ADM 3346 Lecture Notes - Lecture 1: Management Accounting, The Office: The Accountants

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greenscorpion188

7 Feb 2017

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Chapter 1: the accountant"s vital role in decision making. Measures and reports financial and non financial information related to the cost of acquiring or utilizing resources in an organization. Provides information on the accumulation and recovery of costs. Measures, analyzes, and reports financial and non-financial information to internal management. Goal is to use past performance to predict the future. Planning: the purposeful analysis of information to select and rank organizational goals: identify the problem and uncertainties/risks, obtain information, make predictions about the future, decide on one of the available alternatives, implement the decision, evaluate performance and learn.

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Prepare a Project Proposal that includes the nature of the project, the sources of information you plan to use, and the most important concepts and techniques to be applied.

The outline topics should include the following:

A brief summary of the company you have chosen, such as business lines, and its industry;
Information sources (e.g. industry studies, market share reports, financial statements, etc.);

The analyses you will include in your study. This will likely require a summary review of the material in later sections of the course, such as competitor analysis;

If you have access to, and permission to use, internal company documents, please discuss so in the outline.

You are required to complete a course project that reveals mastery in application of the strategic managerial accounting and performance management concepts emphasised in the course. This involves reporting on a specific organisation within an industry, analysing the firmâs competitive position (e.g., market position, cost competitiveness, market power, innovation, SWOT, etc.), its managerial accounting approach, and the non-financial performance metrics should be used in monitoring firm performance, all aligned with value creation for the chosen firm.

This project should be a formal business report that covers all elements of the strategic management process: mission statement, strategic goals, strategic objectives, actionable plans (if available, analyse the specific budget planning process used by the Firm; if not, search for relevant articles for the subject company and recommend a process that you believe is appropriate for the company), and performance monitoring processes employed by the Firm, including its board of directors. These processes and strategies are to be supported with managerial accounting and performance management concepts.

In selecting a company to analyze, first focus on information availability. If you work for the company, ensure that you can obtain the information required to do a proper job on this assignment. If you choose a company you do not work for, begin your search among larger public companies with ample information available. Company websites are often the best place to begin, in particular the investor relations site. Look for annual reports, quarterly reports, press releases, white papers, and other sources of information (e.g., public filings, such as for the U.S. Securities & Exchange Commission at http://www.sec.gov./

Your tasks are to:

Â· Briefly describe the business of the Firm (i.e. industry segments, geographic service area, market position, and size as measured by revenues, employees, and market capitalisation). Describe the mission statement and strategic objectives of the Firm.
Â· Analyse the behaviour of expenses of the business, distinguishing between variable costs and fixed costs (or estimates thereof), describe the relationships between sales volume, costs, and profit. Estimate a break-even point for the Firm and support with relevant calculations and discussion.

Â· Discuss the level of the Firmâs operating leverage.

Â· Assess the budgeting process and procedures for the Firm, bearing in mind the context of the business and its characteristics. Identify methods employed for budgeting, managerial reporting, and control, and make recommendations for improvement. Justify your recommendations.

Â· Summarise the Firmâs performance over the past five years in terms of sales and earnings growth, return on equity, return for shareholders, and non-financial performance measures (e.g. market share, recognition, customer satisfaction).

Â· Analyse the fixed capital needs (i.e. capital expenditures) of the company, and discuss significant capital projects, how they fit with the strategic goals of the Firm. Evaluate risks associated with major capital projects and suggest risk mitigation strategies. Justify your suggestions.

Â· Briefly profile two or three key competitors and analyse the basis for competition (e.g., is it cost? Innovation? Capital intensity? Branding?). Compare the Firm with these key competitors on key performance metrics (e.g., revenue growth, profit margins, return on equity, financial leverage, receivables turnover, payables turnover, asset turnover, operating costs, market share, market share growth, etc.). Identify areas where the Firm may outperform or underperform the peer group, and suggest improvements for weaknesses.

Â· Design a Balanced Scorecard for the Firm.

This project should follow a structured approach and should be prepared and presented as a professional business report.

lilacmanatee501

Please help me answer the following questions:
1. Management accounting:
A) is both retrospective, providing feedback about past operations,and also prospective, incorporating forecasts and estimates aboutfuture events.
B) is primarily oriented to external stakeholders.
C) must be consistent with rules formulated by the FinancialAccounting Standards Board (FASB).
D) provides information that is generally available only on aquarterly or annual basis.

2. Management accounting information is BEST described as:
A) providing a signal that something is wrong.
B) identifying and helping to explain what is wrong.
C) simply summarizing information, but giving no indication thatanything is wrong.
D) measuring overall organizational performance.

3. Which of the following would be MOST helpful for a top managerof a company?
A) profitability report of the company
B) information to monitor hourly and daily operations
C) number of customer complaints
D) operating expense summary reported by department

4. The Balanced Scorecard is said to be "balanced" because itmeasures:
A) short-term and long-term objectives.
B) financial and nonfinancial objectives.
C) internal and external objectives.
D) All of the above are correct.

5. The ________ perspective of the Balanced Scorecard asks, "How issuccess measured by our shareholders?"
A) learning and growth
B) customer
C) financial
D) shareholder

6. Defect rates for products and yield percentages in manufacturingare measures of quality included in the ________ perspective of theBalanced Scorecard.
A) financial
B) production
C) process
D) internal

7. The purpose of the Balanced Scorecard is BEST described ashelping an organization:
A) develop customer relations.
B) mobilize employee skills for continuous improvements inprocessing capabilities, quality, and response times.
C) introduce innovative products and services desired by targetcustomers.
D) translate an organization's mission, vision, and strategy into aset of performance measures that help to implement thestrategy.

