Cost Management and Strategy

Overview
 Management Accounting and the Role
of Cost Management
Cost  Management accountants are the
Management accounting and finance professionals
and Strategy who develop and use cost management
Overview
information to assist in implementing the
organization’s strategy.
  Cost management information consists of
financial information about costs and revenues
and nonfinancial information about customer
Cost retention, productivity, quality, and other key
Management success factors for the organization.
and Strategy  Cost management is the development and use
Overview
of cost management information
 Development of Cost Management
Information in a firm’s value chain
Cost  Business Events
Management  Data
and Strategy  Information
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 Knowledge
 Decisions
 Four Major Management Functions
Cost  Strategic Management
Management  Planning and Decision Making
and Strategy  Management and Operational Control
Overview  Reportorial and Compliance to Legal Requirements
 Cost Strategic Management
Management  Development and implementation of a sustainable competitive

and Strategy position in which the firm’s competitive advantage provides

continued success.
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 Strategic Management
 Competitive advantage is attained
Cost through having the following:
Management • Superior quality
and Strategy • Superior innovation
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• Superior efficiency
• Superior customer responsiveness
 Cost Customer Value
Management • Customer Realization – Customer
and Strategy Sacrifice
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 Planning and Decision Making
This major function of management Involves the
following:

Cost  Budgeting and profit planning

Management  Cash flow management

and Strategy  Other decisions related to operation such as:

Overview • Lease or buy
• Repair or replace
• Change marketing plan
• Begin new product
 Operational and Management Control
 Operational Control
Cost • Mid-level managers monitor the activities of
Management operating-level managers and employees
and Strategy  Management Control
Overview • Evaluation of mid-level managers by upper
level managers
 Reportorial and Compliance to Legal
Requirements
Cost  Compliance with the reporting requirements of
Management relevant groups and relevant government
and Strategy agencies.
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 The financial statement information serves the
other three major management functions.
 Cost
Management  Use of Cost Management Information to Functions of
Management
and Strategy
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 Cost
Use of Cost Management Information to
Management Functions of Management
and Strategy
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  Strategic Management
Cost  Planning and Decision Making
Management  Management and Operational Control

and Strategy  Reportorial and Compliance to Legal Requirements

Overview