1.

Strategy- set of goal and specific action plans to achieve goal and priorities
- “Strategic” effectively means long-term.
2. Strategy Management

2. STRATEGIC COST MANAGEMENT

i. Involves development of cost management information to facilitate the

principal management function
ii. Identifying and implementing these goals and action plans
iii. Emphasis requires an integrative approach combines with skills from all business
function, marketing, production, finance, accounting

2. IMPORTANCE OF COSTS IN DECISION MAKING

i. The cost information system plays an important role in every organization
within the decision-making process. An important task of management is
to ensure the control over operations, processes, activity sectors, and not
ultimately on costs.
ii. The detailed analysis of costs, the calculation of production cost, the loss
quantification, the estimating of work efficiency provides a solid basis for
the financial control.

3. STRATEGIC COST ANALYSIS

i. The goal of the analysis is to determine whether or not one company's
costs are competitive with another's.

4. CONCEPT OF JUST
a. Just in Time
i. is an inventory management method in which goods are received
from suppliers only as they are needed.
ii. The main objective of this method is to reduce inventory holding costs
and increase inventory turnover.

b. Business process reengineering-

i.  management approach aiming at improvements by means of elevating
efficiency and effectiveness of the processes that exist within and
across organizations.
ii. act of recreating a core business process with the goal of improving
product output, quality, or reducing costs.
 5.  Be able to apply cost concepts to cost concepts to management decision making

\ Many business decisions require a firm knowledge of several cost concepts. Different types of
costs have differing characteristics. Consequently, when reviewing a business case to determine
which path to take, it is useful to understand the following cost concepts:

 Fixed, variable, and mixed costs. A fixed cost, such as rent, does not change in lock step
with the level of activity. Conversely, a variable cost, such as direct materials , will
change as the level of activity changes. Those few costs that change somewhat with
activity are considered mixed costs . It is important to understand the distinction, since a
decision to alter an activity may or may not alter costs. For example, shuttering a facility
may not terminate the associated building lease payments, which are fixed for the
duration of the lease.

 By-product costs. A product may be an incidental by-product of a production process

(such as sawdust at a lumber mill). If so, it does not really have any cost, since its cost
would have been incurred anyways as a result of the production of the main product.
Thus, selling a by-product at any price is profitable ; no price is too low.

 Allocated costs. Overhead costs are allocated to manufactured goods only because it is
required by the accounting standards (for the production of financial statements ). There
is no cause-and-effect between the creation of one additional unit of production and the
incurrence of additional overhead. Thus, there is no reason to include allocated overhead
in the decision to set a price for one additional unit.

 Discretionary costs. Only a few costs can actually be dropped without causing any short-
term harm to an organization. Examples are employee training and facility maintenance.
Over the long-term, delaying these expenditures will eventually have a negative effect.
Thus, managers need to understand the impact of their decisions over a period of time
when determining which costs to cut back.

 Step costs. Though some costs are essentially fixed, it may be necessary to make a large
investment in them when the activity level increases past a certain point. Adding a
production shift is an example of a step cost. Management should understand the activity
volumes at which step costs can be incurred, so that it can manage around them -
perhaps delaying sales or outsourcing work, rather than incurring step costs.
All of the cost concepts noted here are critical elements of many types of management
decisions.

6. importance of costs in pricing strategies

i. cost data are most important element. Hence, cost must be relevant to
the pricing decision and under-estimation and exaggeration must be
avoided.
ii. If the company is going to change the higher prices then theses prices might not
be afford by the customers in the market. Thedemand of a product is known as
the sum of the purchasing power and interest of thecustomers. The company is
providing the higher qualitative product and the company isfocusing on the
customer’s priorities and interest in the market so in such circumstances the
purchasing power of the customers plays a significant role.

7.  Apply tools and techniques in making techniques in making decision

i. SWOT Diagram – Creately.

ii. Decision Making Diagram – Lucidchart.
iii. Decision Matrix – Mindtools.
iv. Pareto Analysis – Visual Paradigm.
v. Force Field Analysis – SmartDraw.
vi. Strategy Map – Cascade Strategy.
vii. Break-even analysis – Good Calculators.

8. Design a costing system for an organization

i. A costing system is designed to monitor the costs incurred by a
business. The system is comprised of a set of forms, processes,
controls, and reports that are designed to aggregate and report to
management about revenues, costs, and profitability.

9. Evaluate existing costing systems and propose improvement

i. Cost accounting systems can help companies accurately
cost products, provide valuable operational and financial
information, and even measure performance.
ii. When determining the resources needed to carry out the
evaluation effectively take into account time, money, and
expertise. 
iii. Depending on budgeting and planning processes in your
organization, you may be asked to make a rough estimate of
evaluation costs some time before the start of the evaluation
 planning, and to develop a more detailed budget at a later
stage.
iv.