Nama : Cintya Trisanty

NIM : 12030117140151
Kelas : E
AKUNTANSI MANAJEMEN

Chapter 1
Introduction: The Role, History, and Direction of Management Acoounting 2

The management accounting information system provides information needed to

satisfy specific management objective. The criteria are flexible and based on management
objectives. The management accounting system has three broad objectives:
1. To provide information for costing out services, products, and other objects of
interest to management.
2. To provide information for planning, controlling, evaluation, and continuous
improvement.
3. To provide information for decision making.

 Information Needs of Managers and Other User

Continuous improvement means searching for ways to increase the overall efficiency and
productivity of activities by reducing waste, increasing quality, and reducing costs. the
importance of strategic decision making, which is defined as the process of choosing among
alternative strategies with the goal of selecting one or more strategies that provide a
company with a reasonable assurance of long-term growth and survival.
 The Management Process
The management process is defined by the following activities:
(1) Planning; The managerial activity called planning is the detailed formulation of action
to achieve a particular end; it requires setting objectives and identifying methods to achieve
those objectives
(2) Controlling; is the managerial activity of monitoring a plan’s implementation and taking
corrective action as needed. Control is usually achieved with the use of feedback.
(3) Decision making; The process of choosing among competing alternatives.
 Organization Type
Regardless of the organizational form, managers must be proficient in using accounting
information.

Management Accounting and Financial Accounting

 The financial accounting information system is primarily concerned with producing
outputs for external users, using well-specified economic events as inputs and processes
that meet certain rules and conventions.
Comparison of Management and Financial Accounting
Management Accounting Financial Accounting
Targeted users Internally focused Externally focused
Restrictions on inputs and processes No mandatory rules Must follow externally imposed rules
Type on information Subjective information possible Objective financial information
Time orientation Emphasis on the future Historical orientation
Degree of Agregation Very detailed information A whole information
Breadth Board, multidisciplinary More self-contained

A Brief Historical Perspective of Management Accounting

Prior to 1914, many of the early developments concerned product costing—tracing a
firm’s profitability to individual products and using this information for strategic decision
making. Some effort to improve the managerial usefulness of conventional cost systems took
place in the 1950s and 1960s. In the 1980s and 1990s, many recognized that the traditional
management accounting practices no longer served managerial needs.

Current Focus of Management Accounting

1. Activity-Based Management: a systemwide, integrated approach that focuses
management’s attention on activities with the objective of improving customer value
and the resulting profit.
2. Customer Orientation : Customer value is a key focus because a firm can establish a
competitive advantage by creating better customer value for the same or lower cost than
that of its competitors or creating equivalent value for a lower cost than that of its
competitors.
 Strategic Positioning; Strategic cost management is the use of cost data to
develop and identify superior strategies that will produce a sustainable
competitive advantage.
 Value-Chain Framework; The internal value chain is the set of activities
required to design, develop, produce, market, and deliver products and services
to customers.
3. Cross-Functional Perspective: A cross-functional perspective lets us see the big picture.
This broader vision allows managers to increase quality, reduce the time required to
service customers (both internal and external), and improve efficiency.
4. Total Quality Management: which manufacturers strive to create an environment that
will enable workers to manufacture perfect (zero-defect) products, has replaced the
“acceptable quality” attitudes of the past.
5. Time as a Competitive Element: Time is a crucial element in all phases of the value
chain. his correlation between cost and time is the kind of information that should be
available from a management accounting information system.
6. Effficiency: While quality and time are important, improving these dimensions without
corresponding improvements in profit performance may be futile, if not fatal
7. E-business: any business transaction or information exchange that is executed using
information and communication technology.
The Role of the Management Accountant
 Structure of the Company: They assist those individuals who are responsible for
carrying out an organization’s basic objectives. The controller, the chief accounting
officer, supervises all accounting departments. The treasurer is responsible for the
finance function.
 The Sarbanes-Oxley Act requires that a company’s senior financial officers be subject
to a code of ethics or that the company must disclose publicly that they are not

Management Accounting and Ethical Conduct

Virtually all management accounting practices were developed to assist managers in
maximizing profits. To help achieve this objective, many of the problems in this text force
explicit consideration of ethical issues.
 Ethical Behavior; involves choosing actions that are “right,” “proper,” and “just..
Companies with a strong code of ethics can create strong customer and employee
loyalty.
 Company Codes of Conduct and SOX; Since no company wants to say publicly that its
CEO or CFO is not subject to a code of ethics. In practice, companies have developed
codes of ethics, often called codes of conduct, that are applicable to all their employees.
 Standards of Ethical Conduct for Management Accountants; Organizations commonly
establish standards of conduct for their managers and employees. Professional
associations also establish ethical standard

Certification
All three certifications require the holders to engage in continuing professional education in
order to maintain certification. Because certification reveals a commitment to professional
competency, most organizations encourage their management accountants to become certified.
 The CMA: A certified management accountant (CMA) has passed a rigorous qualifying
examination, has met an experience requirement, and participates in continuing
education.
 The CPA: A certified public accountant (CPA) is permitted (by law) to serve as an
external auditor.
 The CIA: The certified internal auditor (CIA) has passed a comprehensive examination
designed to ensure technical competence and has gained two years of experience.
Nama : Cintya Trisanty
NIM : 12030117140151
Kelas : E
AKUNTANSI MANAJEMEN

