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TOPIC 1 – ROLE OF MANAGEMENT Accounting; COST CONCEPTS

TEXT READING:
Ch.1
Ch.2 (delete pp.38-42.   This will be covered in lecture 3)
留学生论文代写Ch.10, pp.337-340

A.  OVERVIEW OF MANAGEMENT ACCOUNTING – THE UNIT IN CONTEXT

1. MANAGEMENT ACCOUNTING – WHERE DOES IT FIT?

• Provides accounting information to management

• Management accounting information has similarities and differences to the accounting you have covered so far

2. FINANCIAL AND MANAGEMENT ACCOUNTING COMPARED

2.1 SIMILARITIES

• Accounting rules (GAAP, debits/credits, accounting equation)

• Basic financial reports (called an ABSORPTION COSTING report.  In this unit, also learn another report called a VARIABLE COSTING (CONTRIBUTION MARGIN) report)

This is the format required by the accounting standards (AASB101), i.e.:
  Sales
  Less Cost of Goods Sold
   GROSS PROFIT
  Less selling, general and administrative expenses
  Less interest expense
   NET PROFIT (before income tax)

2.2 DIFFERENCES

• Information primarily for internal management (different levels/different purposes)

• Few accounting standards; few constraints (what info, and how to provide?  Provide whatever management wants)

• Many different “correct” answers:  Illustrate:

DEPRECIATION (until now, an EXPENSE.  In fact, could be an asset or an expense, depending on what is being depreciated.  Depreciation on sales vehicles would be an expense; depreciation on factory equipment would be an asset!)

WHY?  Because of the costing rules (accounting standards).

OIL USED IN PRODUCTION MACHINERY (until now, would expect it would be an expense.  Now, it will depend on what type of costing system (ABSORPTION OR VARIABLE) the firm is using.)

WHY?  Because of choices the firm makes.

• Large focus on manufacturing firms (management accounting principles originally developed in a manufacturing environment, but can be adapted to service and not for profit firms.)

• See purposes in section 3 below

3. THE PURPOSES OF INFORMAITON IN MA INFORMATION SYSTEMS

Management accounting information is collected and accumulated to support the information needs of managers (in all types of firms, and at various levels of the organization) engaged in any of the following activities:

(1) Budgeting.  (Budgets (plans/targets/objectives) are developed, and strategies put in place to achieve these plans.)

(2) Product (service) Costing.  (What DOLLAR AMOUNT does the product/service cost to produce/provide.  This figure is recorded in the accounts.  See 3.3. below)

(3) Decision-making.  (The type of decision influences the type of information collected.  For example, what would you need to know if you were deciding between “buying” a component, or making it yourself?  (which option is cheaper).  What would you need to know if you were setting a selling price for a service?  (what is the total cost to provide the service, and what mark-up do we want to achieve?)

(4) Performance evaluation.本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。