100% tevredenheidsgarantie Direct beschikbaar na je betaling Lees online óf als PDF Geen vaste maandelijkse kosten
logo-home
Eerder door jou gezocht
Eerder door jou gezocht
logo
Summary advanced management accounting €8,99
In winkelwagen
Snel navigeren naar
Voorbeeld
  2.  
  3. Vrije Universiteit Amsterdam (VU)
  4.  
  5. Advanced management accounting (E_ACC_AMA)

Samenvatting

Summary advanced management accounting

2 beoordelingen
 2 keer verkocht

I offer my summary of the advanced management accounting course for sale. This summary contains all the mandatory reading materials of this course (the book chapters of Groot & Selto as well as the scientific articles). But it excludes notes of the lectures and tutorials. The summary is 95 pages lo...

[Meer zien]

Voorbeeld 4 van de 95  pagina's

Document informatie

  • Nee
  • Chapters 1, 2, 4, 5, 6, 8, 9, 10
  • 7 december 2023
  • 95
  • 2023/2024
  • Samenvatting

Onderwerpen

Gekoppeld boek

book image

Titel boek:

Auteur(s):

  • Uitgave:
  • ISBN:
  • Druk:

Meer samenvattingen voor studieboek

Alles voor dit studieboek (4)

Geschreven voor

Alle documenten voor dit vak (5)

2  beoordelingen

review-writer-avatar

Door: splinterjoel • 1 jaar geleden

review-writer-avatar

Door: noerieyah • 1 jaar geleden

Verkoper

avatar-seller
lauravanbeek3

Ontvangen beoordelingen

Voorbeeld van de inhoud

Summary Advanced management accounting
1. Foundations of management accounting

Management accounting is concerned with the generation, communication and use of financial
and non-financial information for managerial decision making and control activities.
Management accounting information can take many forms. Management accounting
information does not have to follow standard rules or regulations that are commonly used for
external financial reporting.
 Allows managers to generate information that best fit their needs.

Most of our current management accounting systems and techniques have been developed in
practice. Managers developed each of the new planning and control techniques to solve
specific challenges. Why are new management accounting techniques developed?
1. A major driver of management accounting development is the way economic activity is
organized.
2. The way organizations are structured.
3. The type of productive activities performed in organizations may lead to differences in
management accounting information used.
 Management accounting solutions that worked well for past problems may not be
necessarily the best solution for current problems, and we can expect new solutions to
evolve.

Merchants became employers, gaining control over the artisans’ productive activities by
administering their production tasks. The merchant employers who replaced the market-based
contracts with their suppliers by labor contracts, organized productive activities in centralized
work places specialized in mainly one activity, that of transforming raw materials into finished
products.
Companies in 1800’s gew both in size and in geographic dispersion. This companies used
complex production processes, which were organized in functionally specialized organizational
forms. In the industrial revolution many companies introduced production processes that were
increasingly capital intensive.
Scientific management movement was particularly powerful between 1880 and 1914. Standard
cost accounting and variance analysis were introduced.

At the turn of the 20th century, the US economy was driven by large, mass producing
manufacturing firms that were capable of achieving unprecedented speeds of throughput by
the use of sophisticated mass-production techniques. It is generally believed that inefficient
markets may have caused the merger wave of 1897-1903. The more complex US integrated
organizations also needed a new organizational structure to control their diverse set of
activities. Most organizations changed to the unitary form of organization, which is comprised
of independent units and one central office to manage both the units and the entire firm.

,  Succes to measure and compare the inherently very different department’s
contributions to the success of the entire company were cash flow and return on
investment. Investment projects were evaluated with the criterion return on
investment.
 In 1912 ROI measure was decomposed into the product of the sales turnover ratio and
the operating ratio.

