Management Accounting and Control

Management accounting has been the basic toolbox in business administration for decades. Today it is an integral part of all curricula in business education and no student can afford not to be familiar with its basic concepts and instruments. At the same time, business in general, and management accounting in particular, is becoming more and more international. English clearly has evolved as the "lingua franca" of international business. Academics, students as well as practitioners exchange their views and ideas, discuss concepts and communicate with each other in English. This is certainly also true for management accounting and control.
Management Accounting is becoming more and more international. ?Management Accounting and Control? is a new textbook in English covering concepts and instruments of management accounting at an introductory level (primarily at the Bachelor level, but also suited for general management and MBA courses due to a strong focus on practical relevance). This textbook covers all topics that are relevant in management accounting in business organizations that are typically covered in German and Central European Bachelor courses on management accounting and control.
After a general introduction to the field of management accounting and control the book discusses cost management as an extension of cost accounting. Typical cost management instruments such as target costing, life cycle costing and process-based costing approaches are explained in detail. Differences between Anglo-American activity-based costing (ABC) and German process-based costing are highlighted. The book then turns to an extensive discussion of planning and budgeting tasks in management accounting with a strong focus on the practical application of the topic such as developing a budget in practice. Another chapter is dedicated to a comparison of traditional budgeting with modern /alternative budgeting approaches.
A major part of the book is dedicated to the broad area of performance management. The relevance of financial statement information for performance management purposes is discussed in detail. In addition, the most widely spread financial performance indicators are illustrated using real-world examples. The book also includes detailed content on value-based management control concepts. In a consecutive chapter, performance measurement is linked with strategy while extensively discussing the Balanced Scorecard as a key tool in strategic performance management.
The remaining parts of the book deal with management reporting as one of the main operative tasks in management accounting practice. The book closes with insight into new fields and developments that currently influence management accounting practices and research and promise to play an increasingly important role in the future.

Autorentext
Both authors hold chairs and teach at the ESB Business School, Reutlingen University. They have been researching and teaching in the field of management accounting for many years.
Michel Charifzadeh holds a diploma in business administration from the Ludwig-Maximilians University Munich and received his doctoral degree from the EBS Universität für Wirtschaft und Recht, Oestrich-Winkel. He has worked as a project manager in mergers & acquisitions at Siemens AG for several years. As a professor of finance and accounting he was employed at the International University of Bad Honnef-Bonn before he was appointed to the ESB Business School at Reutlingen University in 2011. His teaching and research interests include value based management, performance measurement, company valuation and International Financial Reporting Standards (IFRS).
Andreas Taschner holds a diploma and a doctoral degree from the Wirtschaftsuniversität Wien (Vienna University of Economics and Business). He has more than 10 years of industry experience. He was appointed professor of management accounting at the ESB Business School at Reutlingen University in 2011. His teaching and research interests include comparative management accounting, management reporting, investment appraisal techniques, and supply chain accounting.

Inhalt

Preface xiii

Chapter 1 Introduction to Management Accounting and Control 1

The Concepts of Management, Accounting, and Control 2

A Definition of Management 2

A Definition of Accounting 3

A Definition of Control 4

Bringing it Together: Management Accounting and Management Control 5

Management Accounting 5

Management Control 6

The Role of a Controller in an Organization 9

Skill Set of a Controller 10

The Management Control Function in a Corporation 12

Management Accounting vs. Financial Accounting 14

Financial Accounting 14

Contrasting Management Accounting and Financial Accounting 15

Performance Measurement and Performance Reporting 17

An Example of Performance Reporting 17

Performance Measurement beyond Financials 19

Trends in Management Accounting and Control 20

Ethical Aspects of Management Accounting and Control 23

Chapter 2 Management Reporting 29

Information Needs in Business 30

What is Information? 31

Information Supply vs. Information Demand 32

Management Reporting as a Key Information Tool 34

Scope and Definition of Management Reporting 35

The Management Reporting Process 36

Management Reporting Dimensions 38

What For? Management Reporting Purposes 40

What? Content of Management Reports 42

Inductive Methods 42

Deductive Methods 43

Information Sources 44

How? Preparing and Communicating Management Reports 46

Amount of Information 46

Order and Structure 47

Relationships between Pieces of Information 49

Presentation and Visualization 50

When? Timing Issues in Management Reporting 50

Reporting Cycles 50

Duration of Report Preparation 51

Timeliness and Punctuality 52

Who? Parties Involved in the Management Reporting Process 53

Emerging Trends in Management Reporting 54

Reporting Factories 54

Self-Reporting 55

Cooperative Reporting 56

Chapter 3 Managing Cost 61

Cost Management 62

Cost Accounting vs Cost Management 62

The Focus of Cost Management 63

Cost Management Tools 65

An Overview 65

Problems of Volume-Based Cost Allocation 65

Activity-Based Costing and Process-Based Costing 67

How Activity-Based Costing Works 67

How Process-Based Costing Works 70

Activity-Based Costing and Process-Based Costing a Comparison 71

Process- and Activity-Based Management Control 73

Cost Reduction and Process Efficiency Improvements 74

Pricing and Product Mix 74

Product and Service Design 74

Planning and Budgeting 75

Target Costing 75

Determining the Cost Gap in Target Costing 76

The Target Costing Process 77

Splitting Target Cost into its Sub-Values 79

Target Cost Index and Target Cost Diagram 81

A Critical Reflection: When is Target Costing Appropriate? 82

Life Cycle Costing 83

Cost and Revenue Elements Across the Product Life Cycle 85

Contribution Margin Method of Life Cycle Costing 86

Discounting Method of Life Cycle Costing 88

A Critical Reflection: What Life Cycle Costing Can and Cannot Do 91

Chapter 4 Budgeting 97

Planning in Management Control 98

The Budgeting Cycle 100

Uses of Budgets 101

The Master Budget 102

Preparing an Operating Budget 104

The Revenue Budget 105

The Production Budget 106

The Direct Materials Budget 107

The Direct Labor Budget 108

The Manufacturing Overhead Budget 108

The Manufacturing Costs Per Unit 109

The Cost of Goods Sold Budget 110 The Non-Manufacturing Cost...