Management Accounting: An Australian Perspective, 3/e
Strenghts of this edition | Major Changes in the third edition
Strengths of this edition
Presents a contemporary perspective of the role of management accounting within organisations
The book takes a cutting-edge approach in explaining the contemporary role of management accounting within organisations. Rather than being a provider of information for managers' strategic and operational decisions, management accounting is now viewed as playing a greater role in supporting managers' quest for enhancing both shareholder value and customer value. The effective management of resources - both financial and non-financial - is essential to creating value. This perspective is enhanced through references to the activities of leading-edge Australian companies. Throughout the book, the themes of strategic resource management, customer value and shareholder value are emphasised, as new topics are presented.
REAL LIFE EXAMPLES ILLUSTRATE THE THEORY
Utilises case illustrations to stimulate students' interest
Most chapters are built around major case illustrations. The illustrations are used throughout the chapters, allowing students to gain a deeper understanding of all dimensions of the topic. Each illustration has a management flavour, with enough descriptive background to involve students in the scenario. In most chapters these cases discuss actual Australian businesses, and involve real managers (but not their real names) and typical management decisions.
Describes the techniques and explains the concepts of management accounting in an Australian context
Many of the major chapter illustrations are based on actual Australian companies, even though in some cases we have used a fictitious businesses name to protect the company's competitive position. Information from the managers and management accountants of these companies has enabled the construction of realistic, although often simplified, management cases, dealing with real problems and describing real information needs. Some of these businesses, such as Mason & Cox in Chapters 8 and 15, Melbourne Theatre Company in Chapter 17 and Monash Medical Centre in Chapter 20 may be relatively small and unknown. However others, such as Adelaide Bank in Chapter 6, AVJennings in Chapter 9, R.M. Williams in Chapters 10 and 11, and Mitsubishi Motors in Chapter 14 are well known. In addition to the major cases, each chapter contains 'Real life' excerpts that describe the current management accounting practices of Australian businesses. The real world context will help students develop an understanding of the Australian business environment and the role that management accounting can play in business.
Where appropriate, the text also integrates some material on Australian accounting standards, taxation legislation and pricing policies. Those of us that have taught with overseas texts appreciate the enormous advantages of relating product costing material to the external reporting requirements of Australian accounting standards, teaching capital expenditure evaluation methods that take account of Australian taxation laws on depreciation and investment allowances, and describing pricing within an Australian regulatory framework.
Includes material on the latest developments in management accounting, as well as a thorough coverage of conventional management accounting approaches
Over the past few decades the business environment has changed dramatically. Improvements in communication, transportation and information processing have stimulated the development of global markets. Customers have become increasingly demanding about quality, delivery performance and flexibility, as well as cost.
Management accounting has also had to change. Many businesses still use conventional approaches and this book provides a thorough coverage of the conventional management accounting concepts and techniques. However, one of the major strengths of this book is its comprehensive coverage of the latest developments in management and management accounting. Chapters 1, 8, 14, 15 and 16 are devoted entirely to more contemporary practices and include a breadth of case material from Australian businesses using new approaches. Other chapters - such as 12, 13, 17, 18 and 19 - describe the role of both the conventional and new approaches to management accounting. In all chapters there is reference to new developments in management and management accounting.
Provides a balanced coverage of the management accounting concepts relevant to the many sectors in the Australian economy: manufacturing, service, not-for-profit and retail
A substantial part of the Australian economy is made up of service, not-for-profit and retail organisations and a large percentage of the students pursuing studies in management accounting will work in non-manufacturing environments. It is important that students understand the applicability of management accounting to a variety of organisations. Thus, in the third edition, a new chapter on service costing has been included. Also, throughout the book, major illustrations, around which the chapters in this text are built, are drawn from a wide variety of enterprises. Where manufacturing illustrations are used, the chapter also considers the applicability of the concepts and techniques to non-manufacturing organisations, particularly to service entities.
