L01 Review and Introduction S224 (2).pptx

Module 01: Accounting, Behaviour and Control Review and Introduction...

Module 01: Accounting, Behaviour and Control Review and Introduction Prepared by Yuni Yuningsih Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  ELECTRONIC WARNING NOTICE FOR COPYRIGHT STATUTORY LICENCES Faculty of Business and Law | Accounting CRICOS Provider Code 00301J A quick refresher … 5  Manufacturing Costs Direct Materials Raw material that is used to make, and can be conveniently traced, to the finished product. Direct Labor Cost of salaries, wages, and fringe benefits for personnel who work directly on manufactured products. Manufacturing Overheads All other manufacturing costs. E.g., indirect material (lubricants), indirect labor (maintenance personnel, security) and other costs (depreciation, taxes). 4 Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  Product cost Sum of the costs assigned to a product for a specific purpose. Product cost = Direct materials + Direct labour + Manufacturing overhead 5 Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  Cost terminology Direct costs Costs that can be easily and conveniently traced to a product or department. Indirect costs Costs that must be allocated in order to be assigned to a product or department. Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  Cost terminology Opportunity cost The potential benefit that is given up when one alternative is selected over another. Sunk cost All costs incurred in the past that cannot be changed by any decision made now or in the future. Controllable cost A cost that can be significantly influenced by a manager is a controllable cost. Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  Cost behaviour Cost behavior means how a cost will react to changes in the level of business activity. Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  Contribution margin Contribution margin = Total revenues – total variable costs Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  Module 1 Introduction to Management Control Systems Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  Lecture Outline  What is management control?  The environment  Phases of management control Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  Introduction to management control systems Process by which managers influence members of the organisation to implement the organisation’s strategies efficiently and effectively. Takes goals and strategies as given. Includes planning. Source: Reading list – AHM 1 Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  Goal congruence als Organisational goals are goals of top go management and board of directors. ’s als on go Participants act in their own self interest. ati t’s ni s Management control systems should be an ga cip designed so that incentives/goals of Or rt i participants are consistent with the goals of Pa the organisation. Source: Reading list – AHM 2 Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  The management control environment There are four facets Nature of organisations Rules, guidelines and procedures that govern the actions of the organisation’s members The organisation’s culture External environment Source: Reading list – AHM 1 Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  Nature of organisations Organization: a group of people who work together for one or more purposes. Managers or the management - leaders who perform important tasks such as: o Deciding what the goals should be; o Deciding on the objectives that should be achieved to move towards the goal; o Tasks that need to be performed to achieve the goal; o Coordination of organizational activities; o Matching individuals and tasks to be performed; o Motivating individuals; o Evaluating performance and taking corrective action. Source: Reading list – AHM 1 Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  Organisation hierarchy When in slideshow mode, use the arrow keys or space bar on your keyboard to reveal more Board Board of of Directors Directors Staff Line Chief Executive Officer Manager, Manager, Control Control Manager, Manager, Finance Finance Manager, Manager, Manager, Manager, Manager, Manager, Division Division A A Division Division B B Division Division C C Manager, Manager, Personnel Personnel Manager, Manager, Manager, Manager, Manager, Manager, Dept Manager, Manager, Research Research Dept 11 Dept Dept 22 Dept Dept 33 Manager, Manager, Manager, Manager, Manager, Legal Legal Manager, Manager, Manager, Section Section A A Section Section B B Section Section C C Source: Reading list – AHM 1 Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  Rules, guidelines and procedures Influence the way members behave. Written or verbal; formal or informal. Source: Reading list – AHM 1 Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  Culture Norms of behavior determined by: Tradition. External influences. Attitudes of senior management and the board of directors (BOD). Source: Reading list – AHM 1 Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  External environment Everything outside of the organization itself. E.g., customers, suppliers, competitors, regulatory agencies. Source: Reading list – AHM 1 Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  Behavioural aspects of management control Social psychology – discipline that studies the behaviour of people in organisations. The underlying principles relevant in the control process (not economics). Participants – people in an organisation. People become participants because they believe by doing so they can achieve their personal goals. Source: Reading list – AHM 2 Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  Phases of management control When in slideshow mode, use the arrow keys or space bar on your keyboard to reveal more Strategies Strategies Is the process of deciding on the programs the organisation will undertake and the approximate Strategic Planning amount of resources to be allocated to each programme. Information Source: Reading list – AHM 2 Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  Phases of management control When in slideshow mode, use the arrow keys or space bar on your keyboard to reveal more Strategies Strategies Strategic Strategic Planning Planning Information Information Is the process of deciding Budgeting Budgeting on the programs the organisation Plan expressed in quantitative, will usually monetary, terms that undertake and the period covers a specified Information Information of time, usually one approximate year. amount of resources to be allocated to each program. Source: Reading list – AHM 2 Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  Phases of management control Strategies Strategies Strategic Strategic Planning Planning Measurements – Information Information comparison of actual and budget Budgeting Budgeting costs and revenues. Reporting – used as a basis for control, Information Information conveys both Measurement Measurement and and accounting and Reporting Reporting non-accounting information. Information Information Source: Reading list – AHM 2 Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  Phases of management control Evaluation of actions to be taken based on: Strategies Strategies -Formal control reports. -Personal observations. Strategic Strategic Planning Planning -Other informally communicated information. Information Information Evaluation Evaluation Budgeting Budgeting Informatio Informatio n n Information Information Measurement Measurement and and Reporting Reporting Information Information Source: Reading list – AHM 2 Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  Phases of management control Strategies Strategic Strategic Planning Planning Information Information Revise Budget Evaluation Evaluation Budgeting Budgeting Ad jus tO per atio ns Information Information Information Information Measurement Measurement and and Reporting Reporting Information Information Source: Reading list – AHM 2 Faculty of Business and Law | Accounting CRICOS Provider Code 00301J  THANK YOU! Next week - Responsibility Accounting, Variable and Absorption Costing Faculty of Business and Law | Accounting CRICOS Provider Code 00301J