Introduction To Modern Management Accounting Notes

Lecture 1: Introduction to Modern Management Accounting 04 October 2010 Topics * Forces of change * Contemporary issues * The "new economy" * Costing Reading * 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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