Management Accounting

An Integrative Approach
 
 
Wiley (Verlag)
  • 1. Auflage
  • |
  • erschienen am 7. Mai 2020
  • |
  • 816 Seiten
 
E-Book | ePUB mit Adobe-DRM | Systemvoraussetzungen
978-1-119-72075-1 (ISBN)
 
An Integrative Approach
1. Auflage
  • Englisch
  • 7,57 MB
978-1-119-72075-1 (9781119720751)
weitere Ausgaben werden ermittelt
Chapter One Business Planning and Analysis: An Integrative Framework for Management Accounting 1

Chapter Two Measuring and Evaluating Performance 41

Chapter Three Defining and Using Cost Estimates 91

Chapter Four Cost Pools, Capacity, and Activity- Based Costing 165

Chapter Five Understanding the Management Process 217

Chapter Six Planning in the Product Domain 273

Chapter Seven Assessing and Improving Product Profitability 337

Chapter Eight Setting Process Expectations 393

Chapter Nine Evaluating and Improving Process Performance 455

Chapter Ten Setting Performance Expectations at the Entity Level 503

Chapter Eleven Setting Performance Expectations in Large, Complex Organizations 565

Chapter Twelve Evaluating and Improving Entity Performance 625

Chapter Thirteen Setting and Achieving Targets in the Customer Domain 675

Chapter Fourteen Strategic Cost Management and the Value Chain Domain 725

CHAPTER ONE
Business Planning and Analysis: An Integrative Framework for Management Accounting


The culminating point of administration is to know well how much power, great or small, we ought to use in all circumstances.

MONTESQUIEU1

CHAPTER ROADMAP

  1. The World of Management: An Overview
    1. What Is a Manager?
    2. Types of Managerial Work
  2. The Management Process and the Role of Management Accounting
  3. What Is Business Planning and Analysis?
    1. Bpa as a Tool to Integrate Management Accounting Practices
    2. A Financial vs. Managerial Perspective
  4. The BPA Integrated Framework and Management Accounting
    1. The BPA Database
    2. The Decision Domains
  5. Management Accounting: Real World-Real Issues
    1. Analyzing Performance
    2. Management Accounting in Action
  6. IMA Statement of Ethical Professional Practice
  7. The Management Accounting Professional

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

  1. Explain the basic nature of managerial work.
  2. Discuss the management process and describe how management accounting supports these efforts.
  3. Describe how a BPA lens affects management accounting practices and how these differ from financial accounting.
  4. Identify the primary types of information in a management accounting database and analyze the concept of a decision domain and how it is applied to organizations.
  5. Illustrate how measurements influence decision making and behavior in organizations.
  6. Interpret the IMA Statement of Ethical Professional Practice that guides the use and presentation of information within organizations.
  7. Describe the various career paths open to management accounting professionals.

Success in business boils down to managers making good decisions. Behind every such decision lies a management accounting database supported by an information network that either formally (for example, with rules or policies) or informally (for instance, the culture of an organization) links the organization's people and progress across space and time. This network of information, and the data that flows through this network, defines and shapes the practice of management accounting, which is the focus of this textbook.

This book is built around three unique features:

  1. An integrative framework that uses a business planning and analysis perspective to emphasize the relationship between management accounting and management decision making, control, and information.
  2. Three Excel-based databases that illustrate how organizations use information to complete the management accounting processes of planning, decision making, and control.
  3. Three industry settings (an airline, a kitchen cabinet manufacturer, and an automobile dealership) to help you understand management accounting in action.

The overriding objective is to improve your existing critical thinking skills by helping you learn to analyze and respond to the challenges faced every day by organizations and the managers who run them.

The World of Management: An Overview


This chapter introduces the management process-what managers do to ensure that their organization achieves its objectives. We will approach management accounting from a business planning and analysis (BPA) perspective, which, when applied to management accounting issues, includes all of the activities in which managers use information, whether for planning, decision making, or control.

OBJECTIVE 1

Explain the basic nature of managerial work.

