ZCMA 6022 MANAGERIAL ACCOUNTING MODULES MANAGERIAL ACCOUNTING MODULE
- Slides: 64
ZCMA 6022 : MANAGERIAL ACCOUNTING MODULES
MANAGERIAL ACCOUNTING MODULE 1 a Managerial Accounting & Business Environment ZCMA 6022 : Managerial Accounting Prepared by: Nasuha Nordin
MANAGERIAL ACCOUNTING MODULE 1 b Budgeting ZCMA 6022 : Managerial Accounting Prepared by: Nasuha Nordin
MANAGERIAL ACCOUNTING MODULE 2 Managerial Accounting : Costing Part 1 ZCMA 6022 : Managerial Accounting Prepared by: Nasuha Nordin
MANAGERIAL ACCOUNTING MODULE 3 a Managerial Accounting : Costing Part 2 ZCMA 6022 : Managerial Accounting Prepared by: Nasuha Nordin
MANAGERIAL ACCOUNTING MODULE 3 b Managerial Accounting : Decision Making ZCMA 6022 : Managerial Accounting Prepared by: Nasuha Nordin
MANAGERIAL ACCOUNTING MODULE 4 Managerial Accounting : Control (Performance Prepared by: Evaluation) ZCMA 6022 : Managerial Accounting Nasuha Nordin
MANAGERIAL ACCOUNTING MODULE 4 Managerial Accounting : Control (Performance Evaluation) ZCMA 6022 : Managerial Accounting Prepared by: Nasuha Nordin
WHAT IS CONTROL?
HOW TO CONTROL?
PERFORMANCE MANAGEMENT MEASURE PERFORMANCE REPORT 11
WHAT DO YOU REPORT IN PERFORMANCE REPORT?
FINANCI AL PERFORMANCE EVALUATION NONFINANCIAL
PERFORMANCE EVALUATION : FINANCIAL MEASURES Variance Analysis FINANCIAL MEASURES Financial Ratios Operational Performance Measure
WHAT IS VARIANCE ANALYSIS?
VARIANCE ANALYSIS BUDGETED AMOUNTS VS ACTUAL AMOUNTS
VARIANCES ANALYSIS • THE FINANCIAL NUMBERS ARE THE PRODUCT OF A PRICE AND A QUANTITY COMPONENT: • BUDGETED AMOUNT = EXPECTED PRICE X EXPECTED QUANTITY • ACTUAL AMOUNT = ACTUAL PRICE X ACTUAL QUANTITY • VARIANCE ANALYSIS EXPLAINS THE DIFFERENCE BETWEEN PLANNED AND ACTUAL COSTS BY EVALUATING: • DIFFERENCES BETWEEN PLANNED AND ACTUAL PRICES PRICE VARIANCES • DIFFERENCES BETWEEN PLANNED AND ACTUAL QUANTITIES QUANTITY VARIANCES • ACCOUNTANTS FOCUS SEPARATELY ON PRICES AND QUANTITIES BECAUSE IN MOST ORGANIZATIONS: • ONE DEPARTMENT OR DIVISION IS RESPONSIBLE FOR THE ACQUISITION OF A RESOURCE AND DETERMINING THE ACTUAL PRICE • A DIFFERENT DEPARTMENT USES THE RESOURCE AND DETERMINING THE QUANTITY
STANDARD COST CARD VARIABLE PRODUCTION COST A standard cost card for one unit of product might look like this:
A GENERAL MODEL VARIANCE ANALYSIS Variance Analysis Price Variance Difference between actual price and standard price Quantity Variance Difference between actual quantity and standard quantity
A GENERAL MODEL VARIANCE ANALYSIS Variance Analysis Price Variance Materials price variance Labor rate variance VOH rate variance Quantity Variance Materials quantity variance Labor efficiency variance VOH efficiency variance
A GENERAL MODEL VARIANCE ANALYSIS Actual Quantity × Actual Price Actual Quantity × Standard Price Variance Standard Quantity × Standard Price Quantity Variance Materials price variance Materials quantity variance AQ(AP - SP) SP(AQ - SQ) Labor rate variance Labor efficiency variance AQ = Actual Quantity SP = Standard Price Variable overhead AP = Actual Price SQ = Standard Quantity spending variance efficiency variance 1 -21
