Cost Accounting Foundations and Evolutions Kinney, Prather, Raiborn

صفحه 1:
Cost Accounting Foundations and Evolutions Kinney, Prather, Raiborn 0 000 7 Chapter 1 Introduction to Cost Accounting 

صفحه 2:
* Describe the relationships among financial, management, and cost accounting * Identify two common organizational strategies * Describe the value chain and the major value chain functions 

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ie. ۰ 5 * Explain how a balance scorecard is used to implement an organization’s strategy ٠ Explain why accountants must understand the organization’s ‏اور 0106177 12 اناك ناتاه‎ effectively 

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ie. ۰ 5 * Identify the sources of ethical standards for cost accountants + List the sources of authoritative pronouncements for the practice of cost accounting 

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ie. ۰ 5 * Provide information to external تتا - Stockholders, creditors, regulators * Estimate the cost of products produced and services provided * Provide information to internal decision makers ~ To plan, control, and evaluate ‎baec‏ ا ا 

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Managerial + External focus * Internal focus Segments or divisions Current/projected * Quantitative/qualitative ‏وس‎ ea a ۰ ۰ آمنه‌صمصز۴ * Whole organization * Historical * Quantitative * Monetary Sa (Sater eC * GAAP * Formal 

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Relationship of Financial, Management, and Cost Accounting 

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- 0 ers, ‏ةم ,5ه نل م02‎ - For investment and credit decisions - Complies with GAAP - Enterprise focus ٠ Internal parties ‏ا ات‎ CcCotsCon end etile) - Evaluating performance - Includes upstream and downstream costs - Disaggregated pW ee Olek TCs 

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1. Develop Mission Statement. 2. Implement strategy 3. Measure and control the value chain and managers’ ‏2م سرعم‎ 4. Set balance scorecard goals, objectives, and targets pW ee Olek TCs 

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ie. ۰ 5 1 ees Mission Statement What an organization wants to accomplish - How its products/services can meet ‏تا ات‎ - Why the organization exists - Used to develop an organization’s - Modify over time 

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2. Implement strategy Strategy - A plan to fulfill goals and objectives by deploying resources to create value for customers and shareholders Organization strategy is supported by business unit strategies pW ee Olek TCs 

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۹ ۰ 5 ٠ Cost leadership strategy - Undercut competitor prices ° Product differentiation strategy - Superior quality products or unique services sold at a premium ° Core competency - critical function or activity providing a competitive advantage 

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3. Measure and control the value chain and managers’ performance Set of -adding functions and tt convert inputs into ‏مت‎ processes products/: 65 Research and Development Product Design Communicate strategy to all members of the — ‏ا‎ . . ,.. 

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Balanced Scorecard et balance scorecard goals, objectives, and targets Business outcomes are evaluated against performance tal Learning Internal andGrowth | Business ‎Financial‏ وتان لكلف 22/013 ‎ ‎ 

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* Learning and Growth * Internal Business ‏ته كنات‎ 61 6 Bt noon ۰ Hines ‏لها‎ ‎- How well the orga erect 5 0 i a“ 5 Mr oe aera ee ۱۳ ‏مره‎ es ional gro 0 

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ie. ۰ 5 ٠ Distribution of authority and responsibility in an organization - Authority - right to use resources to accomplish a task or achieve an objective - ‏انز تعصمح و۴‎ obligation to accomplish a task or achieve an objective 

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۱ Act - CEOs and CFOs personally accountable for the accuracy of their organization’s financial reporting * Foreign Corrupt Practices Act - prohibits bribes to obtain/retain business ° False Claims Act - whistle-blower protection 0 ۳ ۳ 2 ae tion of Economic Cooperation ind Development See 0 crime to offer, promise, give bribes to _ obtain/retain Aes business deals a By ‏کب‎ 

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Ethics & Management 2225 * Standards of Ethical Conduct for Management Accountants - Competence - Confidentiali - Integrity - Objectivity 

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00 Management ۱ pene Oh (sass ohne * IMA 0270 ‏ا‎ sree lames 1 ‏تاصمصه وقع۷1‎ Accountants of Exchange Commission (SEC) Canada SPREE ASSUMING, oF (Olois /Neteerrinann ‏ی ا‎ (CASB) 

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۹ ۰ 5 IMA Statements on Management Accounting (not legally binding) Society of Management Accountants of Canada Management Accounting Guidelines (not legally binding) — Cost Accounting Standards Board (CASB) Government contracting standards (legally binding) 

صفحه 21:
ie. ۰ 5 * What is the relationship among financial, management, and cost accounting? * How is the balance scorecard used to. implement an organization’s strategy? ¢ Where can an accountant find ethical standards for cost accountants? 

