Womack Report

August 21, 2007

Managerial Accounting, August 21

Filed under: Accounting,Notes,School — Phillip Womack @ 5:32 pm

Accounting class now. Figured out how to connect to the UHCL wireless network, which I had previously thought didn’t exist. Coverage is patchy, but better in the classrooms. Professor showed up eight minutes or so early. Uploaded all my previous class notes while waiting for this one to start.

This class uses the Garrison/Noreen/Brewer book my previous class at Cy-Fair used. That’s pretty handy, although I wasn’t impressed with the Cy-Fair class. Maybe this one will be more valuable.

This class will start somewhat accounting based, and then switch to cost systems for managers. That lines up with the previous course. This class is basically accounting for non-accountants, apparently. Everyone here will have already taken six hours of Principles of Accounting classes, like me.

Professor is Ed Altemus. He teaches one course, but used to be the primary instructor for the course. That bodes well. Claims to have put some real effort into reducing drop rates for his class, which also bodes well. Altemus is a talker.

He graduated from Penn State. Worked for U.S. Steel for 12 years. Moved to Texas, opened a CPA practice with a partner. Been at UHCL for 12 years. He was born in Pennsylvania.

Prof. has a high opinion of the textbook. He also recomends the Student Lecture Aid and an “Instructor’s Coursepack”.

The class will self-select into teams of up to three people. On a test, there will be problems to work, which people will do individually. Then the team will have a chance to do the same problems, and replace the individual grades with the group result. Gotta find some reliable arithmetic people to help me here.

No make-up tests will be given. Missed test grades will be replaced by the final exam grade.

Grade consists of three tests, a daily quiz (Readiness Assessment Test) aggregate, and a comprehensive final exam. The three tests are collectively worth 50% of the grade. The final is worth 35% of the grade. The remaining 15% of the grade is the aggregate of the quizzes. The lowest two quiz scores are dropped from the aggregate.

All tests, including final, allow bringing a note card, handwritten, with notes on it. Approximately half the test value will be multiple choice, half will be problems.

Took a break for twenty minutes, and now we’re getting to some content.

Managerial Accounting.

Material for tonight:

  1. The work of management
  2. Management accounting contrasted with financial accounting
  3. Organizational structure and the work of the managment accountant
  4. Continuous improvement
    • Just In Time
    • Total Quality Management
    • Process Reengineering
    • Theory of Constraints

Financial accounting focuses on generating reports for people outside the company. High importance placed on past data and precision.

Managerial accounting focuses on internal reporting and data. Highest importance is placed on timeliness and future relevence.

Just In Time production is expensive but flexible compared to traditional production. Often characterized as the pull approach. Key elements of JIT systems:

  1. Initiate JIT purchasing — Suppliers must deliver defect-free goods in the correct quantity and at the correct time
  2. Improve the plant layout — reduce the distances WIP must travel
  3. Reduce Setup Time — this reduces needed batch sizes, increases responsiveness, reduces need for inventories
  4. Strive for zero defects — high defect rates require extra WIP to ensure enough defect-free goods to meet orders
  5. Develop a flexible work force — you’ll have smaller workforces, so each person needs to have broader skills

Primary benefits of JIT

  • Funds aren’t tied up in inventories
  • Space made available for production
  • Throughput time reduced
  • Defect rates reduced

Total Quality Management

  • emphasizes an unending series of small, incremental improvements
  • Usually implemented by teams of front-line workers who identify and solve problems

Process Reengineering

  • Radical approach to improvement
  • Business processes completely redesigned to eliminate non-value-added activities, reduce errors, and reduce costs
  • Possible problems include morale issues and fear, often justified, of layouts

Theory of Constraints

  • Constraints are things which limit the ability of an individual or organization to attain objectives.
  • The most restrictive constraint determines the productivity of the entire system.

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