A325 Cost Accounting

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A325Cost Accounting

• January 13, 2011

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What we will do today

1. Introduce the course and ourselves
2. Go over the syllabus
3. Have an abbreviated discussion of chapters 1 and
   2.
4. Get started with Chapter 3

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Syllabus
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Syllabus - materials

• Cost Management A strategic emphasis
• Blocher, Chen, Cokins, and Lin (5ed)

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Syllabus - the way things work

• Regular updates/modifications to they syllabus
  will be on ONCOURSE
• YOU ARE RESPONSIBLE FOR THESE

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Syllabus
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A little about me
Reed Smith Accounting (BS, MAcc Tennessee) (PhD,
Ohio State) (Faculty Texas, Oregon,
SUNY-Buffalo, Indiana University) e-mail
jrsmith2_at_iupui.edu I am a big college
football enthusiast. I also like to sail and
swim. I play Zimbabwean music on Marimba and
Mbira. I used to play guitar, but dont find
much time to do that any more.
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Four Functions of Management
Strategicmanagement
Planning anddecision making
Management and operational control
Preparation offinancial statements
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Strategic Cost Management

• Strategic cost management is the development of
  cost management information to facilitate the
  principal management function, strategic
  management

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Strategic Management

• Strategic management requires
• Anticipating changes
• Understanding the business andcompetitive
  environment
• Ability to make changes quickly
• Ability to identify and solve problemsfrom a
  cross-functional view

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Types of Organizations

Merchandisers
Manufacturers
Servicefirms
Government and Not-for-profit
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Changes in Business Environment

• Increase in global competition
• Advances in manufacturing technologies
• Advances in information technologies
• Greater focus on the customer
• New forms of management organization
• Social, political, and cultural changes

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Target Costing
Identify product opportunity.
Determine price that wouldmake product
competitive.
Determine if product can be made at cost
sufficiently low to provide a desired profit.
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The Value Chain

• The value chain is an analysis tool firms use to
  identify the specific steps required to provide a
  product or service to the customer
• An analysis of the firms value chain helps
  management discover
• which steps or activities are not competitive
• where costs can be reduced
• which activity should be outsourced

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The Balanced Scorecard

• The balanced scorecard is an accounting report
  that includes the firms critical success factors
  in four areas
• Financial performance
• Customer satisfaction
• Internal business processes
• Innovation and learning

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The Balanced Scorecard
Learning improvesbusiness processes.
Improved businessprocesses improvecustomer
satisfaction.
Improving customersatisfaction
improvesfinancial results.
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Strategic Positioning

• Firms arrive at one of two competitive
  strategies
• Cost leadership is a competitive strategy in
  which a firm succeeds in producing products or
  services at the lowest cost in the industry
• Differentiation is a competitive strategy in
  which a firm succeeds by developing and
  maintaining a unique value for the product as
  perceived by consumers