Cost Accounting Foundations and Evolutions Kinney, Prather, Raiborn Chapter 1 Introduction to Cost Accounting Learning Objectives (1 of 3) • Describe the relationships among financial, management, and cost accounting • Identify two common organizational strategies • Describe the value chain and the major value chain functions Learning Objectives (2 of 3) • Explain how a balance scorecard is used to implement an organization’s strategy • Explain why accountants must understand the organization’s structure in order to perform effectively Learning Objectives (3 of 3) • Identify the sources of ethical standards for cost accountants • List the sources of authoritative pronouncements for the practice of cost accounting Accountants • Provide information to external parties – Stockholders, creditors, regulators • Estimate the cost of products produced and services provided • Provide information to internal decision makers – To plan, control, and evaluate performance Accounting Differences Financial Managerial • External focus • Whole organization • Historical • Quantitative • Monetary • Verifiable • GAAP • Formal recordkeeping • • • • • • • • Internal focus Segments or divisions Current/projected Quantitative/qualitative Monetary and nonmonetary Timely/reasonable estimate Benefits exceed costs Formal and informal recordkeeping Relationship of Financial, Management, and Cost Accounting Product Costs FINANCIAL COST MANAGEMENT ACCOUNTING ACCOUNTINGACCOUNTING Product Cost Information • External parties - stockholders, creditors, regulators – For investment and credit decisions – Complies with GAAP – Enterprise focus • Internal parties – – – – Planning, controlling, decision making Evaluating performance Includes upstream and downstream costs Disaggregated Organizational Strategy 1. Develop Mission Statement 2. Implement strategy 3. Measure and control the value chain and managers’ performance 4. Set balance scorecard goals, objectives, and targets Organizational Strategy 1. Develop Mission Statement – – – – – What an organization wants to accomplish How its products/services can meet customer needs Why the organization exists Used to develop an organization’s strategy Modify over time Organizational Strategy 2. Implement strategy Strategy - A plan to fulfill goals and objectives by deploying resources to create value for customers and shareholders Organization strategy is supported by business unit strategies Organizational Strategies • Cost leadership strategy Undercut competitor prices • Product differentiation strategy Superior quality products or unique services sold at a premium • Core competency – critical function or activity providing a competitive advantage Value Chain 3. Measure and control the value chain and managers’ performance Set of value-adding functions and processes that convert inputs into products/services – – – – – – – Research and Development Product Design Supply Production Marketing Distribution Customer Service Communicate strategy to all members of the value chain Balanced Scorecard et balance scorecard goals, objectives, and targets Business outcomes are evaluated against performance tar Learning and Growth Customer Value Internal Business Financial Balance Scorecard • Learning and Growth • Internal Business – Things to do well to meet customer needs and expectations • Customer Value – How well the organization is doing relative to important customer criteria • Financial Performance – Stockholders/stakeholders concerns about profitability and organizational growth Organizational Structure • Distribution of authority and responsibility in an organization – Authority – right to use resources to accomplish a task or achieve an objective – Responsibility – obligation to accomplish a task or achieve an objective Ethics and Legislation • Sarbanes-Oxley Act – CEOs and CFOs personally accountable for the accuracy of their organization’s financial reporting • Foreign Corrupt Practices Act – prohibits bribes to obtain/retain business • False Claims Act – whistle-blower protection • Organization of Economic Cooperation and Development Convention – crime to offer, promise, give bribes to obtain/retain internal business deals Ethics & Management Accountants • Standards of Ethical Conduct for Management Accountants – Competence – ConfidentialityCompetence Confidentiality – Integrity Integrity – Objectivity Objectivity Accounting Bodies Financial • Public Company Accounting Oversight Board (PCAOB) • Securities and Exchange Commission (SEC) • Financial Accounting Standards Board (FASB) Management • IMA • Society of Management Accountants of Canada • Cost Accounting Standards Board (CASB) IMA Management Accounting Organizations Statements on Management Accounting (not legally binding) Society of Management Accountants of Canada Management Accounting Guidelines (not legally binding) Cost Accounting Standards Board (CASB) Government contracting standards (legally binding) Questions • What is the relationship among financial, management, and cost accounting? • How is the balance scorecard used to implement an organization’s strategy? • Where can an accountant find ethical standards for cost accountants?