OPERATIONAL PERFORMANCE Raw Material and Scrap Inventory Productio n and Delivery Machinery Productivit y Product & Service Quality Innovation and Learning
OPERATIONAL PERFORMANCE Lead time for material delivery No. of inventory parts Delivery cycle time Hours of machine downtime Total productivit y No. of defects found % of sales from new product
FINANCIAL RATIOS
RETURN ON INVESTMENT (ROI) • IS A MEASURE OF THE EARNINGS PER RINGGIT OF OPERATING ASSETS AND EXPRESSED IN A FORM OF PERCENTAGE • ROI = OPERATING INCOME / OPERATING ASSETS • OPERATING INCOME - EARNINGS BEFORE TAXES AND INCOME TAXES. • OPERATING ASSETS – ALL ASSETS ACQUIRED TO GENERATE OPERATING INCOME INCLUDING CASH, RECEIVABLE, INVENTORIES, LAND, BUILDING AND EQUIPMENT. THESE ARE USUALLY MEASURED AS THE AVERAGE OF BEGINNING AND END OF TIME TO BE CONSISTENT WITH THE INCOME MEASURED OVER A PERIOD OF TIME. • ALSO CALCULATED AS INCOME MARGIN X OPERATING ASSET TURNOVER (DUPONT METHOD OF PROFITABILITY) 25
RESIDUAL INCOME (RI) • RESIDUAL INCOME IS THE DIFFERENCE BETWEEN OPERATING INCOME AND THE MINIMUM RETURN REQUIRED ON A COMPANY’S ASSETS. • THE MINIMUM RATE OF RETURN REPRESENTS THE RATE THAT CAN BE EARNED ON ALTERNATIVE INVESTMENT OF SIMILAR RISKS I. E. THE OPPORTUNITY COST OF THE INVESTMENT. • RESIDUAL INCOME IS CALCULATED AS FOLLOWS: Residual income = Operating income - (Minimum rate of return x operating assets) 26
ECONOMIC VALUE ADDED (EVA) • EVA IS EQUAL TO INCOME AFTER TAXES LESS THE COST OF CAPITAL EMPLOYED. • EVA CONCEPT EXTENDS THE TRADITIONAL RESIDUAL INCOMEMEASURES FOR DISTORTIONS INTRODUCED BY GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP). • THE THREE SIGNIFICANT CHANGES FROM THE RESIDUAL INCOME CALCULATION ARE : • THE USE OF COMPANY’S WEIGHTED AVERAGE COSTS OF CAPITAL AS MINIMUM RETURN • NET ASSETS AS EVALUATION BASED AND • AFTER-TAX INCOME. • THE EQUATION FOR EVA IS AS FOLLOWS: EVA = After tax operating income - (Weighted average costs of capital x Total capital employed) 27
ACTIVITY 1 : EXERCISE 4 Please complete the Question Distributed and Submit before you leave using softcopy in IFOLIO or Handwritten Hardcopy Improving ROI (15 minutes) 5% of total Assessment Marks Good Luck! MODULE 4
MANAGERIAL ACCOUNTING MODULE 4 Managerial Accounting : Control (Performance Evaluation) ZCMA 6022 : Managerial Accounting Prepared by: Nasuha Nordin
CRITICS OF FINANCIAL CONTROL • FINANCIAL INFORMATION IS DELAYED—AND HIGHLY AGGREGATED—INFORMATION ABOUT HOW WELL THE ORGANIZATION IS DOING IN MEETING ITS COMMITMENTS TO ITS SHAREOWNERS • THIS INFORMATION MEASURES NEITHER THE DRIVERS OF THE FINANCIAL RESULTS NOR HOW WELL THE ORGANIZATION IS DOING IN MEETING ITS OTHER STAKEHOLDERS’ REQUIREMENTS • FINANCIAL CONTROL MAY BE AN INEFFECTIVE CONTROL SCORECARD FOR THREE REASONS: • FOCUSES ON FINANCIAL MEASURES THAT DO NOT MEASURE THE ORGANIZATION’S OTHER IMPORTANT ATTRIBUTES • MEASURES THE FINANCIAL EFFECT OF THE OVERALL LEVEL OF PERFORMANCE ACHIEVED ON THE CRITICAL SUCCESS FACTORS, AND IT IGNORES THE PERFORMANCE ACHIEVED ON THE INDIVIDUAL CRITICAL SUCCESS FACTORS • ORIENTED TO SHORT-TERM PROFIT PERFORMANCE, SELDOM FOCUSING ON LONG-TERM IMPROVEMENT OR TREND ANALYSIS, INSTEAD CONSIDERING HOW WELL THE ORGANIZATION OR ONE OF ITS RESPONSIBILITY CENTERS HAS PERFORMED THIS QUARTER OR THIS YEAR
