Chapter 1: Cost Management and Strategy Flashcards
(30 cards)
What is cost management information?
information developed and used to implement strategy, consisting of financial and non-financial information (customer retention, productivity etc.) key to success
What is cost management?
development and use of cost management information
What is management accounting?
profession involving partnering in management decision making and performance management systems, providing expertise in financial reporting and control to assist management in formulation and implementation of organization’s strategy.
What are the stages of an organization’s information value chain?
- Business need and business event
- Data
- Information (real or estimates)
- Knowledge
- Decision
Phases 2 and 3 are the Management accounting’s conceptual design.
What are the main focus and objectives of 1) cost management information and 2) financial reports?
Main focus of cost management information: Usefulness and timeliness
Focus of financial reports: accuracy and compliance
What are the four major management functions?
- Strategic management
- Planning and decision making
- Management and operational control
- Preparation of financial statements
What is strategic management as a function of management?
development and implementation of sustainable competitive positions
What is the planning and decision making management function?
Budgeting and profit planning, cash flow management, and other decisions related to operations
What is management and operational control as a management function?
- Management control: system used by C-levels to evaluate performance of mid-level managers
- Operational control: monitoring of short-term operating performance; takes place when mid-level managers monitor activities of operating-level managers and employees
What is preparation of financial statements as management function?
requires management to comply with financial reporting requirements and regulatory agencies.
Name the three types of organizations?
- Manufacturing firms (use materials, labor and facilities to produce products
- Service firms (provide services offering convenience, freedom, safety or comfort
- Governmental and not-for-profit organizations (provide services for which no relationship between payment and services provided exists, such as public goods)
Which six factors caused modification of cost management practices?
- Continuing growth in global competition and increasing international trade
- Lean manufacturing
- Advances in information technologies and ERP management
- Continued focus on customers
- New forms of management organization
- Changes in social, political and cultural environment
What is economic nationalism?
ideology promoting domestic growth and opposes globalization and free trade. Countermovement to international trade. Important element is tariffs to protect domestic workers and industries.
What are critical success factors?
Performance measures of aspects of the firm essential to competitive advantage and success of the firm. Can be both financial and non-financial.
What is a balanced scorecard?
accounting report including firm’s CSF’s in four areas: (1) financial performance, (2) customer satisfaction, (3) internal processes and (4) learning and growth
What is a strategy map?
Graphical representation of organization’s value proposition, which is used to depict causes and effects embodied in various perspectives of organization’s BSC.
What is value chain?
analytic tool firms use to identify specific steps required to provide product or service to customer.
What is activity analysis?
development of a detailed description of specific activities in firm’s operations. ABC approach = Activity based costing
What is business analytics?
approach to strategy implementation in which management accountant uses data to understand and analyze business performance. Often used for predictive analysis
What is target costing?
Desired cost for product is determined on basis of given competitive price, so product will earn a desired profit. Often forces firm’s to significantly reduce costs and become more competitive.
What is life-cycle costing?
method used to identify and monitor costs of products throughout their lifecycles.
What are the five different stages in the life cycle?
- Research and development
- Product design, prototyping, target costing and testing
- Manufacturing, inspecting, packaging etc.
- Marketing, promotion and distribution
- Sales and service
What is benchmarking?
Identifying CSF’s, studying best practices of other firms for achieving these CSF’s and implementing improvements in the firm’s processes to match or beat competitor’s performance.
What is business process improvement?
management method by which managers and workers commit to a program of continuous improvement in quality and other CSF’s.
