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FM1|Block 2: Chapters 15,20,22 Summary and Practice Questions
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Financial&
Managerial Accounting
Summary and Practice
Questions
CH 15, 20, 22
,
, FINANCIAL MANAGEMENT SUMMARY For this purpose, the company will use a number of
metrics, such as: market share, customer satisfaction,
net profits, etc.
Chapter 15
The set of metrics give an overview of how well the
company is doing.
Management Accoun ng
Controlling: Monitoring operating results and
Management accounting is a system that provides comparing actual results with the expected results is
information to the management for business decision controlling.
making.
This feedback allows management to isolate areas for
Differences between Financial and Management further investigation and possible remedial action.
accoun ng:
Management by exception: the philosophy of
controlling by comparing actual and expected results
and highlighting only important deviations.
Management Accoun ng and the Management
Process
Management accounting supports the decisions that
are made in the management process.
- Cost volume profit analysis
- Budgeting
The Management Process:
Manufacturing Opera ons
The operations of a business can be classified as
service, merchandising, or manufacturing.
Most of the managerial accounting concepts that
apply to manufacturing businesses also apply to
service and merchandising business.
Planning: Management uses planning in developing
the company’s objectives (goals) and translating these
objectives into objectives into courses of action. Plans
are broadly divided into Strategic plans and
Operational plans.
Strategic plans typically are for a longer time period
(5-10 years) and involve setting the direction in which
the company wants to develop.
Cost Related to Manufacturing Opera ons
Operational plans are developed to achieve short-
term goals that form steps in achieving the strategic In manufacturing operations, we have to look at
plan. several aspects of costs:
The most common operational plan is the annual Classification of costs – how can we group cost
Budget. together with meaningful categories
Cost behaviour – how do costs change with
Measurement: Once the company starts to execute volume (chapter 20)
the plans (turn it into actions), it will have to measure Expense recognition (product cost and period
the outcome(s) of the actions. cost)
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