Management Accounting

An Integrative Approach

Carol J. McNair-Connolly, Kenneth A. Merchant

• Publisher: Wiley
• Year: 2020
• Print ISBN:
  9780999500491
• Edition: 1
• eBook ISBN:
  9781119720751
• Topic: Business
• Subtopic: Managerial Accounting
• Index: Business

An intuitive and straightforward introduction to management accounting In the newly revised second edition of Management Accounting: An Integrative Approach, a team of distinguished accountants and educators delivers a comprehensive and authoritative discussion of key management accounting subjects. From business planning and analysis to the measurement and evaluation of performance, estimating costs, activity-based costing, and management accounting in large, complex organizations, this book covers every critical component of a rapidly evolving and centrally important subject. This latest edition includes updated data tables, revised practice problems, corrected and simplified formulas, new "In the News" and "Looking Back" sections, and updated figures. It is essential reading for students of business, managerial accounting, and related subjects.

CHAPTER ONE
Business Planning and Analysis: An Integrative Framework for Management Accounting

The culminating point of administration is to know well how much power, great or small, we ought to use in all circumstances.

MONTESQUIEU¹

CHAPTER ROADMAP

1. The World of Management: An Overview
   1. What Is a Manager?
   2. Types of Managerial Work
2. The Management Process and the Role of Management Accounting
3. What Is Business Planning and Analysis?
   1. Bpa as a Tool to Integrate Management Accounting Practices
   2. A Financial vs. Managerial Perspective
4. The BPA Integrated Framework and Management Accounting
   1. The BPA Database
   2. The Decision Domains
5. Management Accounting: Real World—Real Issues
   1. Analyzing Performance
   2. Management Accounting in Action
6. IMA Statement of Ethical Professional Practice
7. The Management Accounting Professional

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1. Explain the basic nature of managerial work.
2. Discuss the management process and describe how management accounting supports these efforts.
3. Describe how a BPA lens affects management accounting practices and how these differ from financial accounting.
4. Identify the primary types of information in a management accounting database and analyze the concept of a decision domain and how it is applied to organizations.
5. Illustrate how measurements influence decision making and behavior in organizations.
6. Interpret the IMA Statement of Ethical Professional Practice that guides the use and presentation of information within organizations.
7. Describe the various career paths open to management accounting professionals.

Success in business boils down to managers making good decisions. Behind every such decision lies a management accounting database supported by an information network that either formally (for example, with rules or policies) or informally (for instance, the culture of an organization) links the organization’s people and progress across space and time. This network of information, and the data that flows through this network, defines and shapes the practice of management accounting, which is the focus of this textbook.

This book is built around three unique features:

1. An integrative framework that uses a business planning and analysis perspective to emphasize the relationship between management accounting and management decision making, control, and information.
2. Three Excel-based databases that illustrate how organizations use information to complete the management accounting processes of planning, decision making, and control.
3. Three industry settings (an airline, a kitchen cabinet manufacturer, and an automobile dealership) to help you understand management accounting in action.

The overriding objective is to improve your existing critical thinking skills by helping you learn to analyze and respond to the challenges faced every day by organizations and the managers who run them.

The World of Management: An Overview

This chapter introduces the management process—what managers do to ensure that their organization achieves its objectives. We will approach management accounting from a business planning and analysis (BPA) perspective, which, when applied to management accounting issues, includes all of the activities in which managers use information, whether for planning, decision making, or control.

OBJECTIVE 1

Explain the basic nature of managerial work.

Information lies at the center of the management process. Information is data that has been organized to meet a specific need during decision making and analysis. It is the lifeblood of any organization, essential to effective decision making and the actions of management. A key focus of this book is to illustrate and explain what types of information are used during the various stages of the management process. This chapter focuses on understanding the basic elements of the integrative management accounting framework and how it relates to the work done by business managers. Attention the...

Table of contents

• Cover
• Title Page
• Dedication
• Copyright
• About the Authors
• Preface
• Acknowledgements
• Chapter One: Business Planning and Analysis: An Integrative Framework for Management Accounting
• Chapter Two: Measuring and Evaluating Performance
• Chapter Three: Defining and Using Cost Estimates
• Chapter Four: Cost Pools, Capacity, and Activity-Based Costing
• Chapter Five: Understanding the Management Process
• Chapter Six: Planning in the Product Domain
• Chapter Seven: Assessing and Improving Product Profitability
• Chapter Eight: Setting Process Expectations
• Chapter Nine: Evaluating and Improving Process Performance
• Chapter Ten: Setting Performance Expectations at the Entity Level
• Chapter Eleven: Setting Performance Expectations in Large, Complex Organizations
• Chapter Twelve: Evaluating and Improving Entity Performance
• Chapter Thirteen: Setting and Achieving Targets in the Customer Domain
• Chapter Fourteen: Strategic Cost Management and the Supply Chain Domain
• Index
• End User License Agreement