Managerial Accounting and the Business Environment,Chapter1,Managerial Accounting and Financial Accounting,Managerial accountingprovides informationfor managers of anorganization whodirect and controlits operations.,Financial accountingprovides informationto stockholders,creditors and otherswho are outsidethe organization.,Work of Management,Planning,Controlling,Directing and Motivating,Planning and Control Cycle,DecisionMaking,Formulating Long-andShort-Term Plans (Planning),MeasuringPerformance (Controlling),Implementing the Plans(Directing and Motivating),Comparing ActualtoPlanned Performance (Controlling),Begin,Differences Between Financial and Managerial Accounting,Expanding Role of Managerial Accounting,Increasing complexity andsize of organizations,Rapid development andimplementation of technology,Regulatoryenvironment,World-widecompetition,Increasedemphasison quality,Factors thatincrease the need formanagerial accountinginformation,The Changing Business Environment,A more competitive environment emphasizing: Higher quality products Lower prices and costs Global competition Meeting and anticipating customer needs,Business environment changes in the past twenty years,The Changing Business Environment,Just-In-Time Total Quality Management Process Reengineering Theory of Constraints,New tools for managers!,Complete productsjust in time toship customers.,Complete partsjust in time forassembly into products.,Receive materialsjust in time forproduction.,Scheduleproduction.,Just-in-Time (JIT) Systems,Receivecustomerorders.,Flexibleworkforce,Reducedsetup time,Zero productiondefects,Key Elements for a SuccessfulJIT System,Improvedplant layout,JIT purchasing Fewer, but more ultrareliable suppliers. Frequent JIT deliveries in small lots. Defect-free supplier deliveries.,More rapidresponse tocustomer orders,Less warehousespace needed,Reducedinventorycosts,Greatercustomersatisfaction,Higher qualityproducts,Benefits of a JIT System,Do we need to change the plan?,Where are we? Where do we want to go?,How do we start?,How are we doing?,Total Quality Management,Benchmarking,ContinuousImprovement,Process Reengineering,The process isredesigned to includeonly those steps that makeour product more valuable.,Every step inthe businessprocess mustbe justified.,A business processis diagrammedin detail.,Process Reengineering,Anticipated results: Process is simplified. Process is completed in less time. Costs are reduced. Opportunities for errors are reduced.,The process isredesigned to includeonly those steps that makeour product more valuable.,Every step inthe businessprocess mustbe justified.,A business processis diagrammedin detail.,Theory of Constraints,A sequential process of identifying and removing constraints in a system.,Restrictions or barriers that impedeprogress toward an objective,International Competition,Meeting world-class competition demands a world-class management accounting system. Managers must make decisions to plan, direct, and control a world-class organization.,Organizational Structure,An organization is a group of peopleunited for a common purpose.,Decentralization,Decentralizationdecisionmaking,Decentralizationdecisionmaking,Decentralization is the delegation of decision-making authority throughout an organization.,Line and Staff Relationships,Line positions are directly related to achievement of the basic objectives of an organization. Example: Production supervisors in a manufacturing plant.,Staff positions support and assist line positions. Example: Cost accountants in the manufacturing plant.,The Controller,The chief accountant in an organization with responsibility for: Financial planning and analysis. Cost control. Financial reporting. Accounting information systems.,Importance of Ethicsin Accounting,Ethical accounting practices build trust and promote loyal, productive relationships with users of accounting information. Many companies and professional organizations, such as the Instituteof Management Accountants (IMA),have written codes of ethics whichserve as guides for employees.,IMA Code of Ethics for Management Accountants,Competence Confidentiality Integrity Objectivity Resolution of Ethical Conflict,IMA Code of Ethics for Management Accountants,Follow applicable laws, regulations and standards.,Prepare complete and clear reports after appropriate analysis.,Maintain professional competence.,Competence,IMA Code of Ethics for Management Accountants,Do not disclose confidential information unless legally obligated to do so.,Ensure that subordinates do not disclose confidential information.,Do not use confidential information for personal advantage.,Confidentiality,IMA Code of Ethics for Management Accountants,Avoid conflicts of interest and advise others of potential conflicts.,Recognize and communicate personal and professional limitations.,Do not subvert organizations legitimate objectives.,Integrity,IMA Code of Ethics for Management Accountants,Integrity,Avoid activitie