONALLY“Idleness Waste Money” or

if manpower and machine are not running you are losing money

PUSH THROUGH PRODUCTION---OLD

PUSH through Production –old way Three inventories: Raw Materials (RM), Work

in Process(WIP), Finished Goods (FG)

RM | WIP FG Company Queque Results in Large Inventory waiting to

be sold

THREE APPROACHES FOR IMPROVEMENT

Lean ProductionTheory of ConstraintsSix Sigma

LEAN PRODUCTION Lean means Less Costs Advantages:

Lower Inventory required Fewer Defects Less Wasted Effort Quicker Customer Response

LEAN PRODUCTION CON’T

Summaries all theories into 1Value AddedFlow Chart of ActivitiesManufacturing Cell Just in Time (JIT)Supply Chain Management and Continuous Improvement

VALUE ADDED Value Chain pg 12 Activities that add value per customer Chip Box vs Dove Box

FLOW CHART

List Processes or Activities How It Is Made

TRADITIONAL PRODUCTION

Several large Machines with only one job each

Mixing Machine Cutting Machine Wrapping Machine

MANUFACTURING WORK CELL

One Machine performing several jobs Several Multi-job Machines

Each Machine Mixes-Cuts-Wraps

JUST IN TIME (JIT)

Pull Through Production--- Customer initiates

RM WIP FG (Customer order) Shipped immediately to customer No queing of inventory

SUPPLY CHAIN MANAGEMENT AND CONTINUOUS IMPROVEMENT

Suppliers responsible for Quality of Incoming Parts and Materials

Production Workers responsible for Quality during WIP

THEORY OF CONSTRAINTS

Control of Bottlenecks

Increase capacity to remove bottleneck where process has smallest capacity

Freeway system --- Norwalk on Interstate 5

Throughput time--- Cycle time to manufacture a product

SIX SIGMA OR ZERO DEFECTS

Non Value Added Identify process that do not add value or

those customer is not willing to pay for Eliminate Non Value Activities Activities that use resources but do not add

value