ACT202 Chapter Notes - Chapter 8: Management Accounting
ACT 202 Management Accounting
Master budget and responsibility accounting
PLANNING
The comprehensive planning approach involves
• The definition and the detailed specification of the organisation’s objectives
• The identification of the courses of action available, within the limits imposed by the
resources at the disposal of the organisation
• The selection and implementation of the course of action which maximises the
achievement of the objectives of the organisation
Business Goals and Objectives Business Goals must be determined before preparing a Budget
Business Goals are the desired outcomes of the business operations
• E.g. to sell my business for $500,000 in 5 years time
• E.g. to have a debt free business at the end of 3 years
• E.g. operate a franchise in every capital city within 5 years
• NOT “to maximise sales”, or NOT “to retire wealthy” – relative terms not definable NOT
“to be my own boss” or NOT “double size in two years” – too vague
Business Goals must be
– Measurable
– Clear and concise
– In writing
– Attainable
Business Objectives are set to achieve business goals
• E.g. business goal
– sell business for $500,000 in five years business objective
– increase market share by 2% each year leading to $1,000,000 in sales in year five at 15%
net profit per year
• Usually several objectives (outcomes of strategy) to achieve business goal
Managing Operational Functions
• Business performance is a function of ALL the activities of the TOTAL operation.
• Business Plan must also consider all the activities of the TOTAL operation
• Effective management of the TOTAL operation requires planning as well as control of
EACH operating function.
ELEMENTS OF SUCCESSFUL, S.M.A.R.T. STRATEGYS
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Business goals and objectives business goals must be determined before preparing a budget. To be my own boss or not double size in two years too vague. Business objectives are set to achieve business goals: e. g. business goal. Sell business for ,000 in five years business objective. Increase market share by 2% each year leading to ,000,000 in sales in year five at 15% net profit per year: usually several objectives (outcomes of strategy) to achieve business goal. Define precisely the objective or outcome you want. Define objectively how you will know when you"ve attained the goals and objectives. Measurable so that you can manage goals and objectives. Effective goals are those ones that have achievable targets. Concentrate on the areas that will have the greatest impact. Planning & forecasting: formulation of policies, detailed planning of future action, preparation of estimates. Co-ordination & communication: motivation & goal congruence.
