Short-run decision-making based on a management accounting data

In graphics of document flow the circle of people, responsible for paperwork is defined, and the order, a place, time of passing of the document are specified from the moment of drawing up before delivery in archive. When developing book of accounts for management accounting it must be kept in mind that book of accounts and accounting operating now allows to carry out the accounting of expenses for production and calculation of product cost at the same time for financial and management accounting. Use one-circular (monistiс) and two-circular (dualistic) systems of the accounting of production expenses is thus allowed. The one-circular of the accounting system of expenses can be carried out:

• without use of special accounts of management accounting;

• with use of system of accounts of management accounting. A t the first option special accounts for the management• the account is not used. F.

or management information of the financial account is grouped in special registers which can be supplemented with settlement and other data. It is expedient to use two-circular system of the accounting of expenses in the large organizations. A t this system independent books of accounts have financial and management accounting. T he allocation option for management accounting of the isolated accounts is possible also. For coordination the data of financial and management accounting use transitional and mirror accounts.

T ransitional accounts provide information transfer from the financial account in management and from the management — to financial. M irror accounts provide numerical coordination of data of financial and management accounting and identification of possible divergences. In respect of documentation specify the list of documents for the accounting of economic operations. A t this enterprise such documents are: invoice, consignment note, credit and account cash order, balance sheet. At the industrial enterprise there are two types of the account: financial and administrative. In management accounting taxes are considered on accounts of expenses by it the moment of their transfer in the budget. T.

he expanded analytical account on accounts of the expenses accounting and the income from sales is kept only in management accounting. At calculation of prime cost of products in the financial account into accounts of the accounting of expenses for production only those expenses which according to the current legislation are authorized for carrying on costs of production and addresses belong. In management accounting prime cost is formed according to the technique accepted at the enterprise. All accounts of the financial account are balance and are conducted in rubles. F or convenience of the analysis and acceptance by the management of administrative decisions is provided to operate all accounts of management accounting in US dollars. F.

or combination in the automated accounting program of financial and management accounting of the account of management accounting are presented as off-balance.Accounting of materials (raw materials). A ccount of materials (raw materials) is kept on actual cost. A t allotment materials are estimated at production on the actual average cost.

I t determine by prime cost of the rest of materials for the beginning of month and prime cost of the materials prepared in reporting month. Accounting of expenses. I n management accounting account 20 «Main production» is expanded.

C osts of production and general running costs undersign on the accounts (the consumption of materials, an expense of accessories, a salary, utility payments, taxes etc.), it allows to divide variables and a billeting other expenses for «direсt-сosting» system use. Constant expenses gather on the separate account and upon termination of the reporting period are written off for cost of sales (in account 90 debit «Sales, the sub-account «Cost of sales»). It allows to study interrelation between output, expenses and profit and consequently, to predict change of prime cost or separate types of expenses depending on output, to find the most favorable combinations of the price and volume, to pursue effective policy of the prices. For control of work of heads of the centers of responsibility the accounting of expenses for production keep on a standard method, i.e. working book of accounts included account 40*1 «Output». On the debit of this account all actual expenses gather, and by the credit the finished product at standard prime cost is reflected. A ccount 40 allows to generalize information on production let out within a month and to reveal deviations of the actual production cost from its standard (planned) size. The 40th deviation revealed on the account is written off by direct or stornirovochny recording in account 90 debit. T.

he account balance 40 for the end of month does not happen. I f standard prime cost is more actual, it is the positive moment. I f standard prime cost is less actual, there is an opportunity to analyse the reasons of the arisen overexpenditure thanks to the detailed analytical accounting of expenses. I.

t allows to define guilty of estimate excess as the enterprise is broken into the responsibility centers. Sale of finished product. P rocess of sales represents set of the economic operations connected with sale and sale to production. S.

ale of production is carried out according to the signed contracts with buyers and customers. T he reflection purpose of economic operations on accounts sale of financial and management accounting is identification of financial result from production sales. There is a possibility of the accounting of sales by two techniques: for date of payment of production or on the date of shipment and presentation of settlement documents for payment. A t the industrial enterprise of holding sales account is kept in the second way, i.e. in process of shipment of production and presentation of settlement documents in management accounting record is formed: D-t Account 62 * 1 «Calculations with buyers and customers» K-t account 90*1 of «Sale», sub-account «Revenue» .Account of sales process of finished product is kept on account 90 * 1 which feature is that sold production is reflected in it at the same time in two estimates: on the credit — at sale price;on the debit — at standard prime cost (K-t account 40*1).It allows to define and write off result of production sale — profit: D-t of account 90*1 of «Sale», sub-account «Profit/loss from sales» K-t account 99 * 1 «Profits and losses» or loss (D-t account 99*1, K-t account 90*1).Reporting documentation. Accounting management aims to provide with necessary data of all interested internal users. Such information include: prime cost calculation — for sales managers;the report on the consumption of materials — for purchasing department;the report on an expense of accessories — for complete set department;

• the production report, shipment, cash flow for the director general. Data of management accounting are requested by administration immediately as soon as there is a need. Therefore administrative reports make daily, weekly or monthly. Are daily formed and requested:

• reports on cash desk, bank, on the drawn-up accounts (expected receipts);

• the report on cash flow in a day. Reports are weekly formed and requested:

• the production;

• on sales;

• about implementation of the enterprise budget. Monthly internal users need information containing in:

• balance,• report about expenses;

• report about profit and losses;

• report about cash flow. Information containing in these reports, allows to calculate not only financial performance, but also indicators of business activity, effective management of the enterprise.