After world war I, some larger companies started to diversify their activities, mostly to capture
economies of scope and to diversify business risks. However, diversification also introduced
new management problems. The large variety and complexity of the firm did not allow
managers to effectively manage each unit, and it also made it impossible to generate sufficient
economies of scope for the whole company.
 Later centralized control systems were introduced with decentralized responsibility.
 Decentralised operational decision making and control.
 Centralised corporate strategy making and firm wide coordination of diversified
units.
 Special attention was given to coordination problems between manufacturing and sales
functions and to coordination between production divisions.
Most divisions did not only produce finished products, but also parts to be used in other
divisions.  transfer pricing system was developed that allowed parts and products to be
exchanged at cost plus transfer prices.

A large portion of the management accounting methods and techniques currently taught in
management accounting textbooks had already developed in 1925. Discounting of cash flows is
an exception. Another innovation after 1925 is the development of residual income (RI) as an
alternative for the ROI measure. The residual income measure is defined as the difference
between net operating income after taxes (NOPAT) and the cost of invested capital. In the
1990’s the economic value added (EVA) concept was promoted.
In the 1980’s improvements were proposed in the allocation of indirect costs to cost objects
known as activity based costing (ABC).
In this period also new ideas about cost control and pricing were developed, which did also
come from other countries than the US. Old ideas like budgeting and shared costing, which
were developed in large hierarchical and bureaucratic organizations in the beginning of the 20 th
century, became widely questioned.
In the 1990’s, markets become more dynamic as a result of governments reducing trade
barriers, combined with information technology facilitating the generation and distribution of
product information to a wide audience of customers. Competitive advantage is not only about
outperforming competitors on price, but also on other product characteristics. Corporate
management needs to be proactive, and looks for information that can be used to prepare
timely for future developments.
 Balanced scorecard was developed that contains performance indicators that may
complement the existing accounting information.
An important driver of management accounting innovation since the year 2000 is the
availability of more business related data than ever before. Companies increasingly use

,analytics to gain competitive advantages. The use of analytic approaches started in the 1960’s
when decision support systems were developed for rather narrow activities. The use of
analytics changes the management accounting function.
 New analytical procedures and data availability will provide the opportunity not only to
analyze costs and cost drivers, but also value creation and profit drivers. They will also
enable a better understanding of how intangibles contribute to corporate performance.
Table 1.1 Overview of practical management accounting innovations

Management accounting is a discipline, which has largely developed through practice. Both
changes in economic system and in organizational form posed new challenges for management
in planning and controlling organizational activities.
Most of the 19th and early 20th century cost accounting practices were developed by engineer
managers for internal use within the company. Only very few manufacturing firms issued
financial reports. The need for financial reporting rose after 1900 because a growing number of
US companies needed to raise funds from widespread and detached suppliers of capital. In
order to facilitate the auditors’ work, the public accountants established well-defined methods
and procedures for corporate financial reporting. The rule making work of public accountants
has influenced greatly the development of management accounting theory and practice since
the early 1920’s.

The early academic writers on cost accounting in the early 1900’s emphasized that the main
task of the management accountant was to make sure that the operational data and financial
reports are connected in one single objective and verifiable accounting image of corporate
performance and wealth. John Maurice Clark tries to relate cost accounting information to the
managerial decision making, using microeconomic analysis of marginal cost and marginal
revenues. He said that different costs are for different purposes.
Later the opportunity cost concept arises, the opportunity cost of the preferred option equals
the costs incurred or revenues foregone as a result of the next best option, which could also
include the option of doing nothing. John Neuer stressed the importance of having frequent
and timely information and information that is relevant for managerial planning and control
decisions.

Since 1960’s, newly developed disciplines like operations research (OR) and mathematical
economics were used by academics to solve decision problems in which cost information was
involved. When computer capacity became cheaper and more accessible for users outside
academic and other research institutes, the more advanced analytical techniques became also
more widely used in practice.
In most economic models, the person that is supposed to be supported by management
accounting information is assumed to be a rational decision maker. This person can range
options from the most preferred to least preferred outcome. They are capable of reaching an
optimal decision outcome.
According to the study of Simon et al (1954), accounting information was to serve three
different functions of controllership within an organization:
- Scorecard keeping (how the firm performs).

