Professional Documents
Culture Documents
Learning Objectives
Explain the use of cost management information for
each of the four functions of management and in
different types of organizations, with emphasis on
the strategic management function
Explain how the contemporary business
environment has influenced cost management
Explain contemporary management techniques and
how they have influenced cost management
Blocher,Stout,Cokins,Chen, Cost Management 4e
Learning Objectives
(continued)
Explain different competitive strategies that
companies can pursue
Describe the professional environment of the
management accountant, including professional
organizations and professional certifications
Understand the principles and rules of professional
ethics and explain how to apply them
Blocher,Stout,Cokins,Chen, Cost Management 4e
Introduction to Strategy
Success comes from developing and
implementing an effective strategy aided by
management accounting methods
Clear mission statement
Strategy is a roadmap to achieve a companys
mission
Competitive Strategies
A firm succeeds by implementing a set of
policies, procedures, and approaches to
business called strategy
Strategy must have a long-term focus and adapt
to the changing environment
Cost management information should be used to
develop and monitor strategic information
Blocher,Stout,Cokins,Chen, Cost Management 4e
Cost Leadership
Strategic
Target
Basis of
competitive
advantage
Unique product or
service
Product line
Limited selection
Wide variety
Production
emphasis
Marketing
emphasis
Low price
Differentiation
Vice President
for Marketing
Vice President
for Operations
Controller
Treasurer
Chief Information
Officer (CIO)
Cost Management
Financial Systems
Financial Reporting
Other Reporting Obligations (e.g., tax)
Blocher,Stout,Cokins,Chen, Cost Management 4e
Cost management
Internal users
Emphasis on usefulness and timeliness, key
characteristics of decision-relevant information
10
Four Functions of
Management
Cost management information is
assembled to aid management in
the following functions:
Strategic management
Planning and decision-making
Management and operational control
Preparation of financial statements
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Management Functions
Strategic management
Most important management function
Involves identifying and implementing goals and
action plans to maintain a competitive advantage
Monitoring of Critical Success Factors (CSFs) is
necessary
Critical to a firms success due to global competition
and rapidly changing markets
Strategic cost management information vs.
traditional cost management?
Blocher,Stout,Cokins,Chen, Cost Management 4e
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Types of Organizations
Manufacturers
Manufacturers
Merchandisers
Merchandisers
Wholesalers
Wholesalers
Service
Service
firms
firms
Government
Governmentand
and
Not-for-profit
Not-for-profit
Retailers
Retailers
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Stage Two
Stage Four
19
Contemporary Management
Techniques
Benchmarking
Process by which a firm identifies its CSFs,
studies the best practices of other firms in
achieving these CSFs, and institutes change
based on the assessment results
20
Contemporary Management
Techniques (continued)
Business Process Improvement
Often associated with the previous two techniques,
this method involves managers and workers
committing to a program of continuous improvement
in quality and other CSFs
21
Contemporary Management
Techniques (continued)
Reengineering
Process for creating a competitive advantage in
which the firm reorganizes its operating and
management functions, often resulting in modified,
combined, or eliminated jobs
22
Contemporary Management
Techniques (continued)
Mass Customization
Customers expect products and services to be
tailored to their unique needs creating the need for
smaller production runs
Target Costing
Target Cost = Market-determined price Desired
Profit
23
Contemporary Management
Techniques (continued)
Life-Cycle Costing
Costs should be monitored throughout a products
life cycle from research and development to sales
and service
Traditionally, only the costs incurred for
manufacturing, inspecting, packaging, and
warehousing were monitored
24
Contemporary Management
Techniques (continued)
The Balanced Scorecard (BSC)
An accounting report that addresses a firms
performance in four areas: financial, customer,
internal business processes, and innovation and
learning
Financial measures reflect only a partial, and
frequently only a short-term, measure of a firms
progress so the BSC incorporates both financial
and nonfinancial information
Blocher,Stout,Cokins,Chen, Cost Management 4e
25
Professional Organizations
Organizations that provide guidelines and
regulations:
Internal Revenue Service (IRS), Federal Trade
Commission (FTC), Securities and Exchange
Commission (SEC), etc.
26
Professional Certifications
There are three main certifications that are
relevant for management accountants:
Certified Management Accountant (CMA)
Certified Financial Manager (CFM)
Certified Public Accountant (CPA)
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Chapter Summary
Cost management information is used in all four of
the management functions and is important in the
pursuit of a firms mission and goals
The contemporary business environment expects
fast results and has influenced the role of the
management accountant
There were several contemporary management
techniques noted in this chapter that influence the
collection of cost management information
Blocher,Stout,Cokins,Chen, Cost Management 4e
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