PERFORMANCE MEASUREMENT VS. PERFORMANCE MANAGEMENT • PERFORMANCE MEASUREMENT • DEFINED AS A MANAGEMENT CONTROL TOOL THAT GUIDES ORGANISATIONAL EFFORTS TOWARDS A SPECIFIC OBJECTIVE AND DETERMINES THE SUCCESS OF THE EFFORTS THROUGH INDICATORS OF WORK PERFORMED AND THE RESULT OF ACTIVITIES. • CONSISTS OF MEASURES BASED ON KEY SUCCESS FACTORS, MEASURES FOR DETECTION OF DEVIATIONS, MEASURES TO TRACK PAST ACHIEVEMENTS AND MEASURES OF OUTPUT AND INPUT DIAGNOSTIC CONTROL • PERFORMANCE MANAGEMENT • DEFINED ACTIVITIES AND PROCESSES THAT PROVIDE THE ENVIRONMENT FOR PERFORMANCE MEASUREMENT WHERE RELEVANT ACTIONS AND COMMUNICATION WITH RESPECT TO THE PERFORMANCE ACHIEVED ARE MADE • PERFORMANCE MANAGEMENT COVERS TRAINING, TEAM WORK, MANAGEMENT STYLE, EMPLOYEE INVOLVEMENT AND REWARDS. 31 • PERFORMANCE MANAGEMENT AND PERFORMANCE MEASUREMENT IS DIFFERENT BUT LINKED TO EACH OTHER. ACCORDING TO LEBAS (1995), PERFORMANCE MANAGEMENT
THE ADVANTAGES OF NON FINANCIAL MEASURES (CONTD) • THEY ARE MORE ACTIONABLE. • IT IS EASIER FOR OPERATIONAL MANAGER TO INVESTIGATE THE SOURCE OF PRODUCT DEFECTS AND CUSTOMER COMPLAINT THAN IT IS TO INVESTIGATE COST VARIANCE AS DEFECTS AND COMPLAINTS RELATE DIRECTLY TO ACTIVITIES AND OPERATION THAT THEY CONTROL • THEY MAY BE MORE TIMELY. • SOME MEASURES CAN BE REPORTED VERY QUICKLY AFTER A PERFORMANCE PERIOD AND LEAD TO IMMEDIATE CORRECTION OF PROBLEM AREAS
THE ADVANTAGES OF NON FINANCIAL MEASURES (CONTD) • THEY ARE MORE UNDERSTANDABLE AND EASIER TO RELATE TO, PARTICULARLY AT THE OPERATIONAL LEVEL. • SHOP FLOOR EMPLOYEES MAY FIND IT EASIER TO UNDERSTAND THE MEANING OF ‘REJECTS PER 100 UNITS’ OR ‘NUMBER OF DELIVERY DAYS’ COMPARED WITH MONTHLY VARIABLE OVERHEAD COST VARIANCES.
THE ADVANTAGES OF NON FINANCIAL MEASURES • NON FINANCIAL MEASURES MAY EMPHASIZE STRATEGY • IF A COMPANY’S BUSINESS STRATEGY IS BASED ON PROVIDING SUPERIOR CUSTOMER SERVICE, IT MAKES SENSE TO MEASURE THE LEVEL OF CUSTOMER SATISFACTION • NON FINANCIAL MEASURES CAN BE THE DRIVERS OF FUTURE FINANCIAL PERFORMANCE. • MANAGERS MAY MEASURE PRODUCT QUALITY AND CUSTOMER SATISFACTION AS THEY BELIEVE HIGH PERFORMANCE IN THESE AREAS WILL FLOW THROUGH TO IMPROVED FINANCIAL PERFORMANCE.
FINANCIAL PERFORMANCE EVALUATION NONFINANCIAL
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NON-FINANCIAL AND FINANCIAL PERFORMANCE EVALUATION BALANCED SCORECARD FINANCIAL PERSPECTIVE CUSTOMER PERSPECTIVE LEARNING & GROWTH PERSPECTIVE INTERNAL BUSINESS PROCESS PERSPECTIVE
THE FOUR PERSPECTIVE OF THE BALANCED SCORE CARD …(1) • FINANCIAL PERSPECTIVE • REFLECT THE VIEW OF SHAREHOLDERS OR OTHER STAKEHOLDERS OF THE ORGANIZATION. • PERFORMANCE MEASURES CHOSEN TO SUPPORT THE FINANCIAL OBJECTIVE WILL SUMMARIZE THE FINANCIAL OUTCOMES OF DECISIONS AND ACTIVITIES • E. G. OF PERFORMANCE MEASURES – COST AND PROFIT MEASURES, RETURN ON INVESTMENT, MEASURES BASED ON CASH FLOW, AND SHAREHOLDER VALUE MEASURES. • CUSTOMER PERSPECTIVE • SPECIFIC CUSTOMER OBJECTIVE MAY FOCUS ON MARKET OR SALES PERFORMANCE • INCLUDE MEASURES OF CUSTOMER SATISFACTION, CUSTOMER PROFITABILITY , MARKET SHARE.