, - Attention directing (when actual to budget line items are compared).
- Problem solving (studies to evaluate special decisions such as make or buy
comparisons).
Since the 1950’s companies have grown rapidly and expanded internationally at an ever-
growing pace. The multi divisional organizational form did not proliferate until after 1950.
Business failures in the 1970’s and 1980’s called attention to management control problems
caused by managers being almost exclusively focused on achieving accounting scorecard
results.
 Effective management control requires a combination of accounting information,
knowledge of production processes (including quality issues) and a deep understanding
of customer needs.
Nowadays, accounting numbers are increasingly also combined with knowledge and experience
in other areas, like production and logistic technology, human behavior, strategy and
marketing.
The management control framework provides not only the most common tools used by
managers in controlling internal activities, but it also analyses the functional and dysfunctional
behavior they may cause.

2. Planning and decision making

In everyday life individuals make many decisions. Some decisions are different: they appear
only rarely and they may have enormous consequences. A similar situation exists in
organizations. The more complex decisions are those that do not occur on a frequent basis, and
that have unique characteristics each time they appear. The main focus is on decision making
for strategic planning, organizational planning and budgeting purposes.

Traditional economic theory portrays the decision maker as a rational human being who has
complete information about all decision consequences and a clear preference ordering of
alternatives. This enables reaching an optimal decision in which utility will be maximized, which
is known as optimizing behavior.
Economic actors are seen as ‘limitedly rational’ because they are satisficing solutions at best.
Decision makers may deal with bounded (limited) rationality by using an incremental decision
making process. In this approach, the decision maker focuses on a few most important decision
areas and implements solutions in an incremental manner. This is also known as muddling
through: the changes implemented are not drastic and build on previous experiences.

The rationality of decision making can be influenced by the following three conditions:
- The ability of decision makers to define a clear, coherent, and limited set of decision
objectives.
- The knowledge available to analyze a decision situation and to reach a reasoned
conclusion.
- The time and attention decision makers devote to a specific decision problem.

Dit zijn jouw voordelen als je samenvattingen koopt bij Stuvia:

Bewezen kwaliteit door reviews

Bewezen kwaliteit door reviews

Studenten hebben al meer dan 850.000 samenvattingen beoordeeld. Zo weet jij zeker dat je de beste keuze maakt!

In een paar klikken geregeld

In een paar klikken geregeld

Geen gedoe — betaal gewoon eenmalig met iDeal, creditcard of je Stuvia-tegoed en je bent klaar. Geen abonnement nodig.

Direct to-the-point

Direct to-the-point

Studenten maken samenvattingen voor studenten. Dat betekent: actuele inhoud waar jij écht wat aan hebt. Geen overbodige details!

Veelgestelde vragen

Wat krijg ik als ik dit document koop?

Je krijgt een PDF, die direct beschikbaar is na je aankoop. Het gekochte document is altijd, overal en oneindig toegankelijk via je profiel.

Tevredenheidsgarantie: hoe werkt dat?

Onze tevredenheidsgarantie zorgt ervoor dat je altijd een studiedocument vindt dat goed bij je past. Je vult een formulier in en onze klantenservice regelt de rest.

Van wie koop ik deze samenvatting?

Stuvia is een marktplaats, je koop dit document dus niet van ons, maar van verkoper lauravanbeek3. Stuvia faciliteert de betaling aan de verkoper.

Zit ik meteen vast aan een abonnement?

Nee, je koopt alleen deze samenvatting voor €8,99. Je zit daarna nergens aan vast.

Is Stuvia te vertrouwen?

4,6 sterren op Google & Trustpilot (+1000 reviews)

Afgelopen 30 dagen zijn er 68175 samenvattingen verkocht

Opgericht in 2010, al 15 jaar dé plek om samenvattingen te kopen

Begin nu gratis
€8,99  2x  verkocht
  • (2)
In winkelwagen
Toegevoegd