Class notes
Samenvatting HC Management Accounting
- Course
- Institution
This summary contains all the notes and slides of the Management Accounting course lectures. Slide have been adopted in English and notes are included in Dutch.
[Show more]
Seller
Follow
NBURA
Reviews received
Content preview
Management AccountingHoorcollege 1
Management accounting (MA) measures and reports financial and non-financial information and helps
and motivates mangers to make good decisions to fulfill an organization’s goals. Management accounting
is a value adding continuous improvement process of planning, designing, measuring and operating both
nonfinancial information systems and financial information systems that guides management action,
motivates behavior, and supports and creates the cultural value necessary to achieve an organization’s
strategic, tactical and operating objectives (decision control – influencing).
Cost accounting measures and reports financial and non-financial data that relates to the cost of acquiring
or consuming resources by an organization (decision making – facilitating).
Management accounting heeft 2 rollen; decision facilitating en decision influencing. Bij decision
facilitating gaat het er om dat management accounting belangrijk is om de link tussen strategie en
financiële controle te versterken. MA kan expertise inzetten om scenario’s of strategische opties te
vergelijken.
Decision facilitating; Cost Accounting and Cost Management
Business owners and managers are faced with countless decisions every business day. Management
accounting uses information from operations to produce reports that provide ongoing insight into
business performance, such as profit margin and labor utilization, so managers have data-driven input to
make everyday decisions. Businesses can leverage this powerful trove of calculations to improve decision-
making over time for higher profitability and greater competitive advantage.
® Cost accounting: Job costing, Process costing, Cost allocations
® Make or buy decisions: outsource or do we do it ourself?
® Relevant cost decisions: new investment or stick to old technology?
® Break-even analyses: what should I sell to make money?
® Budget reports, balanced scorecards to see where we improve
Decision influencing
How to motivate people into the organization to provide effort for the principal?
How to attract the right workers to my company to make sure they are willing to work?
Decision influencing; guide people towards creating value for the firm.
Motivating employees: management accounting provides a selection of best alternative methods
of doing things. It motivates employees to improve their performance by setting targets and using
incentive schemes.
Coordinating among departments: management accounting is helpful in coordinating the
departments of an organization by applying thorough functional budgeting and providing reports
for the same to the management on a regular basis.
Controlling performance: in order to assure effective control, various techniques are used by a
management accountant such as budgetary control, standard costing, management audit, etc.
Management accounting provides a proper management control system to the management.
Reports are provided to the management regarding the effective and efficient use of resources.
, Decide on company’s goals, decide how to attain these goals, plan resource usage and
allocation, predict results
Cost accounting decisions:
– Costs for inventory and external reporting
– Cost accounting for important decisions to assist marketing, operations,...
o Evaluation profitability of products, customers etc.
o Cost data for pricing, quality investments, outsourcing decisions
o Cost reduction, break-even for start-ups or new ventures
Management control – evaluation towards goals
– Translate plans into concrete actions: budgets, responsibility centers
– Deviations of operations against original plan: variance analyses, BSC
– Performance management and evaluation: bonus / compensation
Management accounting vs. financial accounting
Financial accounting Management accounting
Audience External stakeholders Internal decision maker
Purpose Public (general) figures Internal information & reports
Legal requirements Standards (IFRS), GAAP None
Content Aggregated Very detailed
Time period Historical data Historical + future oriented
Type of info Financial Financial and non-financial
Recording/disclosure Decision making, planning &
control
Financial statements komen voornamelijk achteraf terecht bij de management accounting.
Strategisch Management Accounting
‘Management Accounting’; Meer strategisch, meer lange termijn en meer niet-financieel naast financieel.
Het is niet langer te doen om kosten of revenues etc.
Strategic management accounting is a type of accounting that focuses not only on internal factors of a
company, but factors that are external. This includes industry-wide financials, averages and upcoming
trends. Next to costs, we
– Look at market trends; what are our customers willing to pay and does or cost need to go down?
– Look at predictors for financial results/KPI’s, e.g., is quality of the products important for profit
margin.
– Examine what do we need to achieve on both financials’ and non-financials in order to realize our
strategy.
– Study risk management: which risk factors are we exposed to and how can we manage them?
– Have a long-term perspective: not only on current profits, but what about customer life time
value, customer profitability, long term pricing.
Balanced scoreboard; takes a broad, holistic look at organizational goals, not
just the financials Financieel, Klant, Internal Process, Learning.
,Hoorcollege 2: Cost accounting concepts
Decision facilitating is the role of management accounting and decision influencing is the role of
management accounting.