2.4. T he controller, his role and functions in the system of management accountingThe accountants allocated with management functions, are called as controller (accountants managers).In organizational structure of any enterprise between its separate divisions linear and nonlinear (staff) relations of production are possible. T he linear relations assume directing to the subordinated persons. F.

or example, chiefs of shops are subordinated to the production manager that testifies to existence of the linear relations. T he chief controller is responsible for work of all accounting service, therefore, here too there are linear relations. Nonlinear (staff) relations of production arise when one department provides services to other departments (for example, human resources departments, supply, design, financial security). I n this point function of the controller also have staff character as the accounting service subordinated to it advises, serves and coordinates other divisions of the enterprise. Let's dwell upon functions of the controller. I t is known that management consists of planning, control and stimulation.Planning.

I t is preceded by formation of results for the reporting period, their generalization and the analysis. T he formulated conclusions are used in further planning and forecasting. A.

t a planning stage the controller participates in development of private budgets of the enterprise which then are consolidated by it in the general (general) budget submitted for the approval to the management. W hen developing the production budget (the production program of the enterprise) thanks to activity of the controller the associativity in work of separate shops, sites and crews is provided, emergence of so-called bottlenecks in production is prevented. H e participates in discussion of the production program of the enterprise, in an assessment of offers on capital investments, reveals the most profitable types of production, recommends potential sales markets and the optimum prices.

T he modern accountant-analyst equally has to own methods of expeditious accounting, the financial analysis and financial planning. C ontrol. T his process is also impossible without participation of the controller. U pon termination of the reporting period it makes reports on (plan) budget performance by each center of responsibility in which the comparative analysis of the planned and reached results is provided.

T hus undesirable divergences between the actual and planned indicators come to light, the reasons of it that in further work to exclude their influence are defined. T he reports prepared by the controller, on the one hand, allow to estimate objectively activity of heads of the centers of responsibility, and with another — inform managers and the management on on what sites it was not succeeded to reach planned indicators. Thus, the controller exercises management control in the organization.Stimulation.

B udgets and reports on their execution, prepared by the controller, stimulate activity of the personnel of the enterprise, after all budgets contain planned indicators which have to be reached. Thanks to professional activity of the controller at the enterprise exchange of information and the reporting between separate services is adjusted. W ith its help managers get acquainted with the plans developed for them, understand tasks facing them. The activity the controller creates a basis for increase of management efficiency by the enterprise. S ometimes it is compared to the navigator of the ship laying a course and informing the captain on those, how successfully it is realized.

T he navigator gives help to the captain, but the right of command remains behind the last. Thus, the controller, firstly, bears responsibility before the management for reality of accounting reports of divisions, secondly, gives help to managing directors of the responsibility centers in planning and summing up their work. T herefore it has to combine the independence and objectivity with sincere desire to help managers with business management. Management accounting coordinates registration process to management process. ConclusionIn conclusion I sppose to tell about certain requirements to which the short-run management decision has to satisfy .

I t is possible to relate: timeliness of decision-making, its validity, directivity and addressing, consistency and responsibility for results of the decision. T he head should be able to choose time (not earlier than and not later than the demanded term) acceptances of a final decision, even, maybe, not until the end of the worked. A doption of the overdue decision which even has been deeply worked — more gross blunder, than timely adoption of the «crude» decision. Responsibility for results of the made decision means that to duties of the head belongs not only direct decision-making, but also execution of a certain responsibility for results of its realization — bankruptcy of the organization, or a personal liability of the manager of the organization. F.

ollowing this requirement raises level of feasibility of the made decisions. At the same time management accounting at the enterprise is necessary for normal functioning and enterprise development. I t provides users with information necessary for decision-making, controls current state of the enterprise and measurement of results of activity. M anagement accounting allows to consider correctly all internal and external factors directed by specific goals of development of the enterprise and ways of their achievement, considers expenses and the income and deviations on them from the established norms, standards and estimates on the organization as a whole, to structural divisions, the responsibility centers, groups of products, technological decisions. M anagement accounting allows to realize now most successfully functions of the account, planning, control and regulation of product cost — one of the most important activity indicators of the decisions enterprise. Practical partTask. The N-company assumes to carry out the investment project in the total cost of 700 million rubles life expectancy of the project of 10 years, the rate of discounting makes 15%. Annual receipt of money from implementation of this project is expected with the following probability: ProbabilityCashflow, ths. rub0,290 0000,470 0000,575 0000Determine the net discounted value of the investment project and a profitability rate; establish during the analysis degree of efficiency of implementation of capital investments.Decision.Let's define the average weighed cash flow.(0,2 * 90 000) + (0,4 * 70 000) + (0,5 * 75 000) = 18 000 + 28 000 + 37 500 = 83 500 thousand rubles. Let's determine the net discounted value: yearcapitalinvestmentsincomefrominvestmentsdiscountcoefficientthenetdiscountedvalue0700000 ths. rub- 700 000 183 500 ths.0,870+72 645 283 500 ths.0,756+63 126 383 500 ths.0,658+54 943 483 500 ths.0,572+47 762 583 500 ths.0,497+41 499,5683500 ths.0,432+36 072 783 500 ths.0,376+31 396 883 500 ths.0,327+27 304,5983500 ths.0,284+237 141 083 500 ths.0,247+20 624,5TOTAL: 419 086,5Apparently the table shows that the income is less, than quantity of invested fundsnet additional value = 700 000−419 086,5 =-280 913,5Value net additional value negative, therefore, the project is not effective. Let's define a rate of profitability of the investment project419086,5: 700 000 = 0,59Rate of profitability 0,59 less than 1 — the project should provides profitabilities in a size accepted by norm of discount, therefore, from the project it is necessary to refuse and choose more attractive. The list of reference linksAfanasyevsky N.

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