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Lecture 1

AFM102 Lecture Notes - Lecture 1: Groupthink, Value Chain, Lean ManufacturingPremium

5 pages93 viewsWinter 2018

Department
Accounting & Financial Management
Course Code
AFM102
Professor
Catherine Wong
Lecture
1

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Managerial accounting provides information to managers for use in planning and controlling
operations and for decision making
Data to help the organization run more efficiently
Determining and developing internal accounting information to help managers make decisions to
satisfy customers and improve efficiencies
Requires a variety of reports
o Budgets, forecasts, detailed data by division
Develop a competitive advantage in the marketplace
How a company better manages its costs
o Bonus structure to implement for employees
Financial accounting provide information to shareholders, creditors, and other stakeholders outside
the organization
Judges the company's past performance
The Work of Managers and Their Need For Managerial Accounting Information
Planning establishing goals and specifying how to achieve them
o Ask numerous questions to specify how the goal will be achieved
o Budget - quantitative plan for acquiring and using financial and other resources over a given time
period, accompanies a plan
Companies do not share budgets with other companies or with the public
o Work with other managers in the company to establish the budget and how much will be spent
Directing and motivating mobilizing people to carry out plans and run routine operations
o Oversee day-to-day activities
o Assign tasks, solve problems, answer questions, other decisions that affect employees and
customers
o Daily sales reports
Controlling gathering feedback to ensure that the plan is being properly executed or modified as
necessary
o Gathering, evaluating, and responding to feedback to ensure the year's process meets
expectations
o Finding ways to improve for the year after
o Performance reports detailed reports prepared on a periodic basis that compare budgeted data
to actual data
Find out why performance exceeded or failed to meet expectations
Identify and eliminate sources of unsatisfactory performance
Evaluate and reward employees
Decision making selecting a course of action from among alternatives
o Make intelligent, data-driven decisions
o Answer the following questions:
What should be sold?
Whom do we sell to?
How should the company execute the plan?
o Allocate marketing budget to products that appeal to different customer bases
Planning and control cycle the flow of management activities through planning, directing,
motivating, controlling, and then back to planning
o The entire process requires strong decision making
o Prepare detailed reports to make day-to-day and long-term decisions, and direct resources
towards goals
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o Compare actual revenues and costs with what was budgeted and prepare reports about
variances
Strategic Management
Strategy a game plan that enables a company to attract and retain customers by distinguishing
itself from competitors
Main focus of the company is to please target customers, and have them choose the company over
competitors
Customer value propositions fall into three categories
o Customer intimacy
Signal to the target customers that they will meet their needs better than any other
competitor
o Operational excellence
The company can deliver better products to customers faster, more conveniently, and at a
lower price than competitors
o Product leadership
The company offers higher quality products than competitors
Sophisticated performance measurement systems, such as the balance scorecard track performance
that is important to the company strategy
o Customer satisfaction, number of new products, research and development, delivery time
o Find margins for expenses
o Products that have a high profit margin, correlate with higher sales
Comparison of Financial and Managerial Accounting
Accounting (Financial and operating data)
Recording
Estimating
Organizing
Summarizing
Financial Accounting
Managerial Accounting
Reports to those outside the organization
Owners
Creditors
Tax authorities
Regulators
Financial consequences of past events
Objectivity and verifiability
Precision
Summary data concerning the entire organization
Breakdown of revenues and costs by major
segments, secondary emphasis
Must follow GAAP/ASPE/IFRS
External stakeholders want assurance that
financial statements have been prepared with
ground rules
Enhance comparability and clarity of financial
information on a global basis
Reports to those inside the organization for:
Planning
Directing and motivating
Controlling
Decision making
Decisions affecting the future
Planning is important, there is a strong future
orientation
Not simply a reflection of the past, changes are
constantly taking place
Change in economic conditions
Relevance
Even if it is not completely objective and
verifiable
Appropriate for the decision being made
Timeliness
Precise information takes time and effort
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