Post on 19-Dec-2014
description
BPC 32603Industrial Production Costing
Lecturer:Kamilah Ahmad
Topic 1: IntroductionCost Management Concept
The objectives of cost management
Chapter Learning Outcomes
• Acknowledge the basic concept of cost management in production /operation environment
• Identify the importance of cost management for decision making
Cost management concept
Cost is something of value given up in exchange for something else. It is price paid to acquire some goods or services that includes money, materials, labor and time.
Cost management is the process by which companies control and plan the costs of doing business.
Cost accounting provides the detailed cost information that management needs to control current operations and plan for the future
The objectives of cost management
i. For cost controlling
ii. To ensure adequate supply of funds from the right source at the right cost and at the right time to the firm to meet its funding needs.
The use of cost information
i. Determine selling price
ii. Meeting competition
iii. Bidding on contracts
iv. Analyzing profitability
v. Planning and control
vi. To take necessary corrective action
Cost Management in Perspective
Cost Management in perspective
Know
you
r cos
t of
doin
g bu
sine
ss
Know your cost of producing your services
/products
Know your cost of producing your services
/products
Know your cost of doing business
Know your cost of serving customers
Stay competitive and
relevance in businessStay com
petitive and relevance in business
Role of Management Accountant
The Importance of Cost Management
i. Determinant of Business Success
ii. Focal point of Decision making
iii. Measurement of performance
iv. Optimal Utilization of Resources
Production process in manufacturing environment
Process Management
Business functions making up the value chain
Product Customer R&D Design Manufacturing Marketing Distribution Service
A businessprocess is a series of
steps that are followed in order tocarry out some task in
a business.
Productions Flow
INPUT CONVERSION OUTPUT
MATERIAL + LABORProducts Services Products &
Services
TECHNOLOGY / SYSTEMS
Planning
Controlling
Managing Customer Satisfaction
Customer Focus
END OF TOPIC ITopic I