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Introduction To Modern Management Accounting Notes

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Lecture 1: Introduction to Modern Management Accounting 04 October 2010


* Forces of change

* Contemporary issues

* The "new economy"

* Costing


* Strategic Finance (Chapter 1,2)

Forces of Change Traditional Management Accounting Model

? Budgets are the accounting tool for implementing the planning action
? Control is the capturing of the difference in actual to planned results List of Forces of Change in Management Accounting
? The 1970s were hard times
? Started with OPEC prices |
? Any company that faces constraints becomes inward facing
? This leads to management accounting
? Servicing the needs of the services industries
? The west became more service orientated
? 80% of OECD GDP is accounted for by the service sector
? The advent of technology
? Meant companies became more complex
? Subservience to financial accounting
? The residues of Japan + new influences
? By the late 1970s Japan was taking over western markets
? Japanese management influenced western management accounting
? Strategizing accounting
? Accounting for intellect Management Accounting versus Financial Accounting
? Users
? Standards
? Levels of detail
* Time focus / personalisation
? Volume of information New Management Accounting Model

Changes in Management Accounting
? Backward looking - Forward looking
? Internal focus - External perspective
? Product/Services - Customers and markets
? Financial data - Financial and non-financial information
? Functional - Process
? Information - Knowledge The Traditional Finance Function

? 7.5 pence in every PS1 spent goes to the finance department We can cut costs by outsourcing services

Course Notes Page 1

Key Points

* Forces of change in MA

* MA vs. FA

* Contemporary issues of MA

* Cost management issues

* Absorption costing

* Variable costing

* CVP analysis

* CVP assumptions (5)

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