simple theories of management accounting presentation. and some one willing to learn MA can follow those out lines with some reference books to have good knowledge in MA.
Ecological Succession. ( ECOSYSTEM, B. Pharmacy, 1st Year, Sem-II, Environmen...
management accounting
1. Masters Degree in Business
Management
Course No.02
Institute of Human Resource Advancement
University of Colombo
MBM 03 - Management Accounting
RMRB Rajapakse, Senior Lecturer in Accounting
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3. Challenges to Managers
Today business environment is so
complex and competitive.
Need to
achieve
sustainable
development
through limited resources.
Managers role is challengeable.
So they need to make rational decisions
that
can
facilitate
to
achieve
organizational objectives.
3
4. Challenges to Managers
MA
helps
them
providing
information in on order make
operational/ strategic decisions in
competitive business environment
4
5. Different decisions
What are the various decisions make by
Marketing manager
Production manager
HR manager
Project manager
Financial manager
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6. Management Accounting (MA)
That part of accounting system which
facilitates to the management process
is called as MA
MA is a decision making system- it
presents accounting information to
assists management
MA is futuristic –it helps to evaluate
future as it present.
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7. Management Accounting (MA)
It
is
process
of
identification,
measurement, accumulation, analysis,
presentation,
interpretation
and
communication of information which
use by the management in order to
plan, evacuate, control and assure
accountability.
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8. Concepts of MA
Full cost concepts
Marginal cost concepts
Differential cost concept
Responsibility Accounting Concept
8
9. FA vs. MA
Financial accounting
Prepared for the whole
Entity
Applied GAAPs,
accounting standards
Legal requirement
Framework is given
Use historical data
External parties
Management accounting
Prepared for the sections,
department, activity etc.
No concepts is applied
Management requirement
No framework
Historical / estimated data
Internal parties
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10. Behavioral aspect of MA
Through performance measurement
Through budgeting
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12. Cost Concepts, classification
and ascertainment of cost
Cost information is important to,
-
analysis cost structure
estimate / plan cost
cost control
performance evaluation
profitability analysis
make pricing decision
special decisions like make or
buy decisions,
- product/ product line decisions etc
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13. Cost sheet
Direct Cost
Direct Material
xxx
Direct Labour
xxx
Other Direct Cost
xxx
Prime Cost
xxx
Over Head Costs
Production overhead cost
Production cost
xxx
xxx
Administrative overhead
xxx
Selling & Distribution overhead
xxx
Total Cost
xxx
Profit
xxx
Selling Price
xxx
14. Cost Elements
Direct Cost?. cost that can be
conveniently identified with a particular
cost unit, cost center
- Direct material cost
- Direct labour cost
- Other direct cost ?????
15. Cost elements
cont:
Overhead Cost ?. cost that can not be
conveniently identified with a particular
cost unit, cost center
- Production overhead
- Administrative overhead
- Selling and distribution overhead ??
16. Cost classifications
Direct cost Vs. Indirect cost
Variable cost Vs. Fixed cost
Marginal cost Vs. Absorption cost
Relevant cost Vs. Irrelevant cost
Product cost Vs. Period cost
Sunk cost
Imputed cost
Opportunity cost
etc;………….
17. Over Head Cost
Traditional over head cost allocation
process.
-It has based on volume
-It ignores the involvement of
different activities.
18. Classification of Over Head
Function (production, administration,
distribution)
Elements (indirect material, indirect
labour, indirect expenses)
Behaviour / Variability (Fixed,
variable, semi variable)
19. Steps in Overhead Cost Accounting
Collections and Classification
Allocation
and
apportionment
to
production and service departments
Re-apportionment of service
departments to production departments
Absorption of Overheads
20. Steps in Absorption process
Allocation
Apportionments
Re-apportionment
Absorption rate
21. Illustration 1 : Compute the prime cost,
Factory cost, Cost of production & Total cost
Direct material
57,000 Director’s remuneration
Direct wages
28,000 Telephone & postage
200
2,500 Printing & stationary
100
Factory rent & rates
Office rent & rates
500 Legal charges
1,500
150
Plant repairs &
maintenance
1,000 Advertising
1,500
Plant depreciation
1,250 Salesmen’s salary
2,500
Factory heating &
lighting
400 Showroom rent
Factory mgr’s salary
2,000 Sales
Office salaries
500
1,16,000
1,600
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