|






     
] |


 Planning
 Always forward looking
 Determining objectives
 Identifying ways and means of attaining
such objectives
 Anticipation of problems
 Identifying ways and means of solving or
removing problems (including potential
ones)
 Examples of tools used: CSF and SWOT
] |



 Directing and Motivating

 Mobilizing people to carry out plans and
run routine operations
 Managers assign tasks to employees,
arbitrate disputes, answer questions, solve
on-the-spot problems and make many
other decisions that may affect employees
and customers
] |



 Controlling
 Monitoring and evaluating whether the
plans are being carried out in the manner
that they should be implemented
 Performance measures
 ƠYou simply canƞt manage anything you canƞt measure Ơ
Richard Quinn - Vice-President Sears Merchandising
Group
 ƠMeasures provides clear, visible targets throughout the
organizationơ - Thomas Rosetta - Gilbarcoƞs Manager
] |


 Performance evaluation
 Feedback should be positive and negative
 Aims:
 Institution of improvements
 Implementation of corrective actions
 Means of motivation

ƠWhat gets measure gets done,

But if we measure the wrong things,
The wrong things will be done, and
The wrong things may be done very wellơ
] |


 Performance evaluation
 Feedback should be positive and negative
 Aims:
 Institution of improvements
 Implementation of corrective actions
 Means of motivation

ƠWhat gets measure gets done,

But if we measure the wrong things,
The wrong things will be done, and
The wrong things may be done very wellơ
]  |


 Strategic management involves a
comprehensive analysis of the
organizationƞs environment
 The strategic management process
involves:
 Strategic analysis
 Strategic choice Strategic Planning

 Strategic implementation
 Evaluation and control
]  |


 Œevels of strategic planning
 Corporate strategy
 Business strategy
 Functional strategy
 Benefits of strategic management
 Clearer sense of the strategic vision of the
organization
 Sharper focus on what is strategically important
 Improved understanding of a rapidly changing
environment
] 




 Definition
 Process of identifying, measuring,
accumulating, analyzing, preparing,
interpreting, and communicating
Ô
Ô to meet the needs of the
intended audience
  main types
 Financial Accounting (FA)
 Management Accounting (MA)
 ] |





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 Revolutions in the business environment is
having a profound effect on the practice of
managerial accounting
 Just-In-Time (JIT)
 Total Quality Management (TQM)
 Process Reengineering
 Theory of Constraints (TOC)
 International competition
 E-Commerce
  


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 Regardless of the selected competitive
strategy/strategies, cost management is a
very important issue.
 The level of the     determines the
amount of the various   assigned to a
  .
 
  
 Cost
 Def: Cash or cash-equivalent value sacrificed for
goods and services that are expected to bring a
current and/or future benefit to the organization.
 Cost can either be capitalized or expensed
 
  !
 Cost Object
 Def: Any item for which costs are accumulated
and assigned
 Cost object may be a product, a department in
the company, a project, an activity and so on. For
example:
 Wharton wants to know how much it costs to conduct a course
in financial accounting. The cost object is the Ơcourse in
financial accountingơ.
 If a software developer wants to know the cost of developing a
software, then the cost object is the Ơsoftwareơ.
 In A(ctivity) B(ased) C(osting) - activities are the cost objects.
 
  !
 Cost accumulation - Collection of cost data
in some organized way through an
accounting system
 Cost assignment - Tracing (for direct costs)
and the allocating (for indirect costs) of
accumulated costs to a cost object to help
decision making, and facilitate product or
customer profitability analysis
 
  !
 Direct costs ƛ Costs related to a particular cost
object that can be traced to it in an
economically feasible way, e.g. DM or DŒ
 Indirect costs ƛ Costs related to a particular
cost object through a selected cost allocation
method, e.g. OH
 Factors affecting direct/indirect cost
classifications
 Materiality of the cost in question
 Available information-gathering technology
 Design of operations
 Contractual arrangements
 
  !

 Summary of Cost Objects

 Cost tracing - Assignment of direct costs to
cost objects
 Cost allocation - Assignment of indirect
costs to cost objects
 
   
 Cost Driver: A factor, such as the level
of activity or volume, that causally
affects costs
 A cause and effect relationship exists
between a change in the level of activity or
volume and change in the level of the total
costs of that cost object. For example:
 The number of copies of books printed is the
cost driver of the cost of paper consumed.
 
   

 Types of cost drivers

 Structural cost drivers: Fundamental
choices about the size and scope of
operations and technologies employed in
delivering products or services to
customers
 Organizational cost drivers: Choices
concerning the organization of activities
and the involvement of persons inside and
outside the organization in decision making
 
   
 Activity cost drivers: Specific units of work
(activities) performed to serve customer
needs that consume costly resources
 

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å Deciding to work closely with a limited
number of suppliers.
å Providing employees with cost information
and authorizing them to make decisions.
å Deciding to reorganize the existing
equipment in the plant so that sequential
operations are closer.



 
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å Designing components of a product so they
can only fit together in the correct manner.
å Deciding to manufacture a low volume
product on low-speed, general-purpose
equipment rather than high-speed, special-
purpose equipment.
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