COST MANAGEMENTAccounting & Control Hansen▪Mowen▪Guan Chapter 1 Introduction to Cost Management... Cost Management SystemCost accounting system assigns costs to individual products and
Trang 1COST MANAGEMENT
Accounting & Control
Hansen▪Mowen▪Guan
Chapter 1 Introduction to Cost
Management
Trang 2Study Objectives
1 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 organization
4 Understand the importance of ethical behavior
for management accountants
5 Identify the three forms of certification available
to internal accountants
Trang 3Accounting Information System
Trang 4Accounting Information System
Financial accounting system
follows established rules and conventions to
provide information (financial statements) to
external users such as investors, government agencies, and banks
Cost management system
identifies, collects, measures, classifies, and
reports information that is useful to managers in costing (determining what something costs),
planning, controlling, and decision making
Trang 5Subsystems of the Accounting Information System
Trang 6Cost Management System
Cost 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 system
provides accurate and timely feedback
concerning performance; concerned with what activities should be performed and assessing those activities
Trang 7Factors Affecting Cost 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
Trang 8Factors Affecting Cost 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
Trang 9Factors Affecting Cost 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
Trang 10Factors 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
Trang 11Factors 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
Trang 12Factors Affecting Cost 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
Trang 13Factors 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
Trang 14Factors 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
Trang 15Factors 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
Trang 16Factors Affecting Cost Management
Efficiency
– While quality and time are important,
improving these dimensions without
corresponding improvements in financial performance may be futile, if not fatal
Trang 17The Role of Cost and Management
Trang 18The 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
Trang 19The Role of Cost and Management
Trang 20The Role of Cost and Management
Accountant
Continuous Improvement
– Required in a dynamic environment if a firm is
to remain competitive or to establish a
Trang 21The 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
Trang 22Accounting and Ethical Conduct
Benefits 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
Trang 23Certified 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
Trang 25COST MANAGEMENT
Accounting & Control
Hansen▪Mowen▪Guan
End Chapter 1