Materiale Didattico

MANAGEMENT ACCOUNTING (Controllo di gestione)

Management accounting “Table of content” and in the same sequence as I operate in practice.

What Management accounting is useful for: summarizing the past and deciding the future, e.g. to decide prices. How to do: 1. Decide methods (see the list below es. BEP, ZBB,..) 2. Measure the past 3. Forecast the future and set strategies and goals 4. Measure variances 5. Decide strategies and corrections

Decide strategic goals and organization using Canvas

Canvas Business Model: The Business Model Canvas is a strategic management template for developing new or documenting existing business models. It is a visual chart with elements describing a firm’s value proposition, infrastructure, customers, and finances.

It assists firms in aligning their activities by illustrating potential trade-offs. The Business Model Canvas was initially proposed by Alexander Osterwalder based on his earlier work on Business Model Ontology. Since the release of Osterwalder’s work in 2008, new canvases for specific niches have appeared, such as the SaaS Canvas.

   1 The Business Model Canvas
   2 Application
   3 See also
   4 Further reading
   5 References
   6 External links

MANAGEMENT ACCOUNTING PART 3 – Balanced scorecards
Decide strategic goals and organization using Balanced scorecards: Balanced Scorecards is a scheme to combine traditional financial rates with more general goals. To do that, you establish your main objective in 4 areas (External prospective concerning clients and stakeholders, economic and financial, processes and innovation, Internal prospective concerning organization) and then for each objective you decide performance measures and targets and initiatives.

MANAGEMENT ACCOUNTING PART 4 – Responsibility centres
Re-organize the company in Responsibility centres
Divide the company in Responsibility centres that must have clear goals and resources.

Types of Responsibility centres:

  • Cost centres that are parts of the company focused on costs. Types:
  • Standard: e.g. production business unit. Clear connection costs – results
  • Discretional: indirect  connection costs – results. E.g. departments HR, R&D, Financial, ..


  • Real (or operative) Production, Auxiliary services (e.g. utilities, administration,..)
  • Artificial cost centres. These are created when you have costs related with many costs centres. E.g. passive office rent.
  • Revenue centres: are focused on revenues, e.g. sales department. They are also responsible for advertisement costs and commercial commissions costs.
  • Profit centres: are focused on profit.
  • Investment centres: are focused on return on investments. Indicators are: ROI (Economic), NPV (Financial).


Break Even Point is useful to find economic balance. We need economics bases. Why? It is useful for marketing and for your life.

This section of our course is called BREAKEVEN POINT and READING BALANCE SHEET of a company. We have to give a fast and effective idea on how to read a balance sheet. As long as we do not have too much time to make a course in economics, we have to think from the bottom, it means that if we look at a balance sheet, we have to understand which things are important. For example, if a firm wants to hire you and it is a capital firm [limited responsibility (or, with a specific word, liability) company], the balance is public. It means that you can look at the balance sheet of that company. Looking at it, you can notice if that company is strongly in debt or not; you can also approximately guess the amount of employees. If that company is strongly in debt, it is probable that they are not going to pay you. If you are a firm that produces furniture and a company asks you for some products, looking at the balance sheet you can evaluate if they’ll be able to pay. What about the opposite (if the company has many and old credits)? this could be a warning because it shows the incapacity of a company to get payments or it means that they work on an unfortunate area of clients. E.g. construction companies.

Let us start this subject in a soft way going after to the more technical and economic part. We must consider three points to understand balance sheet of a company:

  • Economic – refers to value of production (sales volume, turnover) and costs (value of needed resources). Value of production – Costs = Profit or loss.
  • Financial – considers incomes and outcomes. The financial aspect is important to understand if you can survive in the financial system of the banks.
  • Patrimonial aspect. bank account, apartments, debts, instruments, industrial machinery,.. In the patrimonial aspect, we consider both positive points (assets) but also the negative ones (liabilities). What the company owns and owes. It can own a building or machines or credits or even debts. Patrimonial assets can be positive or negative.


MANAGEMENT ACCOUNTING PART 6 – Budgeting and variances

Budgeting and variances: the main concept is 1. forecast sales volumes, costs of material and labour, quantities, times, .. 2. at the end in a final balance compare to what actually happened 3. use these variances to decide strategies and corrections.

Main methods: standard costs, target costs, full costing, flexible costing, Activity based costing, .. See below some of these methods.

For all budgeting methods: When you evaluate costs, you have to set “transfer prices” that are prices for services and goods sold and bought inside the company.
Target costing is based on the final imposed price that you want to give to the market.

Standard Costs system
A standard, as the term is usually used in management accounting, is a budgeted amount for a single unit of output. A standard cost for one unit of output is the budgeted production cost for that unit. Standard costs are calculated using engineering estimates of standard quantities of inputs, and budgeted prices of those inputs. For example, for an apparel manufacturer, standard quantities of inputs are required yards of fabric per jean and required hours of sewing operator labour per jean. Budgeted prices for those inputs are the budgeted cost per yard of fabric and the budgeted labour wage rate.

Full costing or Product costing follows these steps:

  • Identify the cost object;
  • Identify the direct costs associated with the cost object;
  • Identify the overhead costs;
  • Select the cost allocation base to use in assigning overhead costs to the cost object;
  • Develop the overhead rate for allocating overhead to the cost object.

Full costing and Price calculation

Summary: Price is a ham slice in a sandwich, between Market value perception above and / Full costing below
Full costing: How much does it cost  a bowl of ragout noodles? 6,51 Euros. In a fast food restaurant 15 euros is too much. See the specific excel file.