Week 1 Video Part 1

Managerial accounting information system Costing 1. Planning/control 2. Decision making 3. Overlap between financial and managerial AIS Cost of goods sold 1. Inventory (WIP or FG) 2. External financial reporting Separate costs into two categories: Production/product cost (inventoriable costs, WIP => FG => COGS) Direct materials (DM) i. Direct labor (DL) ii. Overhead (OH) iii. Something that can be directly traced to a product or service iv. 1. Non Production Costs/Period Cost Selling and administrative costs i. Something that can't be directly traced to a product or service ii. 2. - Differences between managerial AIS and financial AIS Purpose MAIS Internal  Purpose is to report internally  Not public reports  ○ FAIS External  Purpose is to communicate to external stakeholders  ○ - Focus MAIS More detailed  Divisions/products/customers, etc.  ○ FAIS Focus on company as a whole and financial statements  ○ - Applicable rules MAIS More free to tailor our reports in the way they provide value  No rules  ○ FAIS GAAP/IFRS/Auditing rules  ○ - Timing of reports MAIS Not defined - whenever  ○ FAIS Quarterly and annual reports  ○ - Behavioral implications MAIS By design  Design reports to influence behavior  ○ FAIS Indirect effect ○ - Guided Notes and Exam Prep Part 1 Sunday, October 22, 2023 12:44 AM Week 1 Page 1

Indirect effect  Reports aren't designed to influence behavior  Organizational Chart (typical) Line workers are responsible for the product or service - Staff workers are responsible for supporting the line workers - President/CEO => COO (or Production VP) and CFO (or Financial VP) - COO => multiple department and production managers => line employees (people actually producing the product or service) - CFO => department managers (controller and treasurer) - Controller => cost accounting, financial accounting, and tax => staff employees As a cost accountant, you typically work under the supervision of the controller ○ - Designations/Certifications CPA => Certified Public Accountant Those who practice public accounting or auditing ○ Provided by state boards ○ Given in sections, less focused on management accounting ○ - CMA => Certified Management Accountant Provided by the Institute of Management Accountants ○ Much more focused on mastering management accounting techniques ○ - EA => Enrolled Agent Provided by the IRS ○ - CIA => Certified Internal Auditor For those practicing auditing ○ - CISA => Certified Information Systems Auditor - CFP => Certified Financial Planner - Cost Accounting and Ethics The reports you make are made to influence decisions which have impact on people - Each manager has an interest in their performance looking good, so they try to influence your report - IMA framework Principles Honesty  Fairness  Objectivity  Responsibility  ○ Standards Competence  Confidentiality  Integrity  Credibility  ○ - IMA Competency Framework (data analytics related) Forecasting: predicting based on trends/patterns - Budgeting: projecting the amount and timing of resources - Extraction: finding and querying data - Governance: determining the importance of different data - Visualization: best presentation methods - Big data => Artificial intelligence => largely unknown because it's very new People who implement AI are going to be leaders in transforming cost accounting and the value of our analyses based on AI - Quiz questions Inventoriable costs… Are reported as assets before the products are sold 1. 1. True or false? Financial statements are designed to directly influence the actions of managers. 2. Week 1 Page 2