Cost Accounting Fundmentals 01

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2014 by McGraw-Hill Education. This is proprietary material solely or authori!ed instructor use. "ot authori!ed or sale or distribution in any

manner. This document may not be copied# scanned# duplicated# orwarded# distributed# or posted on a website# in whole or part.


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PowerPoint Authors:

Susan Coomer Galbreath, Ph.D., CPA

Charles W. Caldwell, D.B.A., CMA

Jon A. Booker, Ph.D., CPA, CIACnthia J. !oone, Ph.D., CPA

Copyright 2014 by The McGraw-Hill Companies, Inc !ll rights reser"e#McGraw-Hill$Irwin

Cost Accounting: Informationfor Decision Making

Chapter 1


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Value Chain

"he value chain des#ribes a set o$ a#ti%ities that

trans$orms raw materials and resour#es into the &oodsand ser%i#es end users 'ur#hase and #onsume.

LO 1-1 Des#ribe the wa mana&ers use a##ountin&in$ormation to #reate %alue in or&ani(ations.

LO

1-1

Value-AddedValue-Added

ActivitiesActivities

Those activities thatThose activities that

customers perceive ascustomers perceive as

adding utility to the goodsadding utility to the goodsor services they purchase.or services they purchase.


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The Value Chain Components

Produ#tion

LO

1-1


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Accounting Systems

)inan#ial

a##ountin&

)inan#ial

'osition andin#ome

!e'orts

Cost

a##ountin&

In$ormation

about #osts

!e'orts

LO 1-2 Distin&uish between the uses and users o$ #osta##ountin& and $inan#ial a##ountin& in$ormation.

LO

1-2


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Managerial Decisions

Indi%iduals make de#isions.

De#isions determine the 'er$orman#e o$ the

or&ani(ation.

Mana&ers use in$ormation $rom the a##ountin&sstem to make de#isions.

*wners e%aluate or&ani(ational and mana&erial

'er$orman#e with a##ountin& in$ormation.

LO 1-3 +'lain how #ost a##ountin& in$ormation is used$or de#ision makin& and 'er$orman#e e%aluationin or&ani(ations.

LO

1-3


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Differential Costs

Costs that #han&e in

res'onse to a

'arti#ular #ourse o$

a#tion.

Di$$erential #osts#han&e -di$$er

between a#tions.

LO

1-3


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Differential Revenues

!e%enues that

#han&e in res'onse

to a 'arti#ular

#ourse o$ a#tion.

Di$$erential re%enues

#han&e -di$$er

between a#tions.

LO

1-3


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Costs for Control andEvaluation

A res'onsibilit #enter is a s'e#i$i# unit o$ an

or&ani(ation assi&ned to a mana&er who is

held a##ountable $or its o'erations and

resour#es.

LO

1-3

LO


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Trends in Cost Accounting

/. !esear#h and de%elo'ment

0. Desi&n

1. Pur#hasin&

2. Produ#tion

3. Marketin&

4. Distribution

5. Customer ser%i#e6. +!P 7 +nter'rise resour#e 'lannin&

8. Creatin& %alue in the or&ani(ation

LO 1-4 Identi$ #urrent trends in #ost a##ountin&.

LO

1-4

LO


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Cost Accounting inResearch and Development

9ean manu$a#turin& te#hniues are not sim'labout 'rodu#tion.

Com'anies 'artner with su''liers in the

de%elo'ment sta&e to ensure #ost;e$$e#ti%edei&ns $or 'rodu#ts.

LO

1-4

LO


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Cost Accounting in Design

Produ#t desi&ners must write detaileds'e#i$i#ations on a 'rodu#t


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Cost Accounting in Purchasing

Per$orman#e measurement indi#ates how well a

'ro#ess is workin&.

It minimi(es unne#essar transa#tion 'ro#esses.

Ben#hmarkin& methods measure 'rodu#ts,

ser%i#es, and a#ti%ities a&ainst the best

'er$orman#e.

Ben#hmarkin& is an on&oin& 'ro#ess resultin& in

#ontinuous im'ro%ement.

LO

1-4

LO


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Cost Accounting in Production

A lean a##ountin& sstem 'ro%ides

measures at a work #ell or 'ro#ess le%el.

JI" is an in%entor sstem desi&ned tolower the #ost o$ maintainin& e#ess

in%entor.

LO

1-4

LO


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Cost Accounting in Marketing

Cost relationshi' mana&ement

-C!M is a sstem that allows

$irms to tar&et 'ro$itable

#ustomers b assessin& #ustomerre%enues and #osts.

=arrah


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Cost Accounting in Distribution

*utsour#in& o##urs when a $irm


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Cost Accounting inCustomer Service

"M is a mana&ement method

whi#h $o#uses on e#ellin& in all

dimensions.

Cost o$ ualit is a sstem that

identi$ies the #ost o$ 'rodu#in& low

ualit items.

"he em'hasis is 'la#ed on ualit.

ualit is de$ined b the #ustomer.

LO

1-4

LO


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Enterprise Resource Planning

In$ormation te#hnolo& linkin& %arious'ro#esses o$ the enter'rise into a sin&le

#om'rehensi%e in$ormation sstem

"e#hnolo&

Pur#hasin&

=uman

!esour#es

Marketin&

Produ#tion

)inan#e

LO

1-4

LO


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Key Financial Playersin an Organization

Chie$ $inan#ial

o$$i#er -C)*

Mana&es entire $inan#e

and a##ountin& $un#tion

Si&ns o$$ on $inan#ial

statements

Maor !es'onsibilities +am'le A#ti%ities"itle

LO

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LO


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Ethical Issues for Accountants

"he desi&n o$ the #ost a##ountin& sstemhas the 'otential to be misused to de$raud

#ustomers, em'loees, or shareholders.

LO 1-5 nderstand ethi#al issues $a#ed b a##ountantsand was to deal with ethi#al 'roblems that ou$a#e in our #areer.

LO

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LO


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Ethics

)ollow the Institute o$ Mana&ement A##ountants -IMA&uidelines:

C9A!I) the rele%ant issues and #on#e'ts b

dis#ussion with a disinterested 'art or #onta#t the

a''ro'riate #on$idential ethi#s >hotline.?

DISCSS #on$li#ts with the immediate su'erior, unless thesu'erior is in%ol%ed. I$ so, &o to the net authorit le%el.

C*@S9" an attorne about our ri&hts and

obli&ations.

LO

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LO


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Sarbanes-Oxley Act of 2002

What is the

intentE

Who is

im'a#tedE

=ow are

#or'orations

im'a#tedE

Address 'roblemo$ #or'orate

&o%ernan#e

A##ountin& $irms

and

#or'orations

Cor'orate

res'onsibilit

O

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LO


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Corporate Responsibility

ho is impacted!

hat is the impact!

F C+* 7 Chie$ +e#uti%e *$$i#er

7 Mana&es entire #or'orationF C)* 7 Chie$ )inan#ial *$$i#er

7 Mana&es a##ountin& and $inan#e

F "he o$$i#ers o$ the #or'oration must si&n the $inan#ial

re'orts sti'ulatin& that the $inan#ial statements do notomit material in$ormation.

F "he #om'an must dis#lose the e%aluation o$ their

internal #ontrols.

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Appendix: Institute of Management

Accountants Code of Ethics

"ompetence"ompetence "on#identiality"on#identiality

$ntegrity$ntegrity "redi%ility"redi%ility


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End of Chapter 1

Cost Accounting Fundmentals 01

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