BU247 Chapter Notes -Management Accounting, Shift Work, Business Process

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Management Accounting and Decision Making
Management Accounting:
The process of supplying the managers and employees in an organization with
relevant information, both financial and nonfinancial, for making decisions,
allocating resources and monitoring, evaluating and rewarding performance
oExamples: cost of producing a product, cost of delivering a service, cost of
performing an activity or business process
Financial Accounting (external users) Managerial Accounting (internal users)
1. Retrospective, reporting and
summarizing in financial terms the
results of past decisions and transactions
2. It is primarily oriented to external
stakeholders, such as investors, creditors,
regulators and tax authorities
3. It must be consistent with rules
formulated by standard setters. (FASB,
IASB, SEC)
1. Both retrospective, providing feedback
about past operations and also
prospective, incorporating forecasts and
estimates about future events
2. Oriented to meeting the decision
making needs of employees and
managers inside the organization
3. It has no prescribed form or rules about
its content, how the content is to be
developed and how the content is to be
presented.
The Plan- Do- Check- Act (PDCA) Cycle
1. Plan (strategy):
a. Identify objectives
b. Choose a course of action to achieve the desired objectives
2. Do (exercise the strategy)
a. Implement the chosen course of action
3. Check
a. Monitor (measure) the results of the implemented course of action
b. Evaluate the results by comparing them with results expected when the
plan was developed
4. Acta. Maintain the current direction if results are acceptable. Otherwise return
to the plan stage to develop and implement an alternative course of action
Homework
1-10.
Plan: identifies the purpose strategy essentially the starting point of the PDCA.
Revenue, project projections, designing new products, life cycle using and
disposing of products
Do: implementing a chosen course of action from the planning stage and then
exercising the strategy chosen.
Check: nonfinancial and financial indicators management accounting can ensure
that the necessary acts needed to get to the end target are on track and have been
completed in a timely fashion.
Act: managers use management accounting information acquired to take actions to
lower costs, change resource allocations, improve the quality, cycle time and
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