Tutorial 1
- How does management accounting differs from financial accounting?
- Management accounting deals only with costs”. Do you agree? Explain.
- Distinguish planning decisions from control decisions.
- Knowledge of technical issues such as computer technology is a necessary but not sufficient condition to become a successful management accountant.” Do you agree? Why?
- Conner Sdn Bhd makes and sells broom and mops. It takes the following actions, not necessarily in the order given below. For each action given below, state whether it is a planning decision or a control decision.
a / Conner asks it marketing team to consider ways to get back market share from its newest competitor, Swifter.
b / Conner calculates market share after introducing its newest product.
c / Conner compare sit actual costs with its expected costs for the production of the new product .
d / Conner ‘s design team proposes a new product to compete directly with Swifter
e / Conner estimates the costs it will incur to sell 30,000 units of the new product for the first quarter of the next fiscal year.
- The job responsibilities of three employees of Jamieson, Inc , follow.
Maria Samad. Cost Accounting Manager. Maria is responsible for measuring and collecting costs associated with the manufacture of small appliance product line. She is also responsible for preparing periodic reports comparing the actual costs with the planned costs. Maria helps explain and interpret the reports
Carol Jeffry, Sales Manager. Carol is responsible for coordinating the sales team for Jamieson’s small appliance products group. Carol hires, trains and supervises the sales staff. She is also responsible for sales in the eastern region and spends about 25% of her time on the road, selling Jamieson’s consumer products to retailers. She is responsible for seeing that sales quotas are met as well as for controlling selling costs for the consumer products line
George Tan, Production Manager. George is responsible for the manufacture of the coffeemaker line. He supervises the line workers, helps develop the production schedule and is responsible for seeing that the production quotas are met. He is also held accountable for controlling manufacturing costs
Required:
Identify Maria, Carol and George as line or staff, and explain your reasons.
- Explain why today’s management accountant must have cross-functional perspectives.
- Webson Manufacturing Company produces component parts for the airline industry and has recently undergone a major computer system conversion. Michael Darwin the controller has established a trouble shooting system team to alleviate accounting problems that have occurred since conversion. Michel has chosen Maureen the assistant controller to head the team that would include Bob, cost accountant, Cynthia, the financial analyst, Maggie, general accounting supervisor and George, financial accountant.
The team has been meeting weekly for the last month. Maureen insisted on being part of all team conversations in order to gather information, make the final decision on any ideas or action that the team, develops and prepare a weekly report for Michael. She has used this team as a forum to discuss issues and disputes about him and other member s of Webson’s top management team. At last week’s meeting Maureen told the team that she thought a competitor might purchase Webson’s share because she had overhead overheard Michael talking about this on the telephone. As a results, most of Webson’s employees now informally discuss the sale of Webson’s shares and how it will affect their jobs.
Required:
Is Maureen’s discussion with the team about the prospective sale of Webson’s shares unethical? Discuss citing certain specific standards from the code of ethical conduct to support your position.
Solution Tutorial 1:
1. Management accounting measures, analyzes and reports financial and nonfinancialinformation that helps managers make decisions to fulfill the goals of an organization. It focuses on internal reporting and is not restricted by generally accepted accounting principles (GAAP).
Financial accounting focuses on reporting to external parties such as investors,government agencies, and banks. It measures and records business transactions and provides financial statements that are based on generally accepted accounting principles (GAAP). Other differences include (1) management accounting emphasizes the future (not the past), and (2) management accounting influences the behavior of managers and other employees (rather than primarily reporting economic events).
2.“Management accounting deals only with costs.” This statement is misleading at best, and wrong at worst. Management accounting measures, analyzes, and reports financial and nonfinancial information that helps managers define the organization’s goals, and make decisions to fulfill them. Management accounting also analyzes revenues from products and customers in order to assess product and customer profitability. Therefore, while management accounting does use cost information, it is only a part of the organization’s information recorded and analyzed by management accountants.
3.Planning decisions focus on (a) selecting organization goals, predicting results undervarious alternative ways of achieving those goals, deciding how to attain the desired goals, and (b) communicating the goals and how to attain them to the entire organization.
Control decisions focus on (a) taking actions that implement the planning decisions, and (b)deciding how to evaluate performance and providing feedback and learning to help future decision making.
4.Agree. A successful management accountant requires general business skills (such as understanding the strategy of an organization) and people skills (such as motivating other team members) as well as technical skills (such as computer knowledge, calculating costs of products, and supporting planning and control decisions).
5.Action Decision
a. Planning
b.Control
c.Control
d.Planning
e.Planning
6.Pennyisstaff.Sheisinasupportrole—shepreparesreportsandhelpsexplain and interpret them. Her role is to help the line managers more effectivelycarry outtheirresponsibilities.
Karolisline.Sheisresponsibleforsellingproduct.Abasicobjectivefortheexis- tenceofamanufacturingfirmistosellproduct.Karolhasdirectresponsibility for
abasicobjectiveandthereforeholdsalineposition.
Joeisalinemanager.Hehasdirectresponsibilityforproducingagardenhose. Clearly,oneofthebasicobjectivesfortheexistenceofamanufacturingfirmisto make a product. Thus, Joe has direct responsibility for a basic objective and thereforeholdsalineposition.
- Managingthevaluechainrequiresacross- functionalperspective.Becauseoftheinter- relationshipsthatexistinthevaluechain,a decisioncanaffectmanydifferentfunctions. Information must be gathered and reported so that these effects can be assessed and decision making improved.
8.BydiscussingthepossiblesaleofWebson’scommonstockwithmembersofthe troubleshooting team, Maureen Hughes has violated the following standards of ethicalconduct:
Competence.Hugheshasanobligationtoperformherdutiesinaccordancewith relevant laws and regulations. By discussing the information she overheard, Hughes may have violated laws regulating the use of inside information. (CMA adapted)
Confidentiality. Hughes has disclosed confidential information acquired in the courseofherworkthatshehasnotbeenauthorizedtosharewithpeersandoth- erswithintheorganization.Inaddition,shehasnotinformedsubordinatesofthe confidentialnatureoftheinformationnorhassheattemptedtopreventthefur- therdistributionofthisinformation.
Integrity.Bydiscussingthisinformation,Hugheshasengagedinanactivitythat
would discredit her profession and prejudice her ability to carry out her duties ethically.
Objectivity.Hugheshasviolatedtherequirementtocommunicateallinformation fairlyandobjectively.