Cost Accounting

Accounting system provide the information found in a firm’s income statement , balance sheet, statement of cash flow . performance report.

An ERP system is a single datebase that collects data and feeds them into applications that support a company’s business activities . such as purchasing , production , distribution and sales.

Financial accounting focuses on reporting financial information to external parties such as investors , govts, banks and suppliers based on GAAP.

Management accounting is the process of measuring , analyzing and reporting financial and nonfinancial information that helps managers make decisions to fulfill the goals of the organizations.

Cost accounting is the process of measuring , analyzing and reporting financial and nonfinancial information related to the costs of acquiring or using resources in an organization.

Cost management  (1) Reducing costs

                                   (2)Making decision to incur additional costs ( Marketing)

Strategic Management describes the cost management that specifically focuses on strategic issues , For example , How can we be more competitive / Target customer group/ Product differentiation/ Critical Capability

• Goal : Increase the market share / Gain the competitive edge

Value-Chain Analysis ( Trace the cost and improve efficiency)

1. Research and Development
2. Design of products and process
3. Production
4. Marketing
5. Distribution
6. Customer Services

Customer Relationship Management (CRM)

A Strategy that integrates people and technology in all business functions to deepen relationships with customers , partners and distrubutors.

Supply chain analysis

The flow of goods, services and information from the initial sources of materials and services to the delivery of products to consumers , regardless of whether those activities occur in one organization or multiple organizations.

Key Success Factor

1. Cost and efficiency ( Management accounting info. Helps manager calculate a target cost for a product by subtracting from the “ target price “ the operating income per unit of pdt that the company wants to earn
2. Quality ( Total Quality Management ( Continuous increase in the quality )
3. Time ( new product development and customer response time)
4. Innovation
5. Sustainability

Decision Making ( 5 Step process)

1. Identifying the problem and uncertain
2. Obtain information
3. Make predictions about the future
4. Make decisions by choosing among alternatives
5. Implement the decision, evaluate performance and learn

Key Management Accounting Guidelines

1. Cost Benefit Approach ( Only spend resources if the expected benefits > expected costs)
2. Behavioral and Technical Considerations
3. Different Costs for Different purposes

Organization Structure and the Management Accountant

1. Line Management: Directly responsible for achieving goals of the organization
2. Staff management : Provide advice , support and assistance to line management
3. Chief Financial Officer (CFO): Overseeing the financial operations of the company ( Treasury / Controllership/Risk Management/Taxation/Investor relations/ Strategic planning)

Professional Ethics( IMA- Institute of Management Accountants)

1. Competence

• Maintain an appropriate lv. of professional expertise by continually developing knowledge and skills
• Perform professional duties in accordance with relevant laws , regulations and technical standards
• Provide decision support information and recommendations that are accurate , clear , concise and timely
• Reco

Direct Cost – The particular cost object and can be traced to it in an economically feasible ( cost effective ) way

Indirect cost – The particular cost object but cannot be traced to it in an economically feasible ( cost effective ) way

Factors affecting direct/indirect cost classifications

1. The materiality of the cost in question
2. Available information-gathering technology
3. Design of operations

Variable cost – Cost increases in related in the increase in cost volume