Chapter 1
Introduction to Managerial Accounting
Chapter Outline
Identify managers’ four primary responsibilities
Distinguish financial accounting from managerial accounting
Describe organizational structure and the roles and skills required of management
accountants within the organization
Describe the role of CPA Canada and apply its guidelines for ethical behaviour.
Discuss and analyze the implications of regulatory and business trends
Describe a lean production system
Describe and use the costs of quality framework
Planning
Managers’ Responsibilities Directing
controlling
Planning -
setting goals and objectives
-
How to achieve them
Planning involves two main activities:
o Setting goals and objectives for the organization; and
o Determining how to achieve them
Examples of strategic goals:
o Use quality ingredients to keep customers coming back
o Establish good relationships with suppliers to achieve this
Plans may be translated into budgets, to determine if they make financial sense
Page | 1
,Directing
Overseeing organization’s day-to-day operations
Examples:
Using daily/weekly product sales data to determine which menu items are
generating the most sales
Use that information to determine menu and marketing strategies
Controlling
Evaluating results of operations against plans and making adjustments as needed
Examples:
Comparing budgeted sales with actual sales and take corrective action
Comparing budgeted product costs against actual product costs and take
corrective action
Ensure actual results meet planned results
Decision Making Includes : planning
Directing
controlling
Management is continually making decisions while it plans, directs, and controls
operations
Examples:
Location of new restaurants
Which restaurants to refurbish
Prices of meals
Menu items to offer
Page | 2
,Managerial vs. Financial Accounting
Meant to provide managers with information to plan, direct, control and make decisions
Do not need to follow GAAP (IFRS / ASPE)
The focus is on the future, providing relevant information for better decision making
Need smaller, segmented information, rather than company-wide information:
By geographic area
By restaurant
By product line } segmented
information
Page | 3
, Organizational Structure
The Changing Roles of Management Accountants
Now seen as internal consultants or advisors to management
Impact of technology has fostered change in the role from “bean counter” to advisor
Ensuring accurate financial records
}
Planning, analyzing, and interpreting accounting data Roles of Accountants
Providing decision support
Skills Required of Managerial Accountants
Solid knowledge of financial and managerial accounting
Problem-solving and decision-making skills
Knowledge of how a business functions
Ability to lead and to work on a team
Professionalism and ethical standards
Oral and written communications skills
Page | 4
Introduction to Managerial Accounting
Chapter Outline
Identify managers’ four primary responsibilities
Distinguish financial accounting from managerial accounting
Describe organizational structure and the roles and skills required of management
accountants within the organization
Describe the role of CPA Canada and apply its guidelines for ethical behaviour.
Discuss and analyze the implications of regulatory and business trends
Describe a lean production system
Describe and use the costs of quality framework
Planning
Managers’ Responsibilities Directing
controlling
Planning -
setting goals and objectives
-
How to achieve them
Planning involves two main activities:
o Setting goals and objectives for the organization; and
o Determining how to achieve them
Examples of strategic goals:
o Use quality ingredients to keep customers coming back
o Establish good relationships with suppliers to achieve this
Plans may be translated into budgets, to determine if they make financial sense
Page | 1
,Directing
Overseeing organization’s day-to-day operations
Examples:
Using daily/weekly product sales data to determine which menu items are
generating the most sales
Use that information to determine menu and marketing strategies
Controlling
Evaluating results of operations against plans and making adjustments as needed
Examples:
Comparing budgeted sales with actual sales and take corrective action
Comparing budgeted product costs against actual product costs and take
corrective action
Ensure actual results meet planned results
Decision Making Includes : planning
Directing
controlling
Management is continually making decisions while it plans, directs, and controls
operations
Examples:
Location of new restaurants
Which restaurants to refurbish
Prices of meals
Menu items to offer
Page | 2
,Managerial vs. Financial Accounting
Meant to provide managers with information to plan, direct, control and make decisions
Do not need to follow GAAP (IFRS / ASPE)
The focus is on the future, providing relevant information for better decision making
Need smaller, segmented information, rather than company-wide information:
By geographic area
By restaurant
By product line } segmented
information
Page | 3
, Organizational Structure
The Changing Roles of Management Accountants
Now seen as internal consultants or advisors to management
Impact of technology has fostered change in the role from “bean counter” to advisor
Ensuring accurate financial records
}
Planning, analyzing, and interpreting accounting data Roles of Accountants
Providing decision support
Skills Required of Managerial Accountants
Solid knowledge of financial and managerial accounting
Problem-solving and decision-making skills
Knowledge of how a business functions
Ability to lead and to work on a team
Professionalism and ethical standards
Oral and written communications skills
Page | 4