Provides a flexible sequence of chapters written in modular style
Since management accounting lecturers often have differing views on the optimal chapter sequence, flexibility was a paramount objective in writing the text. Each chapter is a module, which can be assigned out of sequence if the lecturer desires.
In short, the lecturer has great flexibility in course design and topic sequence.
- Some lecturers may prefer to cover cost behaviour and estimation (Chapter 3) and cost volume profit analysis (Chapter 17) before delving into product costing issues. Other lecturers may wish to cover cost behaviour and estimation in the section of their course on decision making.
- The information-oriented chapters (17 to 21) can be moved to an earlier point in the course if the lecturer prefers. These five chapters could be assigned any time after the students have completed Chapters 1, 2 and 3. Chapter 7 covers the complexities of manufacturing overhead, and may be omitted if the lecturer wants to cover product costing (Chapters 4, 5, 6 and 8) without going into such detail.
- Some lecturers may prefer to emphasise the contemporary developments in management accounting by teaching Chapters 8, 13, 14 and 16 in a sequence. This could be covered any time after Chapters 1 and 3.
Major Changes in the third edition
Major changes in the third edition are as follows:
- Recognition of the value-creating role of management accounting
Chapter 1 now provides a more contemporary focus on the value-creating role of management accounting. Throughout the book, the themes of strategic resource management, customer value and shareholder value are emphasised, as new topics are presented.
- Integration of strategic management accounting concepts throughout the book
The chapter on strategic management accounting, which formed the capstone chapter of the previous edition, has now become part of the ‘mainstream’. Accordingly, material on strategy is now included throughout the chapters, to significantly strengthen the new edition’s overall strategic orientation.
- Recognition of the value-enhancing role of management accounting
In Chapter 1 we adopt the contemporary notion of management accounting supporting managers in their tasks of enhancing both customer value and shareholder value, through management accounting processes and techniques that allow for the effective management of organisational resources. This theme is continued throughout each chapter of the book as both conventional and contemporary management accounting topics are presented.
- A new chapter on service costing (Chapter 6)
This chapter has been developed in response to market feedback that few management accounting textbooks place sufficient focus on service industries and service costing, even when the Australian economy relies far more on service industries than on manufacturing industries. Conventional and activity-based approaches to costing, and management accounting information in a range of different service contexts are presented.
- Measuring financial performance (Chapter 12)
Contemporary developments in measuring financial performance are integrated with conventional responsibility accounting performance reports. Real-time reporting, the impact of shared services and team-based structures are now included. The transfer pricing section has been reformulated to provide a clearer demonstration of the operation of such systems.
- Financial performance measures and reward systems (Chapter 13)
This chapter presents internal financial reports and traditional financial measures (e.g. return on investment) and an expanded section on value-based management. Up-to-date material on reward systems, including performance-linked pay is also covered.
- Contemporary approaches to measuring performance (Chapter 14)
In this edition there is more detailed material on the formulation and use of non-financial performance measures and balanced scorecards.
- Managing costs and time for customer value (Chapter 15)
This chapter is an expansion of Chapter 14 from the second edition, and relates contemporary cost management and time management to the generation of customer value. As in the previous edition, cost management techniques include activity-based management, business process re-engineering, and life-cycle costing. There is a more detailed coverage of target costing. The new material on time-based management includes measures of break-even time and time-to-market, and identifying and managing time drivers.
- Managing suppliers, customers and quality (Chapter 16)
These three important and cutting-edge topics, which can all be viewed as part of supply-chain management, are brought together in a new chapter. In particular, e-commerce contributions to supplier and customer management are emphasised. New concepts that are covered in this chapter include enterprise resource planning (ERP) systems, customer relationship management (CRM), and B2B (business-to-business) relationships. In the second edition some of this material was included in Chapters 20 and 21.
- Pricing and product mix decisions (Chapter 19)
This chapter contains a more up-to-date and comprehensive coverage of the factors that influence product and service pricing, and various alternative pricing strategies, such as value-based pricing and economic-value pricing, are presented. An updated section on legal restrictions on pricing is included in this chapter.