Managerial Accounting By Dr Mohamed Mousa Ali Lecturer

Managerial Accounting By Dr. Mohamed Mousa Ali Lecturer of Accounting and Auditing Certified International Trainer (IBCT) Mohamed. mousa@com. usc. edu. eg

Syllabus of Managerial Accounting Ch. No Description lecture Notes 1 Managerial Accounting: An Overview 1 2 Managerial Accounting and Cost Concepts 2 3 Cost-Volume-Profit analysis 3 4 5 6 7 6 Master Budget and Responsibility accounting Q. No. 1 Mid-term Exam 15 Financial Statement Analysis 11 Decesion making and Relevant information 12 Strategy , Balanced scorecard, and strategic profitability analysis. 9 10 11 12 13 14 Q. No. 2

Chapter 1 “ Managerial Accounting : An Overview ” The Manager and Management Accounting Dr. Mohamed Mousa 1 -3

Accounting Discipline Overview Management accounting measures, analyzes, and reports financial and nonfinancial information that helps managers make decisions to fulfill organizational goals. Management accounting need not be GAAP compliant. Managers use management accounting information to: Develop, communicate and implement strategies Coordinate product design, production, and marketing decisions and evaluate a company’s performance. Dr. Mohamed Mousa

Accounting Discipline Overview Financial accounting focuses on reporting financial information to external parties such as investors, governmental agencies, banks, and suppliers, based on GAAP. Cost Accounting measures, analyzes and reports financial and nonfinancial information related to the costs of acquiring or using resources in an organization. Dr. Mohamed Mousa

Accounting Discipline Overview Today, most accounting professionals take the perspective that cost information is part of the information collected to make management decisions; therefore the distinction between the two is not clear-cut. Dr. Mohamed Mousa

Major Differences Between Management and Financial Accounting Dr. Mohamed Mousa

Strategic Decisions and the Management Accountant : Strategy specifies how an organization matches its own capabilities with the opportunities in the market place. There are two broad strategies : leadership and product differentiation cost Strategic cost management describes cost management that specifically focuses on strategic issues. Dr. Mohamed Mousa

Strategic Decisions and the Management Accountant: q Management accounting information helps managers formulate strategy by answering questions such as the following: ü Who are our most important customers and what critical capability do we have to be competitive and deliver value to our customers? Dr. Mohamed Mousa

Strategic Decisions and the Management Accountant: Ø What is the bargaining power of our customers? Ø What is the bargaining power of our suppliers? Ø What substitute products exist in the market place and how do they differ from our product in terms of features, price, cost and quality? Ø Will adequate cash be available to fund the strategy, or will additional funds need to be raised? Dr. Mohamed Mousa

Managerial accounting Function : managerial accounting helps managers perform three vital activities- planning, controlling, and decision making. Planning involves establishing goals and specifying how to achieve them. Controlling involves gathering feedback to ensure that the plan is being properly executed or modified as circumstances change. Decision making involves selecting a course of action from competing alternatives. Now let’s take a closer look at these three pillars of managerial accounting. Dr. Mohamed Mousa

managerial accounting Function : 1 - Planning : Plans are often accompanied by a budget. A budget is a detailed plan for the future that is usually expressed in formal quantitative terms. 2 - Controlling : This process would involve gathering, evaluating, and responding to feedback to ensure that this year’s recruiting process meets expectations. Dr. Mohamed Mousa

Managerial accounting Function : 3 - Decision Making : the most basic managerial skill is the ability to make intelligent, data-driven decisions. many of those decisions revolve around the following three questions. What should we be selling? Who should we be serving? How should we execute? Dr. Mohamed Mousa

Value-chain and Supply-Chain Analysis and Key Success Factors: Creating value is an important part of planning and implementing strategy. Value is the usefulness a customer gains from a company’s product or service. The entire customer experience determines the value a customer derives from a product. Dr. Mohamed Mousa

Value-chain and Supply-Chain Analysis and Key Success Factors : The value chain is the sequence of business functions by which a product is made progressively more useful to customers. The value chain consists of : Research & Development. Design of Products and Processes. Production. Marketing (including Sales). Distribution. Customer Service. Dr. Mohamed Mousa

The Value Chain Illustrated : Different Parts of the Value Chain : Dr. Mohamed Mousa

Decision-making, Planning and Control: The Five-step Decisionmaking Process : 1. Identify the problem / uncertainties. 2. Obtain information. 3. Make predictions about the future. 4. Make decisions by choosing among alternatives. 5. Implement the decision, evaluate performance and learn. Dr. Mohamed Mousa

Planning and Control Systems: q Planning consists of : 1. selecting an organization’s goals and strategies 2. predicting results under various alternative ways of achieving those goals 3. deciding how to attain the desired goals. 4. communicating the goals and how to achieve them to the entire organization. Dr. Mohamed Mousa

Planning and Control Systems: Management accountants serve as business partners in these planning activities because they understand the key success factors and what creates value. Dr. Mohamed Mousa

Planning and Control Systems q Control : Ø taking actions that implement the planning decisions Ø evaluating past performance. Ø providing feedback and learning to help future decision making. Dr. Mohamed Mousa

Management Accounting Guidelines Three guidelines help management accountants provide the most value to the strategic and operational decision-making of their companies: 1. The Cost-benefit approach compares the benefits of an action/purchase to the costs. Generally, of course, the benefits should exceed the costs. Dr. Mohamed Mousa

Management Accounting Guidelines 2. Behavioral and technical considerations recognize, among other things, that management is primarily a human activity that should focus on encouraging individuals to do their jobs better. 3. Managers use alternative ways to compare costs in different decision-making situations because there are different costs for different purposes. Dr. Mohamed Mousa

The Next Lecture Chapter 2 “An Introduction to Cost Terms and Purposes “ Dr. Mohamed Mousa 1 -23