Management Accounting for

Planning and Control

Topic 1:
Introduction and cost terms and concepts

Week 1
Semester 2, 2021
 Management Accounting:
Information for creating and managing value,
McGraw-Hill, Australia, 8th Edition.

Chapter 1
Management accounting: information for
creating value and managing resources

Chapter 2
Management accounting: cost terms and
concepts

This material has been copied and communicated to you by or on behalf of Swinburne University of Technology under Part VB of the copyright Act
4
1968.
What is management accounting?

Management Accounting
=
Management
+
Costing
Management Accounting
“processes and techniques that are focused on the effective and
efficient use of organisational resources to support managers in their
task of enhancing both customer value and shareholder value.”

Effectiveness
Achieving most favourable results (goals and targets)

No! This way

Efficiency
Using minimum resources to achieve desired targets (Reducing wasting
materials, energy, efforts, money, and time) B

A
Resources
Financial and non-financial
Organisation capabilities and
competencies 6
Effectiveness
Do good things

Efficiency
Do things good

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Management Accounting
“processes and techniques that are focused on the effective and
efficient use of organisational resources to support managers in their
task of enhancing both customer value and shareholder value.”

Customer value
The value that a customer places on particular features of a product

Shareholder value
Improving the worth of the business from the shareholders’ perspective.

Conflict between customer value and shareholder value

Undertaking some activities to increase customer value may
decrease shareholder value in the short run as costs also
increase, but shareholder value may increase in the longer
run as market share increases

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Code of Ethics for Professional Accountants

• Integrity. Fair dealing and truthfulness.

• Objectivity. No professional judgment compromise

• Professional competence and due care. Having professional

knowledge and skill

• Confidentiality. not disclosing confidential information

• Professional behaviour. complying with relevant laws

and regulations

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 Management Accounting
vs
Financial Accounting

Exhibit 1.1
Management accounting versus financial accounting
Langfield-Smith, K., Smith, D., Andon, P., Hilton, R., Thorne, H., 2018. Management 13
Accounting: Information for creating and managing value, McGraw-Hill, Australia, 8th Edition.
Processes and techniques of management accounting:
• Support the formulation and implementation of strategy.
• Planning and control systems.
• Process improvement.
• Cost management techniques.
• Estimating of the cost of products (goods or services).

Management accounting systems

Produce the information required by managers to manage resources:
• Information provided on a regular basis:
– Estimates of costs of goods and services
– Information for planning and controlling operations
– Information for measuring performance
• Information provided on an ad-hoc basis
– short-term and long-term decision-making needs
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 Management accounting and Strategy

Strategy concepts

The desired future state of an organisation

A statement that defines the purpose and boundaries of the organisation

What the organisation aims to achieve (quantitative and commited timeframe).

Profitability Quality of
Product
Innovati service
quality
on environmental
Grow community responsibility
th service Cost
Product employee
minimisation
leadership welfare
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 Management accounting and Strategy

Strategy concepts

The desired future state of an organisation

Swinburne Business School

Vision statement
Our vision is to be a leading business school for innovation and
social impact in our region.
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 Management accounting and Strategy

Strategy concepts

A statement that defines the purpose and boundaries of the organisation

Swinburne Business School

Mission statement
We advance innovation, entrepreneurship and social impact
through our career-ready graduates and industry-engaged
research.
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 Vision

Mission
Objectives
The direction that the organisation intends to take over the long
term, to meet its mission and achieve its objectives.
Strategie
s
Industrials

What businesses should we do? Officeworks

Department stores

Home improvement

Supermarket retailer

How do we compete? Cost

leadership
Economies
Competitive advantage: of scale
advantages that a business Superior process
may have over another, which technology Tight cost
control
are difficult to imitate. Product
Michael Porter differentiatio
n
Quality 18
Innovation
Customer service
Role of Management Accountants
in formulating and implementing strategies
Management accountants tailor information to support the formulation and
implementation of the organisation’s strategies.

Long-term planning to achieve the organisation's objectives.

Planning and implementing strategies use a wide range of

management accounting information:

• Costing
• Budgeting
• Performance measurement systems
• External information

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Planning and control systems
Planning and control systems provide the framework for effective resource
management to generate customer and shareholder value.

Formulating the direction for future operations

usually between 3 to 5 years

is an example of a detailed plan that summarises the

financial consequences of an organisation's
operating activities for a specific future time period
(usually one year).

Putting in place mechanisms to ensure that operations proceed according to plan.

Control systems are the systems and procedures that provide regular
information to assist with control.

Plans will not be effective unless there is

some way of ensuring that they are achieved.
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Planning and control systems

Exhibit 1.4
Planning and control systems
Langfield-Smith, K., Smith, D., Andon, P., Hilton, R., Thorne, H., 2018. Management 21
Accounting: Information for creating and managing value, McGraw-Hill, Australia, 8th Edition.
Extra Information
Jo opportunities for Management Accountants
b
Common Required knowledge
• Cost analysis and product costing .
• Process improvement.
• Financial analysis for decision support purposes.
• Budget and forecast preparation.
• Variance analysis.
• Advanced knowledge of MS Excel.

Other General Skills:

• Written and verbal communication skills.
• Time management and organisational skills.
• Interpersonal and team working skills.

&
• Prior working experience.
• ERP systems
• Professional qualification
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 Chartered Institute of
Management Accountants

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