Management Accounting

1.

MANAGEMENT ACCOUNTING
Maria E. Gogolukhina, PhD

2.

INTRODUCTION

3.

Management accounting
Management accounting is the
application of professional skills and
knowledge in the preparation of
financial and accounting information in
a manner in which it will assist the
internal management in the formulation
of policies, planning, and control of the
operations of the firm.

4.

Management accounting
Budgeting
Forecasting
Planning
Performance
Analysis
Management
Accounting
Problem
Solving
Cost
Accounting
Cause and
Effect
Decision
Making

5.

Management accounting
The purpose is
to assist management in running the
business the way to achieve the
business objectives

6.

ACCURATE information
Accurate
Complete
Cost-effective (cost of producing info < value of the info)
Understandable
Relevant (redundant parts should be removed)
Accessible
Timely

7.

Planning horizons
Strategic
Tactical
Operational
Long-term
Short-term
Day-to-day

8.

Management vs Financial
Accounting
Management acc.
Financial acc.
Users
Managers, employees
Shareholders, creditors,
lenders, banks, government
Purpose
Planning, controlling, decision
making
To record the financial
performance and the financial
position
Legal req.
-
+
Formats
Up to the management
Governed by Companies Act
Nature of
info
Financial and non-financial
Financial
Precision
As accurate as possible
Must be ‘True and fair’
Reporting
Past and present data
Past data
Scope
Company, division, department Company
Frequency
As required
Annual, quarterly

9.

COST MANAGEMENT

10.

Types of costs
Variable
Direct
Indirect
Fixed
COSTS
Production
Nonproduction

11.

Types of costs by behavior
Variable costs change in proportion to the volume of
production:
Materials
Labor
Fixed costs are not dependent on the activities of the
business:
Heating
Water for non-production purposes
Salaries
Selling & administrative expenses…
Semi variable cost contains both a fixed cost
component and a variable cost component.:
Electricity
Communication means…

12.

Variable and fixed costs
Total
costs,
RUR
Total costs
Variable costs
TC = FC + (UVC*Q)
Semi variable costs
Fixed costs
Quantity, units

13.

Cost reaction ration (CRR)
∆