chapter_01_managerial accounting.pdf

7/23/2019 Chapter_01_Managerial Accounting.pdf

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Managerial AccountingFaculty- Rezwanul Mumtahin Husain

Chapter 1:Managerial Accounting:

An Overview


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- What is business strategy and customer value proposition

- What is management and main activities in management

- Differences between managerial and financial accounting

- Understand organizational structures

- Understand the skills managers require to succeed

- Understand process management

- What is lean production, theory of constraints, and totalquality management.

After studying this chapter, you should

understand


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Strategy: A game plan that enables a company

to attract customers by distinguishing itself from

competitors.

-Customer value proposition

Three categories of customer value

proposition

1.Customer intimacy2.Operational excellence

3.Product leadership


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Main management functions and activities:

1.Planning

2.Controlling

3.Decision Making

Planning: It involves establishing a basic strategy, selecting a course

of action and specifying how the action will be implemented.

Controlling: It involves ensuring that the plan is actually carried out

and modified as circumstances change.

Decision Making: The thought process of selecting a logical choice

from the available options. Basically answers three questions:a) What should we be selling?

b) What should we be serving?

c) How should we execute?


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Managerial Accounting and Financial Accounting

-Managerial Accounting-Financial Accounting

Comparisons between managerial and financial accounting

Managerial Accounting Financial Accounting

1. Prepared for Insiders Prepared for external parties

2.Empasize decisions affecting future Emphasizes financial consequences of

past performance

3.Empasizes relevance Emphasizes objectivity and

verifiability4.Empasizes timeliness Emphasizes precision

5.Need not follow GAAP Must follow GAAP

6. Emphasizes detailed presentation Emphasizes summary presentation

7.Not mandatory Mandatory for external reports


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Organizational structure

-Centralized

-Decentralized

Skills managers need to succeed:

a) Strategic Management Skills

b) Enterprise Risk Management Skills

c) Process Management Skills (Lean Production and

TOC)d) Leadership Skills


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Process Management

Business process: A series of steps that are followed to

carryout some task in a business.

Value chain: A form of business process that showshow functional departments in an organization interact

to add value.

Approaches to improve business processes1. Lean production

2. Theory of Constraints (TOC)


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Lean production: It is a five step management approach that

organizes resources around the flow of business processes and

pulls units through these processes in response to customer needs.

-The fourth system in Lean model is to create a pull system also

known as JIT system.

Theory of Constraints (TOC): A management approach that

emphasizes the importance of management constraints.


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Reading MaterialManagerial Accounting, Ray H. Garrison, Eric W.

Noreen & Peter C. Brewer, 14th Ed, McGraw-Hill Irwin.

Chapter 1: Managerial Accounting: An Overview

chapter_01_managerial accounting.pdf

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