Richard Kelson, the Chief Financial Officer of Alcoa, says: The earlier you get information, the easier it is to fix a problem. The Chief Financial Officer of Cisco, Larry Carter, says that with this kind of live information you can empower all your management team to improve decision making. Managers at these companies can drill down into the company s management accounting system to find the latest data on revenues, margins, order backlogs, expenses, and other data, by region, by business unit, by distribution channel, by salesperson, and so on.
CHAPTER CHAPTER The Work of Management and the Need for Managerial Accounting Information Planning Directing and Motivating Controlling The End Results of Managers Activities The Planning and Control Cycle Comparison of Financial and Managerial Accounting Emphasis on the Future Relevance of Data Less Emphasis on Precision Segments of an Organization Generally Accepted Accounting Principles (GAAP) Managerial Accounting Not Mandatory General Cost Classifications Manufacturing Costs Nonmanufacturing Costs Product Costs versus Period Costs Product Costs Period Costs OUTLINE Cost Classifications on Financial Statements The Balance Sheet The Income Statement Schedule of Cost of Goods Manufactured Product Costs A Closer Look Inventoriable Costs An Example of Cost Flows Cost Classifications for Predicting Cost Behavior Variable Cost Fixed Cost Cost Classifications for Assigning Costs to Cost Objects Direct Cost Indirect Cost Cost Classifications for Decision Making Differential Cost and Revenue Opportunity Cost Sunk Cost Appendix 1A: Cost of Quality Quality of Conformance Distribution of Quality Costs Quality Cost ReportĢ DECISION FEATURE Making Fact-Based Decisions in Real Time Cisco Systems and Alcoa are on the leading edge of their industries and real-time management accounting is one of the keys to their success. Chapter 3 describes activity-based costing, an elaboration of job-order costing. A LOOK AHEAD Chapters 2, 3, and 4 describe managerial costing systems that are used to compute product costs. Because these terms will be used throughout the text, you should ensure that you are familiar with each of them.
We define many of the terms that are used to classify costs in business. A LOOK AT THIS CHAPTER After describing the three major activities of managers in the context of Good Vibrations, Inc., this chapter compares and contrasts financial and managerial accounting.
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After describing the role of the Chief Financial Officer (CFO), we stressed the importance of professional ethics and codes of conduct, and provided information about the Certified Management Accountant designation. You were introduced to Good Vibrations, an international retailer of music CDs, and learned about their organizational structure. 1 1 C H A P T E R O N E An Introduction to Managerial Accounting and Cost Concepts A LOOK BACK We addressed some of the challenges faced by managers in the Prologue, and described the significant improvement programs that have been adopted by many companies.
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