Chapter 1 - Introduction. The topics discussed in this chapter are: Managerial accounting: decision making and control, design and use of cost systems, marmots and grizzly bears, management accountant’s role in the organization, evolution of management accounting: a framework for change, vortec medical probe example. | Introduction Chapter One Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Decision Making - Product Management Examples Add new product Terminate an existing product line Accept or reject special order Related Topics Operations management Budgeting - capital and operating Just-in-time (JIT) 1- Decision Making - Pricing Examples Set selling price to achieve desired profits Set selling price to achieve positive cash flow Related Topics Marketing Microeconomics - Price Theory Corporate Finance 1- Decision Making - Cost Control Examples Add new equipment Change production process Make internally versus buy externally (outsource) Related Topics Process engineering Management information systems Activity-based costing (ABC) 1- Control - Incentives Assumptions Individuals maximize their own self-interest Owners of firm want to maximize firm value Maximizing firm profits maximizes firm value Incentives Design performance incentives based on internal accounting measures to motivate employees to take actions that will maximize firm value 1- Control - Performance Evaluation Examples Performance bonuses depend on accounting results Benchmarking: comparisons to industry leaders Related Topics Organizational behavior Human resources management 1- Design - Multiple Roles of Accounting Study Figure 1-1. Main point: Accounting reports are used for multiple purposes. 1- Design - External Reports Users of external reports Shareholders, bondholders, banks, and analysts (SEC, FASB) Taxing authorities (IRS, states, etc.) Regulatory authorities (GASB, etc.) Board of directors Objectives in external reporting Comparability between firms Historical accounting Auditors can verify reports 1- Design - Internal Reports Users of internal reports Managers at all levels Objectives of internal reporting Useful for decision making about future activities Measure performance that is relevant to the firm Focus on projects or . | Introduction Chapter One Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Decision Making - Product Management Examples Add new product Terminate an existing product line Accept or reject special order Related Topics Operations management Budgeting - capital and operating Just-in-time (JIT) 1- Decision Making - Pricing Examples Set selling price to achieve desired profits Set selling price to achieve positive cash flow Related Topics Marketing Microeconomics - Price Theory Corporate Finance 1- Decision Making - Cost Control Examples Add new equipment Change production process Make internally versus buy externally (outsource) Related Topics Process engineering Management information systems Activity-based costing (ABC) 1- Control - Incentives Assumptions Individuals maximize their own self-interest Owners of firm want to maximize firm value Maximizing firm profits maximizes firm value Incentives Design performance incentives based .
