STRATEGIC COST

MANAGEMENT
STCM211
Introduction to Management Accounting
• Managerial accounting is the practice of identifying, measuring,
analyzing, interpreting, and communicating financial information to
managers for the pursuit of an organization's goals.

• It is primarily concerned with providing information to internal

managers whoare charged with planning and controlling the
operations of the firm and making a variety of management decisions.
Introduction to Management Accounting
Common tasks performed by management accountant:

a. Scorekeeping or data accumulation which enables both internal and

external parties to evaluate organizational performance and position.

b. Interpreting and reporting of information that helps manager to focus on

operating problems, opportunities as well as inefficiencies.

c. Problem-solving or quantification of the relative merits of possible courses

of action as well as recommendations of best procedure.
Introduction to Management Accounting
Administrative functions of management accountant:

a.Planning- involves setting of goals for te firm, evaluating tje various ways to meet
the goals and picking out what appears to be the best way to meet the goals

b. Controlling- this involves the evaluation of whether actual performance

conforms with the planned goals

c. Decision making - this involves determination of predictive information for

making important business decisions
Introduction to Management Accounting
Planning

• Involves identifying alternatives and selecting a course of action and

specifying how the action will be implemented
• Communicates a company’s goals to employees amd specifies the resources
needed to achieve them
• Plans of managements are often expressed in budgets
• Often includes capital and cash budgets, projected statement of financial
position, break-even analysis and projected income statement
• Resource planning and profit planning
Introduction to Management Accounting
Control

• Achieved by evaluating the performance of managers and the

operations for which they are responsible
• Managers are evaluated to determine how their performance should
be merited through the performance reports
• Accounting control reports
Introduction to Management Accounting
Decision Making

• Management accountant develops cost management information for

the Chief Financial Officer, other managers and employees to use to
manage the business and to make the business more competitive and
successful.
Introduction to Management Accounting
Financial Accounting versus Management Accounting
Financial Accounting
As to objective To provide data for internal and
external users
As to IFRS compliance Recording and presentation are in
accordance with IFRS.
As to emphasis on the future Summary of past financial
transactions
As to data relevance and All purpose reports for use of
flexibility different parties
As to emphasis on precision and Late submission does not diminish
timeliness of report usefulness and precision of report
As to reporting requirement of Primarily concerned with reporting
an organization for the compan as a whole.
As to requirement for SEC, BIR and other government
compliance with law requirements
Management Accounting
To provide data for internal users only
Not required to be in accordance with
IFRS
Strong future orientation
Special reports containing both
historical and projected data
Timeliness is often more important to
management than precision.
Focuses on parts or segments
Not mandatory