THE FOUR PERSPECTIVE OF THE BALANCED SCORE CARD …(1) • INTERNAL BUSINESS PROCESS • OBJECTIVES ARE FORMULATED FOR SPECIFIC PROCESSES THAT CONTRIBUTE TO ACHIEVING CUSTOMER AND FINANCIAL OBJECTIVES. • INTERNAL BUSINESS PROCESSES MAY BE THOSE IN THE AREAS OF PRODUCT DESIGN, OPERATIONS, MARKETING, SALES, DISTRIBUTION AND CUSTOMER SERVICES. • INCLUDE PERFORMANCE MEASURES SUCH AS COST, PRODUCT QUALITY. • LEARNING AND GROWTH • FOCUSES ON THE CAPABILITIES OF THE ORGANIZATION THAT MUST BE DEVELOPED TO ACHIEVE SUPERIOR INTERNAL PROCESSES THAT CREATE BOTH CUSTOMER VALUE AND SHAREHOLDER VALUES • E. G. OF PERFORMANCE MEASURES: EMPLOYEES CAPABILITIES (MEASURES OF EMPLOYEE SATISFACTION, TRAINING, ABSENTEEISM AND SKILL)
BALANCED SCORECARD Financial Perspective Goals Measurements Customer Perspective Goals Internal Business Process Perspective Measurements Goals Learning and Growth Perspective Goals Measurements HOW DO WE LOOK TO THE FIRM’S OWNER?
HOW DO WE LOOK TO THE FIRM’S OWNER? Financial Perspective Goals Measurements Customer Perspective Goals Internal Business Process Perspective Measurements HOW DO OUR CUSTOMERS SEE US? Goals Learning and Growth Perspective Goals Measurements HOW CAN WE CONTINUALLY IMPROVE AND CREATE VALUE? Measurements IN WHICH ACTIVITIES MUST WE EXCEL?
BALANCED SCORECARD OF WEATHERMASTER SDN BHD Financial Perspective Customer Perspective Financial Growth Profit growth % ROI Satisfying the % of customers retention Internal Business Response time Process Perspective for on Transaction Efficiency Learning and Growth Perspective Innovative Retailing Customer suggestions adopted line transactions
WHEN SHOULD WE CONSTRUCT BALANCED SCORE CARD? PLANNING STAGE? CONTROLLI NG STAGE?
FINANCIAL PERFORMANCE EVALUATION OR PERFORMANC E EVALUATION NONFINANCIAL
ACTIVITY 2 : GROUP PROJECT DISCUSSION : INDIVIDUAL ASSIGNMENT V Team Name: Team DECISION MAKING Member 1 Balanced Scorecard 2 Balanced Scorecard 3 Variance Analysis 4 Variance Analysis 5 Variance Analysis Team Member Name MODULE 4
ZCMA 6022 : MANAGERIAL ACCOUNTING ACTIVITIES
ACTIVITY 2: GROUP PROJECT DISCUSSION : GROUP ASSIGNMENT I � Organization background � Responsibility Centers 10 MARKS OF 100 MARKS IN FINAL WRITE UP x 40% of total Assessment Marks MODULE 1
ACTIVITY 3 : EXERCISE 1 Please complete the Question Distributed and Submit before you leave using softcopy in IFOLIO or Handwritten Hardcopy Transfer Pricing Problem 13 -47 (Hilton and Platt 2015) 40 minutes 5% of total Assessment Marks Good Luck! MODULE 1
ACTIVITY 4: GROUP PROJECT DISCUSSION : GROUP ASSIGNMENT II � Master 1. 2. 3. Budget and Planning Budgeted Balance Sheet Budgeted Income Statement Budgeted Cash flow 10 MARKS OF 100 MARKS IN FINAL WRITE UP x 40% of total Assessment Marks MODULE 1
ACTIVITY 5: GROUP PROJECT DISCUSSION : INDIVIDUAL ASSIGNMENT I Team Name: BUDGET Team Member Name 1 2 Sales Budget Purchase Budget 3 4 Direct Labor Budget Primary Operation/ Manufacturing Overhead Budget Supporting Activities Overhead Budget 5 Prepare & Analytical Review 2% of total Assessment Marks Comparative 2% of total Assessment Marks Role Play 2% of total Assessment Marks MODULE 1
ACTIVITY 2 : EXERCISE 2 Please complete the Question Distributed and Submit before you leave using softcopy in IFOLIO or Handwritten Hardcopy Job Order Costing in Consulting Firm (40 minutes) Problem 3 -48 (Hilton and Platt 2015) 5% of total Assessment Marks Good Luck! MODULE 2
