CH 1: Intro to Managerial Accounting

section 1.3 not included

managerial accountinng

focuses on providing information to internal decision makers

financial accounting

provides info for external stakeholders and reports on the financial position of an organization.

organizational chart

A visual representation of the structure of an organization, showing the relationships and relative ranks of its parts and positions.

board of directors

A group of individuals elected to represent shareholders and oversee the activities and operations of a company.

CEO

the highest-ranking executive in a company, responsible for making major corporate decisions and managing the overall operations and resources.

line positions

Positions that directly contribute to the organization's core activities, such as production or sales, and are essential for achieving organizational objectives.

staff positions

Positions that support line activities, providing specialized expertise and assistance to ensure effective operations within the organization.

planning

the process of setting objectives and determining a course of action for achieving those objectives.

strategic planning

developing long term strategies

operational planning

the process of translating strategic plans into specific actions and short-term objectives to ensure day-to-day operations align with overall goals.

directing

the process of guiding and overseeing the execution of plans to ensure that objectives are met.

controlling

monitoring day-to-day operations and keeping the company on tby measuring performance against established standards and making necessary adjustments

what are the 3 standards the IMA requires managerial accountants to uphold?

1. maintain professional competence

2. preserve confidentiality

3. act with integrity and objectivity.

how does the IMA suggest you deal with ethical dillemas?

1. speak with an appropriate supervisor

2. speak with an objective advisor

3. speak with an attorney

service companies

sell time, skill, and knowledge

merchandizing companies

resell products from suppliers

manufacturing companies

convert raw materials into finished products

raw materials (RM)

materials used to make a product

work-in-progress (WIP)

inventory that is partially completed in the production process

finished goods inventory (FG)

completed goods that have not yet been sold

direct costs

a cost that can be easily and cost-effectively traced to a cost object

cost object

anything which managers want a seperate measurement of costs

indirect costs

costs that cannot be easily or cost effectively traced to a cost object

direct materials (DM)

raw materials used in production

direct labor (DL)

labor of employees

manufacturing overhead (MOH)

indirect product costs

ex. indirect materials, indirect labor, factory costs for rent etc.

prime costs

combine direct costs of direct materials and direct labor

conversion costs

combine direct labor with manufactioring

product costs

includes the costs of purchasing or making a product (DM< DL< MOH)

period costs

non-manufactoring costs (selling and administrative expenses)

What business trends affect managerial accounting?

1. enterprise resource planning (ERP) - systems integrate company’s data

2. e-commerce

3. just-in-time (JIT) management - an inventory management tool

4. advances in technology

total quality management (TQM)

a philosophy of continuous improvement in products and processes

the triple bottom line

the economic social and enviromental impact of doing business

1. profit

2. people

3. planets