Presentation on

Emerging Concepts in Management Accounting

Introduction
The process of preparing management report an accounts that provide accurate and timely financial and statistical information required by managers to make day-to-day an short term decision.
Generates monthly or weekly reports for internal audiences Show the amount of available cash, sales revenue etc.

Target Costing
Target costing is the process of determining the maximum allowable cost for a new product and then developing a prototype that can be profitably made for that maximum target cost figure. Target Cost = Anticipated selling price Desired profit. Example of Target Costing:

Handy Appliance Company feels that there is a market niche for a hand mixer with certain new features. Surveying the features and prices of hand mixers already in the market, the marketing department believes that a price of $30 would be about right for the new mixer. At that price, marketing estimates that 40,000 of new mixers could be sold annually. To design, develop, and produce these new mixers, an investment of $2,000,000 would be required. The company desires a 15% return on investment (ROI). Given these data, the target cost to manufacture, sell, distribute, and service one mixer is $22.50 as calculated below: Projected sales (40,000 mixers $30 per mixer ) $1,200,000 Less desired profit (15% $2,000,000) 300,000 -----------Target cost for 40,000 mixers $9,00,000 ======= Target cost per mixer ($9,00,000 / 40,000 mixer) $22.50

Balanced Scorecard
Balanced Scorecard, is a performance measurement system that considers not only financial measures, but also customer, business process, and learning measures.

Financial

Customer

Strategy

Business Processes

Learning & Growth

Life Cycle Costing

Life Cycle Costing (LCC) is a technique to establish the total cost of ownership. It is a structured approach which addresses all the elements of this cost and can be used to produce a spend profile of the product over its anticipated life-span.

Activity Based Costing

Activity Based Costing is a management accounting approach which allocate all direct and indirect (overhead) costs to cost objects (products and services) in order to help management understand critical business information. It is a decision making tool. It help management to understand cost and profit drivers.

Just-In-Time
JIT is a philosophy of continuous improvement in which nonvalue-adding activities (or wastes) are identified and removed for the purpose of ; Reduced cost Improving quality Improving performance Improving delivery Adding flexibility Increase innovativeness

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