Chapter 2
Basic Management Accounting Concepts

Cost Assignment: Direct Tracing, Driver Tracing,and Allocation

Assigning costs to products, services, customers, and other objects of managerial interest is
one of the principal objectives of a management accounting information system. Increasing the
accuracy of cost assignments produces higher-quality information, which can then be used to
make better decisions.
 Cost is the cash or cash-equivalent value sacrificed for goods and services that is
expected to bring a current or future benefit to the organization.
 A cost object is any item such as a product, customer, department, project, activity, and
so on, for which costs are measured and assigned.
 Accuracy of assignment: Distorted cost assignments can produce erroneous decisions
and bad evaluations.
o Traceability; The relationship of costs to cost objects should be exploited to
increase the accuracy of cost assignments.
o Methods of Tracing Traceability; can be assigned easily and accurately,
whereas tracing is the actual assignment of costs to a cost object using an
observable measure of the resources consumed by the cost object.
o Assigning Indirect Costs; Indirect costs are those costs that cannot be assigned
to cost objects using either direct or driver tracing.
o Cost Assignment Summarized The foregoing discussion reveals three methods
of assigning costs to cost objects: direct tracing, driver tracing, and allocation.

Product and Service Costs

1. Tangible products are goods produced by converting raw materials through the use of
labor and capital inputs, such as plant, land, and machinery.
2. Services are tasks or activities performed for a customer or an activity performed by a
customer using an organization’s products or facilities.
 Intangibility; buyers of services cannot see, feel, hear, or taste a service before it is
bought.
 Perishability; services cannot be stored for future use by a consumer but must be
consumed when performed.
 Inseparability; producers of services and buyers of services must usually be in direct
contact for an exchange to take place. In effect, services are often inseparable from
their producers.
 Heterogeneity; there is a greater chance of variation in the performance of services
than in the production of products.
  Different Costs for Different Purposes
Product cost is a cost assignment that supports a well-specified managerial objective.
The meaning of “product cost” depends on the managerial objective being served. A firm’s
internal value chain is the set of all activities required to design, develop, produce, market,
distribute, and service a product.
 Product Costs and External Financial Reporting
Production costs are those costs associated with the manufacture of goods or the
provision of services. Nonproduction costs are those costs associated with the functions
of designing, developing, marketing, distribution, customer service, and general
administration. Production costs can be further classified as:
 Direct materials; those materials that are directly traceable to the goods or services
being produced.
 Direct labor; labor that is directly traceable to the goods or services being produced.
 Overhead; All production costs other than direct materials and direct labor are
lumped into one category.
 Prime and Conversion Costs; Prime cost is the sum of direct materials cost and
direct labor cost. Conversion cost is the sum of direct labor cost and overhead cost.
 Selling and Administrative Costs; Those costs necessary to market, distribute, and
service a product or service are marketing (selling) costs. All costs associated with
research, development, and general administration of the organization that cannot
reasonably be assigned to either marketing or production are administrative costs.

External Financial Statements

o Income Statement:Manufacturing Firm
Income computed by following a functional classification is frequently referred to as
absorption-costing (fullcosting) income because all manufacturing costs are fully
assigned to the product.
 Cost of goods sold is the cost of direct materials, direct labor, and overhead
attached to the units sold.
 The cost of goods manufactured represents the total cost of goods completed
during the current period.
 Work in process consists of all partially completed units found in production at
a given point in time.

o Income Statement:Service Organization

In a service organization, the cost of services sold is computed differently from the cost
of goods sold in a manufacturing firm. Unlike a manufacturing firm, the service firm
has no finished goods inventories—it is not possible to store services.

Types of Management Accounting Systems: A Brief Overview

Functional-based management (FBM) accounting systems were in existence throughout the
1900s and are still widely used in both manufacturing and service sectors. Activity-based
management (ABM) accounting systems are much newer.
  FBM versus ABM Accounting Systems
FBM Cost View In an FBM accounting system, resource costs are assigned to
functional units and then to products. Because FBM systems use only drivers related to
the production function to assign costs, this cost assignment approach is referred to as
production- or functional-based costing (FBC).
o ABM Cost View In activity-based costing (ABC), costs are traced to activities
and then to products.
o FBM’s Operational Efficiency View Providing information for planning and
control is another objective of management accounting. The functional-based
management approach to control assigns costs to organizational units and then
holds the organizational unit manager responsible for controlling the assigned
costs.
o ABM’s Operational Efficiency View Activity-based management focuses on
the management of activities with the objective of improving the value received
by the customer and the profit received by providing this value.

 Choice of a Management Accounting System

Activity-based management accounting offers significant benefits, including improved
product costing accuracy, improved decision making, enhanced strategic planning, and
better ability to manage activitie

Comparison of Functional- and Activity-Based Cost Management Systems

Functional Based Activity Based
1.Unit-based drivers 1.Unit-based and nonn-unit-based drivers
2.Allocation intensive 2.Tracing intensive
3.Narrow and rigid product costing 3.Board and flexible product costing
4.Focus on managing costs 4.Focus on managing activities
5.Sparse activity information 5.Detailed activity information
6.Maximization of individual unit perfomance 6.Systemwide perfomance maximization
7.Use of financial measures of perfomance 7.Use of both financial and nonfinancial of perfomance