Management accounting
- Created by: Mollie Kilpatrick
- Created on: 19-05-15 14:49
View mindmap
- Management accounting
- role of accounting in management
- factors increasing need
- global competition
- changes in public sector
- increased importance of service and non tangible industry
- organisational restructuring
- outsourcing
- managing for value
- managing for enviromental sustainability
- factors increasing need
- cost, concepts and classification
- uses of costs
- costing for decisions
- what price to sell
- what product
- how much product?
- profit measurement
- costing fo control
- keeping costs down
- costing for decisions
- uses of costs
- cost volume profit relationship
- cost/revenue behaviour
- breakeven analysis
- equation method
- CM margin method
- margin safety
- operating leverage
- cvp assumptions
- units sold=units produced
- constant feeling price throughout range
- sales mix constant
- costs linear
- profit/volume chart
- economists version
- advantage
- takes account economies of scale
- costing overheads
- activity based costing
- problems
- time consuming
- expensive
- cost greater than benefit
- applies overheads by thinkingall costs driven by something
- effect abc
- identify non value adding products and departments
- can lead to organisational change
- problems
- absorption/full costing
- quick
- apportionmentto multiplecost centres
- representative
- fair
- understandable
- uses
- profit measurement
- control
- assessing efficenticy
- pricing and output decisions
- multipleproductbusiness
- job costing
- by calculating direct cost
- can assign indirect according to a base
- labour hours most common
- calc labour hours for job
- x by POHR
- calc labour hours for job
- by calculating direct cost
- more products need fair apportionmentof overhead
- job costing
- signle productbusiness
- cost output=cost units produced
- no need to split direct and indirect costs
- cost output=cost units produced
- problems
- backward looking
- includes irrelevant info
- excldessome relevantinfo
- out of date in moderntech culture
- now more focus on managing overheads
- re-engineering
- outsourcing
- activity based costing
- pricing/ costing methods
- demand analysis
- advantages
- take into consideration demand and elastisity
- can offer insight on maximising profit in market context
- problems
- doesn'tallow for mark up
- difficult accurate measurement of curves
- doesn'ttake into account non monetary
- slow, in tech culture
- difficult when comes to multiple products
- advantages
- cost plus
- cost of product+ mark up wanted
- absorption costing
- price that allows covering fixed cost and ROI
- think safe
- need to be careful as based on fixed sales
- if sales are not reached ROI could be -ve
- need to be careful as based on fixed sales
- think safe
- price that allows covering fixed cost and ROI
- often used in monopoly situations
- target cost
- used in competitive situation
- estimated market price
- profit desired
- provides target cost of making good
- profit desired
- advantages
- cost management
- provides long term perspective
- problems
- may show not nice results
- too slow tech market
- pricing/yeaild management
- used where
- Untitled
- high fixed cost
- limited capacity
- changing demand
- e.g. hotel
- principles
- demand
- changing need costumer
- changing market
- responsiveness
- accurate hisorical info
- good forecasting method
- how to maximise yield
- i.e. how to get as close as possible to actual capacity
- set price to demand
- used where
- generalproblems
- costs aren't always easy to trace
- more focus on market demand
- demand analysis
- capital investment decisions
- accounting/simple rate return
- only one to include profit and depreciation
- advantage
- simple
- disadvantage
- ignores time value
- includes some irrelevant and excludes some relative
- not direct link to share holder wealth
- payback period
- advantage
- simple to calculate
- insight to liquidity
- disadvantage
- ignores time value money
- doesn't tell you about cash flow after payback period
- ignores relevant info
- doesn't take into account shareholders wealth
- advantage
- internal rate return
- advantage
- timely cash flow
- similar result to NPV
- all relevant info
- disadvantage
- doesn't consider shareholder wealth
- difficult to calculate directly
- if unconventional cash flow can be misleading
- advantage
- net present value
- advantage
- timely cash flow
- considers share holder wealth
- simple to calculate
- all relevant info
- advantage
- accounting/simple rate return
- budgeting and standard costs
- advantages budgeting
- communicating plans
- identify bottlenecks
- define objectives
- identify problems
- plan for future
- way to allocate resources
- disagvantage
- constrained management style
- inflexible
- demoralising
- competition between departments
- cost control not value creation
- standard costs
- advantages
- management by exception
- possible cut costs
- better info for planning
- good for performance evaluating
- disadvantages
- impact moral
- not timely
- should focus on continuous improvement
- may ignore other important company objectives
- advantages
- advantages budgeting
- traditional accounting vs. strategic management accounting
- traditional
- historical, inward looking, internal performance
- existing systems, programmed
- ignores linkages
- finacial performance only
- manufacturing focus
- single period
- Untitled
- strategic
- outward looking, forward looking, competitive performance
- non monetary included
- unprogramedlearning process
- looks for linkages
- multiple periods
- 3 main strands
- external info on competitors
- strategic positioning
- competitive advantage using value chain analysis
- advantages
- management accountants using traditional counting are providing useless info
- keep up with changes
- focus on competitors
- keep up with changes
- disadvantages
- can strategy be planned
- subjectivity ignored
- unsure of quality of info
- balance score card
- link short and long term, fix some perspectives and others will follow
- learning and growth
- internal business perspective
- costumer perspective
- finacial perspective
- costumer perspective
- internal business perspective
- advantages
- communicating and linking goals
- learning and feedback
- translating vision of goal to all
- business planning targets
- disagvantages
- non financial not in monetary terms
- cause and effect hasn't been proven
- shareholder interest is dominant still will not take risk to move away from finance target
- traditional
- role of accounting in management
Comments
No comments have yet been made