Professional Documents
Culture Documents
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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
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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
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Performance evaluation
Feedback should be positive and negative
Aims:
Institution of improvements
Implementation of corrective actions
Means of motivation
Strategic implementation
Evaluation and control
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evels 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
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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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2
a
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 D
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
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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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