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    Managerial Accounting: Concepts and Empirical Evidence

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    kmillat
    The document discusses managerial accounting concepts and empirical evidence. It covers how managerial accounting involves designing and using information systems for managerial planning and decision making. Key aspects covered include setting organizational objectives, identifying opportunities and problems, selecting courses of action, allocating resources, and evaluating accomplishments. Financial and nonfinancial internal and external information is classified. An example of Mala Toy Corporation introducing a new toy is provided to illustrate information economics and the value of a specialized information system in predicting costs more accurately.

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    Managerial Accounting: Concepts and Empirical Evidence

    Uploaded by

    kmillat
    60 views15 pages
    The document discusses managerial accounting concepts and empirical evidence. It covers how managerial accounting involves designing and using information systems for managerial planning and decision making. Key aspects covered include setting organizational objectives, identifying opportunities and problems, selecting courses of action, allocating resources, and evaluating accomplishments. Financial and nonfinancial internal and external information is classified. An example of Mala Toy Corporation introducing a new toy is provided to illustrate information economics and the value of a specialized information system in predicting costs more accurately.

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    Chapter1

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    The document discusses managerial accounting concepts and empirical evidence. It covers how managerial accounting involves designing and using information systems for managerial planning and decision making. Key aspects covered include setting organizational objectives, identifying opportunities and problems, selecting courses of action, allocating resources, and evaluating accomplishments. Financial and nonfinancial internal and external information is classified. An example of Mala Toy Corporation introducing a new toy is provided to illustrate information economics and the value of a specialized information system in predicting costs more accurately.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as ppt, pdf, or txt
    60 views15 pages

    Managerial Accounting: Concepts and Empirical Evidence

    Uploaded by

    kmillat
    The document discusses managerial accounting concepts and empirical evidence. It covers how managerial accounting involves designing and using information systems for managerial planning and decision making. Key aspects covered include setting organizational objectives, identifying opportunities and problems, selecting courses of action, allocating resources, and evaluating accomplishments. Financial and nonfinancial internal and external information is classified. An example of Mala Toy Corporation introducing a new toy is provided to illustrate information economics and the value of a specialized information system in predicting costs more accurately.

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    of 15

    Managerial Accounting:

    Conceptual Framework
    Chapter 1

    Managerial Accounting
    Concepts and Empirical Evidence
    Managerial Accounting

    MANAGERIAL ACCOUNTING:

    ical Evidence
    Design and use of information systems for
    managerial planning and control

    Managerial Accounting
    pts and Emp
    Concepts
    Conce irical
    Empir
    DECISION MAKING
    INFORMATION
    (planning and control)
    Planning and Control Framework
    Setting Organizational
    Setting Organizational
    Objectives
    Objectives

    ical Evidence
    Managerial Accounting
    pts and Emp
    Concepts
    Conce irical
    Empir
    Planning and Control Framework
    Setting Organizational
    Setting Organizational
    Objectives
    Objectives

    ical Evidence
    Managerial Accounting
    Identifying Opportunities
    Identifying Opportunities

    irical
    and/or Problems
    and/or Problems

    Concepts
    Conce Empir
    pts and Emp
    Planning and Control Framework
    Setting Organizational
    Setting Organizational
    Objectives
    Objectives

    ical Evidence
    Managerial Accounting
    Identifying Opportunities
    Identifying Opportunities

    irical
    and/or Problems
    and/or Problems

    Empir
    pts and Emp
    Selecting Course
    Selecting Course of
    of
    Action and
    Action and Allocating
    Allocating

    Concepts
    Resources
    Resources

    Conce
    Planning and Control Framework
    Setting Organizational
    Setting Organizational
    Objectives
    Objectives

    ical Evidence
    Managerial Accounting
    Identifying Opportunities
    Identifying Opportunities

    irical
    and/or Problems
    and/or Problems

    Empir
    pts and Emp
    Selecting Course
    Selecting Course of
    of
    Action and
    Action and Allocating
    Allocating

    Concepts
    Resources
    Resources

    Conce
    Evaluating Accomplishments
    Evaluating Accomplishments
    of Organizational
    of Organizational
    Objectives
    Objectives
    Three-Way Classification
    Scheme of Information

    ical Evidence
    Managerial Accounting
    irical
    Empir
    pts and Emp
    Nonfinancial
    Internal

