Embed Size (px)
DESCRIPTION
mm unand
Citation preview
COST MANAGEMENT
COPYRIGHT © 2009 South-Western Publishing, a division of Cengage Learning.Cengage Learning and South-Western are trademarks used herein under license.
1
Accounting & ControlHansen▪Mowen▪Guan
Chapter 1Introduction to Cost
Management
2
Study Objectives1. Describe a cost management system, its
objectives, and its major systems.2. Identify the current factors affecting cost
management.3. Describe how management accountants
function within an organization4. Understand the importance of ethical behavior
for management accountants.5. Identify the three forms of certification
available to internal accountants
3
Accounting Information System
4
Accounting Information SystemFinancial accounting system
follows established rules and conventions to provide information (financial statements) to external users such as investors, government agencies, and banks.
Cost management systemidentifies, collects, measures, classifies, and reports information that is useful to managers in costing (determining what something costs), planning, controlling, and decision making.
5
Subsystems of theAccounting Information System
6
Cost Management SystemCost accounting system
assigns costs to individual products and services and other cost objects as specified by management; satisfies financial reporting and management decision-making needs
Operational control systemprovides accurate and timely feedback concerning performance; concerned with what activities should be performed and assessing those activities.
7
Factors AffectingCost Management
Global Competition– Vastly imported transportation and
communication has led to a global market for many manufacturing and service firms.
– The new competitive environment has increased the demand not only for more cost information but also for more accurate information.
8
Factors AffectingCost Management
Growth of the Service Industry– As manufacturing industries has declined in
importance, the service sector of the economy has increased in importance.
– Deregulation of many services has increased competition in the service industry
9
Factors AffectingCost Management
Advances in Information Technology– Computers are used to continuously monitor
and control system-wide operations.– Increased ability to accurately cost products
because of advances in available tools.– Emergence of electronic commerce
10
Factors Affecting Cost Management
Advances in Management Environment– Theory Of Constraints is used to continuously
improve manufacturing activities and nonmanufacturing activities.
– Just-in-Time Manufacturing is a demand-pull system that strives to produce a product only when it is needed and only in the quantities demanded by customers.
11
Factors Affecting Cost Management
Computer-Integrated Manufacturing– Can produce a competitive advantage for a
firm– Typically follows JIT as a response to
increased needs for quality and shorter response time
12
Factors AffectingCost Management
Consumer Orientation– Value chain is the set of activities required to
design, develop, produce, market, and deliver products and services to customers
– Firms compete not only in terms of technology and manufacturing, but in the speed of delivery and response to deliver value to the customer
13
Factors Affecting Cost Management
New Product Development– Management recognizes that a high
proportion of production costs are committed during the development and design stage of a new product.
– The requirement to control cost encourages the use of target costing and activity-based management.
14
Factors Affecting Cost Management
Total Quality Management– Continual improvement and elimination of
waste are the two foundation principles that govern a state of manufacturing excellence.
– A philosophy of total quality management, in which managers strive to create an environment that will enable organizations to manufacture perfect products, has replaced the acceptable quality attitudes of the past.
15
Factors Affecting Cost Management
Time as a Competitive Element– Time is the crucial element in all phases of the
value chain.– Decreasing non-value-added time appears to
go hand-in-hand with increasing quality.
16
Factors AffectingCost Management
Efficiency– While quality and time are important,
improving these dimensions without corresponding improvements in financial performance may be futile, if not fatal.
17
The Role of Cost and Management Accountant
• Responsible for generating financial information required by the firm for– Internal reporting– External reporting
• Accounting system information is used by management to– Plan– Control– Make decisions
18
The Role of Cost and Management Accountant
Planning– Detailed formulation of future actions to
achieve a particular end.– Requires setting objectives and identifying
methods to achieve those objectives.
19
The Role of Cost and Management Accountant
Controlling– The managerial activity of monitoring a plan’s
implementation and taking corrective action as needed.
– Feedback is information that can be used to evaluate or correct the steps being taken to implement a plan.
• Performance reports compare budgeted and actual data
20
The Role of Cost and Management Accountant
Continuous Improvement– Required in a dynamic environment if a firm is
to remain competitive or to establish a competitive advantage.
– Searching for ways to increase overall efficiency through
• Reduction of waste• Quality improvement• Cost reduction
21
The Role of Cost and Management Accountant
Decision Making– The process of choosing among competing
alternatives.– Decisions are based on information provided
by the accounting system
22
Accounting and Ethical ConductBenefits of Ethical Behavior
– Can create customer and employee loyalty– Avoid litigation costs– Increases likelihood of commercial success
Standards of Ethical Conduct for Management Accountants
– Competence– Confidentiality– Integrity– Credibility
23
CertificationCertified Public Accountant
– The responsibility of a CPA is to provide assurance concerning the reliability of financial statements.
Certified Internal Auditor– The focus of the CIA is to recognize competency in
internal auditing rather than external auditing.
Certified Managerial Accountant– One of the main purposes of the CMA was to establish
management accounting as a recognized, professional discipline, separate from the profession of public accounting.
24
Certification
• Four areas emphasized on the CMA exam:– Business analysis– Management accounting and reporting– Strategic management– Business application
COST MANAGEMENT
COPYRIGHT © 2009 South-Western Publishing, a division of Cengage Learning.Cengage Learning and South-Western are trademarks used herein under license.
25
Accounting & ControlHansen▪Mowen▪Guan
End Chapter 1