Information lies at the center of the management process. Information is data that has been organized to meet a specific need during decision making and analysis. It is the lifeblood of any organization, essential to effective decision making and the actions of management. A key focus of this book is to illustrate and explain what types of information are used during the various stages of the management process. This chapter focuses on understanding the basic elements of the integrative management accounting framework and how it relates to the work done by business managers. Attention then turns to how management accounting informs BPA, the key differences between a management accounting vs. a financial accounting perspective, and what career options exist for the management accounting professional.

Let us begin by taking a look at the role of management in organizations and how management accounting serves the organizations' information and decision-making needs. As the "In Context" discussion of Easy Air suggests, these needs span the gamut of a business, from strategic decisions such as what markets and customers to serve, to basic operational details (for example, what food to serve on a specific flight). The "In Context" discussions are used throughout the text to help illustrate the role of management accounting in a realistic business setting.

IN CONTEXT


Easy Air: Confronting the Problem

Easy Air Chief Operating Officer (COO) Fran Conte stared out of the window of her office. Lying open on the desk behind her were the most recent figures from the finance department. Profits were down for the third quarter in a row, lost and damaged baggage claims were soaring, and Easy Air's on-time arrival and departure performance was abysmal. The trends were troubling, and it was Fran's job to change them. In the 20 years since she and Frank Russo founded Easy Air, they had faced constant challenges. But at the end of the day, they had always found a way to improve performance and make money at the same time-until now.

Easy Air, headquartered in the Midwest, flies only one type of plane, the Airbus 321. This means one kind of spare parts and one maintenance routine, which greatly simplifies Easy Air's operations. Each plane has the same seating configuration, making it quite simple to switch aircraft (or "tails") between routes and flights. Easy Air offers only one class of service-no-frills coach seating-and only one fare for each flight. No matter when or how the passengers for a specific flight book and pay for their travel, they pay the same price.

Emphasizing point-to-point service, Easy Air flies directly between secondary airports located near major cities and population centers. Initially a regional carrier serving the Chicago/Milwaukee/Indianapolis market, the company has grown steadily over the last 20 years to become the 10th largest air carrier in the United States, serving all major cities from Kansas City, Mo., to the eastern seaboard.

With this growth, operations have become increasingly complex. Corporate headquarters has been relocated five times, each time to a significantly larger space. Flight operations, once housed in a single room, now has its own dedicated wing. Advertising, initially run by Frank, now has more than 150 employees who coordinate ad campaigns, design promotions, and manage a wide-ranging set of corporate programs. While Frank still has the first chair he bought for himself when Easy Air was founded, the company bears little resemblance to the fledgling airline of its early years.

Unfortunately, some of the differences between the Easy Air of the past and today's company are not as positive. Easy Air built its reputation on hassle-free, on-time, dependable air travel. But with growth has come a rapid decline in performance, as the most recent financial and operational reports so clearly demonstrate. Fran's challenge is to determine what Easy Air can do to reverse these trends. How can profits be improved without increasing fares or reducing the level of service Easy Air provides to its customers? Should some routes be cut, or should new ones be added? Would it be better to lower fares to fill empty seats, or raise them to increase the revenue earned per passenger mile flown?

Before she could answer these questions, Fran knew she needed more information in order to properly analyze the current situation, identify options for improvement, make choices, and track the impact of any changes made. For this, she would have to call upon her management accounting systems and analysts.

WHAT IS A MANAGER?


An organization is the sum of the skills and efforts of its people. Every individual is an essential part of the complex web of actions and relationships that define and shape the modern business organization. The coordinated effort of these actions and relationships results in products and services that customers are willing to buy.

In an effective business organization, individuals have different roles and responsibilities. Not everyone makes the product or calls on customers to secure sales of these products. Some individuals are directly involved in producing the firm's goods and services, while others support these efforts. Some perform the tasks they are assigned, while others-the managers-determine what should be done.

Managers are those individuals in an organization who are...

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