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16download_doc.php - Chapter 1 Introduction to Managerial...

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Chapter 1: Introduction to Managerial Accounting -Management Accounting- -Financial Accounting- 1. Internally focused 1. Externally Focused 2. No mandatory rules 2. Must follow externally imposed 3. Financial and non-financial info; rules Subjective information possible 3. Objective financial information 4. Emphasis on the future 4. Historical orientation 5. Internal evaluation and decisions 5. Information about the firm as based on very detailed info a whole 6. Broad, multidisciplinary 6. More self-contained - Planning- -setting objectives and identifying methods to achieve objectives -ex. A firm’s objective may be to increase profits by improving quality -management must develop some specific methods that, when implemented, will achieve the objective -Controlling- -the managerial activity of monitoring a plan’s implementation and taking corrective action -usually achieved by comparing actual performance with expected performance -management accounting plays a vital role in providing needed information -Decision Making- -a major role of management accounting is to supply information that facilitates decision making -decisions can be improved if information about the alternatives is gathered -Strategic Positioning- 1. Cost Leadership – provide the same or better value to customers at a lower cost 2. Product Differentiation – providing something to customers not provided by competitors -Value Chain- -set of activities required to design, develop, produce, market, and deliver products and services to customers -Cross-Functional Perspective- -relating management accounting to all aspects of a business -helps get a broader vision, which allows managers to increase quality, reduce the time required to service customers (both internal and external) and improve efficiency -Certified Management Accountant (CMA)- -Main purpose: to establish management accounting as a recognized, professional discipline -Four areas emphasized for certification: 1. Economics, finance, and management 2. Financial accounting and reporting 3. Management reporting, analysis, and behavioral issues 4. Decision analysis and information systems
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Chapter 2 study guide 1. Cost object is something that you want to know cost information about. Examples are process, activity, product, people, or departments. Accurate costs are vital for profitability, analysis, and strategic decisions concerning product design, pricing, and product mix. 2. a. Direct costs are costs that can easily and accurately be traced to a cost object. The relationship between direct costs and the cost object is easy to physically observe. The more costs that can be traced yield more accuracy. b. Indirect costs are costs that cannot be easily and accurately traced to a cost object. c. The allocations of indirect costs to cost objects are done using a reasonable and convenient method. They are connected by an assumed linkage. This allocation is important to help determine value of inventory and cost of goods sold.
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