MANAGERIAL ACCOUNTING AND BUSINESS ENVIRONMENT

							MANAGERIAL ACCOUNTING AND
BUSINESS ENVIRONMENT

CHAPTER ONE
DIFFERENCE BETWEEN FINANCIAL AND
MANAGERIAL ACCOUNTING
   Financial                 Managerial
       Reports for Users     Reports for Decision Mks
       Past Activities       Future Activities
       Comparison            Relevance
       Accuracy              Fast Information
       Entire Organization   Segments
           BS, IN, CF, SE    Dept, Cust, Vend, Empl, Pro
     YES GAAP                NO GAAP
     External Reports        Reports when needed
    TRADITIONALLY
“Idleness   Waste Money” or

 if manpower and machine
 are not running you are
 losing money
PUSH THROUGH PRODUCTION---OLD
 PUSH through Production –old way
 Three inventories: Raw Materials (RM), Work in
  Process(WIP), Finished Goods (FG)

    RM      | WIP               FG
 Company        Queque         Results in Large
                           Inventory waiting to be sold
 THREE APPROACHES
  FOR IMPROVEMENT

Lean  Production
Theory of Constraints
Six Sigma
LEAN PRODUCTION
 Lean means Less Costs
 Advantages:
     Lower Inventory required
     Fewer Defects
     Less Wasted Effort
     Quicker Customer Response
LEAN PRODUCTION CON’T

Summaries     all theories into 1
  Value  Added
  Flow Chart of Activities
  Manufacturing Cell
  Just in Time (JIT)
  Supply Chain Management
   and Continuous Improvement
VALUE ADDED
 Value Chain pg 12
 Activities that add value per customer

 Chip Box vs Dove Box
FLOW CHART
 List Processes or Activities
 How It Is Made
TRADITIONAL PRODUCTION
   Several large Machines with only one job each

 Mixing Machine
 Cutting Machine

 Wrapping Machine
MANUFACTURING WORK CELL
 One Machine performing several jobs
 Several Multi-job Machines



   Each Machine Mixes-Cuts-Wraps
JUST IN TIME (JIT)
   Pull Through Production--- Customer initiates

 RM  WIP   FG (Customer order)
 Shipped immediately to customer

 No queing of inventory
SUPPLY CHAIN MANAGEMENT AND
CONTINUOUS IMPROVEMENT
 Suppliers responsible for Quality of Incoming
  Parts and Materials
 Production Workers responsible for Quality
  during WIP
THEORY OF CONSTRAINTS
   Control of Bottlenecks

   Increase capacity to remove bottleneck where
    process has smallest capacity

   Freeway system --- Norwalk on Interstate 5

   Throughput time--- Cycle time to manufacture a
    product
SIX SIGMA OR ZERO DEFECTS
 Non Value Added
 Identify process that do not add value or those
  customer is not willing to pay for
 Eliminate Non Value Activities

 Activities that use resources but do not add value