Intro_8 - ManagementAccounting JaypalJain...

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Management Accounting Jaypal Jain Jaypal Jain Departmental Lecturer in Accounting, SAÏD Business School, University of Oxford. E mail: jaypal.jain@sbs.ox.ac.uk 1 jaypal.jain@sbs.ox.ac.uk
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Today’s Aim What are Management Accounting Systems (MA)? Why MA systems? Functions of Cost and Management Accounting systems Cost terminology Cost systems (Absorption and ABC) Cost behaviour Cost collection under absorption costing Accounting for decision making Organization and strategy 2 jaypal.jain@sbs.ox.ac.uk
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What are MA systems? Involves decision making , planning and control process ( see next slide ) Concerned with the provision of information to internal users to help them make better decisions and improve the efficiency and effectiveness of operations Provides information relating to different parts of the business Is future oriented 3 jaypal.jain@sbs.ox.ac.uk
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Steps in decision making Identification of objectives Search for alternatives Information on alternatives Selection of alternative courses of action Implementation of decisions Comparison of outcome with plans Feedback and action 4 jaypal.jain@sbs.ox.ac.uk
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Why MA systems? Globalization of world trade Privatization of government controlled companies and deregulation Changing product life cycles , e.g. automobiles, IT industry, retail industry, Changing customer tastes Emergence of e business 5 jaypal.jain@sbs.ox.ac.uk
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Primary function of cost/ ma systems Inventory valuation for internal and external profit measurement Allocate costs between products sold and fully and partly completed products that are unsold. Provide relevant information to help managers make better decisions Profitability analysis Product pricing Make or buy (Outsourcing) Product mix and discontinuation 6 jaypal.jain@sbs.ox.ac.uk
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Primary function of cost/ ma systems Provide information for planning, control and performance measurement Long term and short term planning (budgeting) Periodic performance reports for feedback control Performance reports also widely used to evaluate managerial performance ( Note that costs should be assembled in different ways to meet the above three requirements.) 7 jaypal.jain@sbs.ox.ac.uk
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FUNCTIONS OF COST AND MANAGEMENT ACCOUNTING SYSTEM Allocate costs between cost of goods sold and inventories for internal and external profit reporting Provide relevant information to help managers make better decisions Provide information for planning, control and performance management 8 jaypal.jain@sbs.ox.ac.uk
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Costing terminology What is Cost? Monetary measure
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Intro_8 - ManagementAccounting JaypalJain...

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