ACTIVITY 4 : GROUP PROJECT DISCUSSION: INDIVIDUAL ASSIGNMENT II Team Name: Team Cost Estimation Member Accounting Analysis 1 Engineering Method 2 High Low Method 3 Visual Fit Method Least Square Regression Method 5 Prepare & Analytical Review 2% of total Assessment Marks Comparative 2% of total Assessment Marks Role Play 2% of total Assessment Marks Team Member Name MODULE 2
ACTIVITY 1 : GROUP PROJECT DISCUSSION : INDIVIDUAL ASSIGNMENT III Team Name: Team Member 1 2 3 4 5 COSTING Team Member Name Absorption Costing Contribution Margin Costing Activity Based Costing Target Costing - Absorption Costing Target Costing - Activity Based Costing Prepare & Analytical Review 2% of total Assessment Marks Comparative 2% of total Assessment Marks Role Play 2% of total Assessment Marks MODULE 3
ACTIVITY 2 : EXERCISE 3 Please complete the Question Distributed and Submit before you leave using softcopy in IFOLIO or Handwritten Hardcopy Operating Leverage (35 minutes) Problem 7 -43 (Hilton and Platt 2015) 5% of total Assessment Marks Good Luck! MODULE 3
ACTIVITY 3 : GROUP PROJECT DISCUSSION : GROUP ASSIGNMENT III COST-VOLUME-PROFIT ANALYSIS 17. 5 MARKS OF 100 MARKS IN FINAL WRITE UP x 40% of total Assessment Marks MODULE 3
ACTIVITY 4 : GROUP PROJECT DISCUSSION : INDIVIDUAL ASSIGNMENT IV Team Name: Team Member 1 2 3 4 5 DECISION MAKING Team Member Name Special Order: Accept or Reject Special Decision: Limited Resources Special Decision: Add, Drop a Service, Product of Department Special Decision: Outsourcing – Make or Buy Special Decision: Sell or Process Further Prepare & Analytical Review 2% of total Assessment Marks Comparative 2% of total Assessment Marks Role Play 2% of total Assessment Marks MODULE 3
ACTIVITY 1 : EXERCISE 4 Please complete the Question Distributed and Submit before you leave using softcopy in IFOLIO or Handwritten Hardcopy Improving ROI (15 minutes) Exercise 13 -27 (Hilton and Platt 2015) 5% of total Assessment Marks Good Luck! MODULE 4
ACTIVITY 2 : GROUP PROJECT DISCUSSION : INDIVIDUAL ASSIGNMENT V Team Name: Team Member 1 2 3 4 5 PERFORMANCE EVALUATION Team Member Name Balanced Scorecard Variance Analysis Prepare & Analytical Review 2% of total Assessment Marks Comparative 2% of total Assessment Marks Role Play 2% of total Assessment Marks MODULE 4
Oral Presentation is 10% of total Assessment Marks 5% Group Marks 5% Individual Marks Team Name: 1 BACKGROUND 2 PLANNING – BUDGETING 3 DIRECTING OPERATION 4 DECISION MAKING 5 PERFORMANCE EVALUATION 6 SUMMARY GROUP ORAL PRESENTATION MODULE 4
Final Write up is 40% of total Assessment Marks INDIVIDUAL FINAL WRITE UP 1 BACKGROUND Basic Marks Additional TOTAL Marks 5 5 10 2 PLANNING – BUDGETING 7. 5 15 3 DIRECTING OPERATION 20 20 40 4 DECISION MAKING 7. 5 15 5 5 52. 5 100 5 CONTROL – PERFORMANCE EVALUATION 6 SUMMARY 47. 5 FINAL WRITE UP MODULE 4
Overall Assessment Activities Individual 1 Exercise 1, 2, 3, 4 5% each 20% 2 Group Project – Individual Assignment I, III, IV, V 6% each 30% 3 Group Oral Presentation Group Individual Final Write Up Group Assignment I, III Individual Assignment I, III, IV, V TOTAL 4 5 5% 5% 15% 25% ASSESSMENT SUMMARY 10% 40% 100% MODULE 4
ZCMA 6022 : MANAGERIAL ACCOUNTING SEPT 2015 UKM-GSB BANGI
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