8. The FIRST step in developing strategic objectives for theBalanced Scorecard is:
A) defining the long-run financial objectives.
B) identifying the target customer.
C) articulating the organization's vision.
D) select objectives for the customer value proposition.

9. Identify the BEST description of the Balanced Scorecard'scustomer perspective. To achieve our firm's vision andstrategy:
A) How do we lower costs?
B) How do we motivate employees?
C) How can we obtain greater profits?
D) How does the company intend to attract, retain, and deepenrelationships with targeted customers by differentiating itselffrom competitors?

10. Fixed costs:
A) may be either direct or indirect costs.
B) vary with production or sales volume.
C) include parts and materials used to manufacture a product.
D) can be adjusted in the short run to meet actual demands.

11. Which of the following describes a variable cost?
A) Variable cost are always indirect costs.
B) Variable costs increase in total when the actual level ofactivity increases.
C) Variable costs include most personnel costs and depreciation onmachinery.
D) Variable costs can always be traced directly to the costobject.

12. Cost-volume-profit analysis is used PRIMARILY bymanagement:
A) as a planning tool.
B) for control purposes.
C) to establish a target net income for next year.
D) to attain extremely accurate financial results.

13. The break-even point is the level at which revenues:
A) equal fixed costs.
B) equal variable costs.
C) equal fixed costs minus flexible costs.
D) equal variable costs plus fixed costs.

14. Cost-volume-profit analysis assumes all of the followingEXCEPT:
A) all costs are purely variable or fixed.
B) units manufactured equal units sold.
C) total variable costs remain the same over the relevantrange.
D) total fixed costs remain the same over the relevant range.

St. Joseph Health Center in St. Charles, Missouri, is on a quest to improve quality. Although good quality is important in any organization, it is especially vital (and urgent) in a medical setting. St. Joseph is one of 20 hospitals in four states that are operated by SSM Health Care Corp., which is sponsored by the Franciscan Sisters of Mary. In any given year, SSM hospitals admit about 150,000 patients and treat more than 1 million people on an outpatient basis. And SSM was the first health-care organization to win the Malcolm Baldrige National Quality Award, which recognizes the outstanding quality performance of US businesses and nonprofits.

Managers at the 364-bed St. Joseph facility have pursued continual improvment for more than 15 years. Early on, Dr. Filippo Ferrigni, head of the intensive-care unit, found that staff members used slightly different methods for measuring the blood pressure of different patients. He quickly standardized measurements for blood pressure, temperature, and other vital signs. Later, he read research showing that high blood-sugar levels are linked to higher infections risks. Knowing that patients sometimes become infected while in the hospital, he suggested the goal of lowering the blood-sugar levels of intensive-care patients.

Because his colleagues were concerned about possible adverse reactions to such treatment, Dr. Ferrigni initially sought very radual improvements. The results were quite impressive: over-all mortality among intensive-care patients dropped by 40%. To make this new process work, the nurses had to check each patient's blood-sugar level 12 times per day instead of 4 times per day; however, the results convinced them that the extra effor and additional tests were worthwhile. Building on the intensive-care unit's success, hospital management then set a quality goal of lowering the blood-sugar levels of all patients - a decision that cut the facility's overall mortality rate by 28% within three years. Treating a serious infection can cost $35,000 per patient, so reducing incidences of infection not only saved patients' lives, it saved the hospital many thousands of dollars.

The 30/30 program, another of St. Joseph's quality-improvement initiatives, requires emerfency room staff to evaluate seriously ill patients within 30 seconds and complete the patient admission process for in-hospital treament in 30 minutes or less. When the 30/30 program began, the facility was chieving its emergency-room objectives only 65% of the time. After two years, it was meeting its objectives 94% of the time. Management had to hire more staff members to achieve this improvement, which raised the cost of providing emergency-room care by $200,000 annually. The higher cost was more than offset by increases in admissions as St. Joseph gained a higher share of the local market for emergency medical treatment.

Quality improvements have led to financial improvements for St. Joseph and its parent company, SSM. Although SSM had no profits in 1999, it was reporting a net profit of $17 million by 2002, the year it was honored with the Baldrige Award. Winning was wonderful, but as Bill Thompson, SSM's senior vice president for strategic planning, says, "It's not thw award, it's the process that shows how to improve quality." In the course of applying for the award and having its results reviewed by examiners, SSM's management refined the processes for analyzing patient-care operations, setting quality-improvement standards, and assessing performance from internal and external perspectives.

St. Joseph's executives, like the top managers of all SSM institutions, are responsible for fomulating the hospital's strategy for serving the community and making decisons about which medical specialties will be offered. As in other SSM hospitals, senior managers evaluate results in terms of the number of procedures completed, market share, patient and staff satisfaction, revenue, and other measures. Patients benefit, staff members benefit, and the community benefits from SSM's focus on performance: "If the activity's not getting the results we want, then we change the activity. It's the result that's improtant."

Questions
1. Would you recommend that St. Joseph's top managers put more emphasis on efficiency or on effectiveness? Explain.
2. How have St. joseph's quality-improvement initiatives affected capacity strategy and product strategy?
3. Do you think that St. Joseph's executives should use management by exception for controlling emergency-room activites? Explain.

ADM 3346 Lecture Notes - Lecture 1: Management Accounting, The Office: The Accountants

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