Managing Cost and Finance –MA2

1. ManagingCost and Finance –MA2 MOHAMED IBRAHIM HAMEEM (CIMA exam complete, ACCA professional level student, Diploma in Economics (distinction) , Third year undergraduate reading for BSc. Mathematics and Economics (university of London)

2. Managing Cost and Finance Management information • This chapter looks at management information: its purpose, sources, categories, desirable qualities and potential problems. It finishes by considering the role of a trainee accountant in a cost and management accounting system

3. Managing Cost and Finance The purpose of management information • Plan the future of the business • Control the progress of the business • Decision making such as invest or don’t invest?, make or buy? Etc.

4. Managing Cost and Finance Data and information • Example - customer order being placed and deciding whether to give credit or not

5. Managing Cost and Finance Data and information • Data is ‘raw’ facts and numbers that have no meaning • Information is data that has been organized and sorted into a form that facilitates decision making

6. Managing Cost and Finance Question 01 • What are the three purposes, described above, for which managers use management information? • A! Estimating, investigating and planning • B! Planning, controlling and decision-making • C! Controlling, buying and selling • D! Accounting, manufacturing and auditing

7. Managing Cost and Finance Question 01 • What are the three purposes, described above, for which managers use management information? • A! Estimating, investigating and planning • B! Planning, controlling and decision-making • C! Controlling, buying and selling • D! Accounting, manufacturing and auditing

8. Managing Cost and Finance Benefits of computerized accounting systems • More specific! (because computers can scan through vast amounts of data and report on the note-worthy events). • More complex! such as analysis of sales trends

9. Managing Cost and Finance Benefits of computerized accounting systems • Wider access! because a terminal on everyone’s desk potential gives all access to information needed.

10. Managing Cost and Finance Question 02 • Which of the following is information rather than simply data? • 1. A random list of the wages of all employees • 2. A list of all stock items that haven’t sold at all in the last three months • 3. A report showing where expenses are 10% or more over budget • 4. A list of all invoices that have to be paid by the company

11. Managing Cost and Finance Answers • A! 1 and 4 only • B! 2, 3 and 4 only • C! 2 and 3 only • D! All items are information rather than just data

12. Managing Cost and Finance Features of good management information • Accurate • Complete • Cost beneficial • User friendly • Relevant • Authoritative • Timely • Easy to use

13. Managing Cost and Finance Question 03 A company has invested in a new data processing software. The software cost $3mn. How ever it has been estimated that the cost Savings generated by the software via accurate information would only be $1mn. Then which quality of good information is compromised? Answer – cost beneficial.