    Concepts
    Ex post

    Conce
    Three-Way Classification
    Scheme of Information

    ical Evidence
    Managerial Accounting
    irical
    Empir
    Financial

    pts and Emp


    Concepts
    Conce
    Nonfinancial External

    Internal
    Ex post Ex ante
    Data for Example

    • MaLa Toy Corporation - Introduction of New

    ical Evidence
    Toy

    Managerial Accounting
    • Estimate of revenues = $2,000,000

    irical
    • Estimates of costs of new toy = $1,000,000 or

    Empir
    pts and Emp
    $2,500,000, with equal probabilities
    • Cost of developing specialized information system
    to help predict toy costs = $40,000

    Concepts
    Conce
    • Cost prediction is 80% accurate with specialized
    information system
    Mala Toy Corporation
    Information Economics
    Prediction without
    Specialized Information
    System

    ical Evidence
    Revenues = $ 2,000,000
    Costs = $ 1,000,000

    Managerial Accounting
    Probability (p) = 0.5

    irical
    s

    Empir
    Cost

    pts and Emp


    w
    Lo

    Concepts
    Hi
    gh
    Co

    Conce
    sts

    Revenues = $ 2,000,000
    Costs = $ 2,500,000
    p = 0.5

    EV = ($ 2,000,000 - $ 1,000,000)*.5
    + ($ 2,000,000 - $ 2,500,000)*.5 = $ 250,000
    Mala Toy Corporation
    Information Economics
    Prediction without Prediction with
    Specialized Information Specialized Information
    System System

    ical Evidence
    Revenues = $ 2,000,000
    Costs = $ 1,000,000 Low-Cost Signal, p = 0.8

    Managerial Accounting
    Probability (p) = 0.5

    irical
    s

    Empir
    Cost High-Cost Signal, p = 0.2

    pts and Emp


    w
    Lo

    High-Cost Signal, p = 0.8

    Concepts
    Hi
    gh
    Co

    Conce
    sts

    Low-Cost Signal, p = 0.2


    Revenues = $ 2,000,000
    Costs = $ 2,500,000
    p = 0.5

    EV = ($ 2,000,000 - $ 1,000,000)*.5
    + ($ 2,000,000 - $ 2,500,000)*.5 = $ 250,000
    Mala Toy Corporation
    Information Economics
    Prediction without Prediction with
    Specialized Information Specialized Information
    Expected payoff
    System System

    ical Evidence
    Revenues = $ 2,000,000
    Costs = $ 1,000,000 Low-Cost Signal, p = 0.8

    Managerial Accounting
    Probability (p) = 0.5 = (.5)*(.8)*($ 2,000,000 - $ 1,000,000) = $ 400,000

    irical
    s

    Empir
    Cost High-Cost Signal, p = 0.2

    pts and Emp


    w
    Lo
    Do not Produce

    High-Cost Signal, p = 0.8


    Do not Produce

    Concepts
    Hi
    gh
    Co

    Conce
    sts
    = (.5)*(.2)*($ 2,000,000 - $ 2,500,000) = $ -50,000
    Low-Cost Signal, p = 0.2
    Revenues = $ 2,000,000 Expected Value (EV) = $ 350,000
    Costs = $ 2,500,000 Less: Cost of Specialized Information System - 40,000
    p = 0.5
    Net EV $ 310,000
    EV = ($ 2,000,000 - $ 1,000,000)*.5 Since $ 310,000 > $ 250,000 (by $60,000),
    + ($ 2,000,000 - $ 2,500,000)*.5 = $ 250,000 install Specialized Information System
    Decision Support Systems
    Overview
    • Computer-based information systems designed to support
    managerial planning and control

    ical Evidence
    Managerial Accounting
    pts and Emp
    Concepts
    Conce irical
    Empir
    User

    User
    Decision Support Systems
    Overview
    • Computer-based information systems designed to support
    managerial planning and control

    ical Evidence
    Data base

    Managerial Accounting
    Management System

    irical
    Empir
    pts and Emp
    Data Base

    Concepts
    Conce
    User

    User
    Decision Support Systems
    Overview
    • Computer-based information systems designed to support
    managerial planning and control

    ical Evidence
    Model base Data base

    Managerial Accounting
    Management System Management System

    irical
    Empir
    pts and Emp
    Model Base Data Base

    Concepts
    Conce
    User

    User

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