Kosten/costs are resources scarified to achieve a given objective. Usually expressed in monetary terms ($,
€, etc.). Goal is to find out the true costs (e.g., of producing a car), which is crucial for decision making.
Part of cost is giving up an alternative, also called opportunity cost. We have actual versus budgeted costs.
Kosten zijn alles wat we opofferen om een bepaald doel te bereiken in de onderneming. Deze
kosteninformatie gebruiken we om beslissingen te maken of mensen te motiveren beslissingen te maken.
Er bestaan zeer veel verschillende soorten van kosten die we categoriseren om ermee te kunnen rekenen.
Opportunity cost is complex te berekenen en is de winst die je niet kan realiseren. Iets wat je verliest door
niet voor ene alternatief te kiezen. Je laat dus iets anders links liggen.
Responsibility accounting
If decentralized organization structure, there are responsibility centers. There are different types of
responsibility centers:
® Cost center; accountable for costs
® Revenue center;accountable for revenues
® Profit center; accountable for revenues and costs
® Investment center accountable for revenues, costs and investments.
Choice or responsibility centers is based on the controllability principle, which keeps
managers/employees accountable for the items they can control. Idea is who has the best
information/knowledge to explain deviations from targets? Not: who can we blame for deviations from
target?
Het soort responsibility center gaat samen met het controllability principle. Je kan managers of
werknemers alleen verantwoordelijk houden voor datgene waar zij de controle over hebben, datgene wat
in hun takenpakket zit.
Welke kosten bestaan er?
Cost object is the thing for which cost information is needed. Examples are products or product lines,
departments or business unit, projects or programs, service, activity or process, customers, etc. It
depends on individual situation or interest. Direct labor, Direct material and Manufacturing overhead.
Cost = ∑ monetary values of all resources needed ¿ achieve the cost object ¿ = COMPLEX
o Cost accumulation stage 1 bookkeeping
o Cost assignment stage 2 tracing and allocating
COMPLEX: assigning to departments (cost object) is already difficult, to the product level even
more complex.
Direct vs. Indirect costs
Direct; related to particular object, tracing economically
feasible/not too costly.
, Indirect; related to particular object, tracing economically not feasible/too costly, allocation based on
(arbitrary) criteria determined by the company.
Indirect/direct depends on cost object. E.g., wage production manager is direct if cost object is production
department, but it is indirect when cost object is product.
Cost driver is a factor, such as a level of activity or the quantity, that causally affects total costs over a
given time span. Change in level of cost driver is a change in total costs of cost object (e.g., # labor hours,
# units, distance to customer, etc.). Wordt gebruikt om indirecte kosten toe te kennen kost
driver/verdeelsleutel.
VARIABLE VS. FIXED ARE NOT THE SAME AS DIRECT VS. INDIRECT
Variable vs. Fixed costs
Do cost vary proportionally with quantity or are they independent of the
quantity? Do costs vary proportionally with quantity (variable) or are they
independent of the quantity (fixed). Vaste kosten blijven constant, onafhankelijk
van de output. Variabele kosten variëren over de output, dus het totaal van de
kosten hangt af van de output.
- Time span; classification depend on the time horizon. Costs can be
classified as fixed in short run, but variable in the long run.
- Relevant range (binnen een bepaald outputniveau); costs can be variable in a certain range, but
require additional fixed costs when range is exceeded.
Vaste kosten zijn moeilijker controleerbaar dan variabele kosten. Variabele kosten is echt gebonden aan
het volume (eenheden) en zijn daarom makkelijker te controleren dan vaste kosten die vaak gebaseerd
zijn op eerder genomen beslissingen (investeringsbeslissingen): corporate overheadkosten zijn in
hoofdzaak vaste kosten.
Product cost vs. Period cost
Product cost; tracing or allocation can be inventoried.
Period cost: no allocation, expensed to P&L.
Cost estimation approaches; deze kan een manager gebruiken om kostinformatie te verkrijgen.
› Industrial-engineering or work-measurement method (time and motion studies)
o Step by step monitoring and measuring of inputs
o Time-consuming and often not feasible, vaak wel bij kleine productieprocessen.
› Conference method
o Use estimations on the basis of analysis and opinions of experts from different areas
o Quick but highly dependent on experts’ input. Experts laten schatten.
› Account analysis method
o Classification in variable, fixed, mixed cost drivers
o Theory driven (e.g., contracts as source), but can be subjective
o Widely used in practice
› Quantitative analyses (e.g., high-low or regression based)
o Data-driven classification
IV: cost driver
DV: cost of a cost object
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller NBURA. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $5.78. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
67474 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now