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AE 23 Module 1 INTRO to Strategic Cost Management

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COLLEGE OF COMMERCE
BACHELOR OF SCIENCE IN ACCOUNTANCY PROGRAM
MODULE PACKET
AE 23 – Strategic Cost Management
MODULE 1 OVERVIEW:
Welcome to Module 1 – INTRODUCTION TO STRATEGIC COST MANAGEMENT
In this module, we will discuss the overview of cost management and strategy. Topics
discussed includes professional environment of cost management, contemporary
business environment and strategic focus of cost management, and developing a
competitive strategy and contemporary cost management technique.
CONSULTATION HOURS:
Phone or Messenger:
Virtual time: Class Schedule
MODULE 1 LEARNING OBJECTIVES:
By the end of this module, the students will be able to:
1. explain what strategic cost management is and how it can be used to help a firm create
a competitive advantage.
2. describe the more recent changes in contemporary business environment and explain
the strategic focus of cost management
3. discuss what are the contemporary cost management techniques and how is this
used in developing a competitive strategy
2021-2022 Module Packets for AE 23 (Strategic Cost Management) | College of Commerce |
University of San Agustin, Iloilo City, 5000, Philippines
Page 1 of 17
COLLEGE OF COMMERCE
BACHELOR OF SCIENCE IN ACCOUNTANCY PROGRAM
Module 1: Course Content:
Below is the schedule for Module 1:
Activity
Description
Time to
Complete
Assigned Reading
Introduction to Strategic Cost Management
a. Overview of Cost Management and
Lecture Discussion
30 minutes
60 minutes
Strategy
b. The Contemporary Business Environment
and Strategic Focus of Cost Management
c. Developing a Competitive Strategy and
Contemporary Cost Management
Technique
ACTIVITY
EXERCISES – CASE ANALYSIS
120 minutes
ASSESSMENT
SUMMATIVE QUIZ
60 minutes
*Suggested Readings:
Cabrera, Ma. Elenita B. and Cabrera, Gilbert Anthony B. (2019). Strategic Cost
Management. GIC Enterprises & Co., Inc.
Chapter 1
Overview of cost management and strategy
Chapter 2
The professional environment of cost management
Chapter 3
The contemporary business environment and strategic focus of
cost management
2021-2022 Module Packets for AE 23 (Strategic Cost Management) | College of Commerce |
University of San Agustin, Iloilo City, 5000, Philippines
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COLLEGE OF COMMERCE
BACHELOR OF SCIENCE IN ACCOUNTANCY PROGRAM
Chapter 4
Developing a competitive strategy and contemporary cost
management techniques
Any book or related reading materials on the topic.
LECTURE DISCUSSIONS
I.
Overview of Cost Management and Strategy
1. Definition of Concepts
Strategy - a set of policies, procedures and approaches to business the produce
long-term success
Strategic management – involves the development of a sustainable competitive
position
Strategic cost management – involves development of cost management
information to facilitate the principal management function which is strategic
management
Cost management information – the information that the manager needs to
effectively manage the firm, profit-oriented as well as not-for-profit organization
Cost management – is the practice of accounting in which the accountant
develops and uses cost management information
2. Users of cost management information
a. Business firms
1. Merchandising
2. Manufacturing
3. Service
b. Government units
c. Not-for-profit organization
3. Uses of Cost management Information
a. Strategic management – development of cost management information to
facilitate the principal management function
2021-2022 Module Packets for AE 23 (Strategic Cost Management) | College of Commerce |
University of San Agustin, Iloilo City, 5000, Philippines
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COLLEGE OF COMMERCE
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b. Planning and decision – support recurring decision
c. Management and operational control – to provide a fair and effective basis for
identifying inefficient operations and reward and motivate the most effective manager.
d. Reportorial and compliance to legal requirements
II.
Contemporary Business Environment and Strategic Focus of Cost
Management
1. Contemporary business environment
a. Increase in global competition
b. Advances in manufacturing technologies
c. Advances in information technologies, the internet, and e-commerce
d. A greater focus on the customer
e. New forms of management organization
f. Changes in the social, political, and cultural environment of business
COMPARISON OF PRIOR AND CONTEMPORARY BUSINESS ENVIRONMENT
PRIOR BUSINESS
ENVIRONMENT
CONTEMPORARY
BUSINESS
ENVIRONMENT
MANAGEMENT ORGANIZATION
Type of information
recorded and reported
Almost exclusively
financial data
Management
organizational structure
Hierarchal, command and
control
Financial and operating
data, the firm’s strategic
success factors
Network-based
organization forms,
teamwork focus –
employee has more
responsibility and control,
coaching rather than
command and control
2021-2022 Module Packets for AE 23 (Strategic Cost Management) | College of Commerce |
University of San Agustin, Iloilo City, 5000, Philippines
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Management focus
Emphasis on the shortterm performance
measures and
compensation, concern for
sustaining the current
stock price, short tenure
and high mobility of top
managers
Emphasis on the longterm, focus on the critical
success factors,
commitment to the longterm success of the firm,
including adding
shareholder value
MANUFACTURING
Basis of compensation
Manufacturing process
Standardization,
economies of scale
High volume, long
production runs, significant
levels of in-process and
finished inventory
Manufacturing technology
Assembly-line automation,
isolated technology
applications
Required labor skills
Machine-paced, low-level
skills
Acceptance of a normal or
usual amount of waste
MARKETING
Relatively few variations,
long product life cycles
Emphasis on quality
Products
Markets
III.
Largely domestic
Quality, functionality,
customer satisfaction
Low volume, short
production runs, focus on
reducing inventory levels
and other non-value-added
activities and costs
Robotics, flexible
manufacturing systems,
integrated technology
applications connected by
networks
Individually and teampaced, high-level skills
Goal of zero defects
Large number of
variations, short product
life cycles
Global
Developing a Competitive Strategy and Contemporary Cost
Management Technique
a. STRATEGIC MEASURES OF SUCCESS
2021-2022 Module Packets for AE 23 (Strategic Cost Management) | College of Commerce |
University of San Agustin, Iloilo City, 5000, Philippines
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Financial performance measures;
1. Growth in sales
2. Cash flows
3. Stock price
Non-financial measures of operation include
1. Market share
2. Product quality
3. Customer satisfaction
4. Growth opportunities
2021-2022 Module Packets for AE 23 (Strategic Cost Management) | College of Commerce |
University of San Agustin, Iloilo City, 5000, Philippines
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SOURCE: Cabrera, Ma. Elenita B. and Cabrera, Gilbert Anthony B. (2019). Strategic Cost Management. GIC Enterprises & Co., Inc.
2021-2022 Module Packets for AE 23 (Strategic Cost Management) | College of Commerce |
University of San Agustin, Iloilo City, 5000, Philippines
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b. Consequences of Lack of Strategic Information
SOURCE: Cabrera, Ma. Elenita B. and Cabrera, Gilbert Anthony B. (2019). Strategic Cost Management. GIC Enterprises & Co., Inc.
c. COMPETITIVE STRATEGIES
1. Cost leadership – a firm succeeds in producing products or services at the lowest
cost in the industry
2. Product differentiation – implemented by creating a perception among
consumers that the product or service is unique in some important way, usually
by being higher quality, features or innovation.
SOURCE: Cabrera, Ma. Elenita B. and Cabrera, Gilbert Anthony B. (2019). Strategic Cost Management. GIC Enterprises & Co., Inc.
2021-2022 Module Packets for AE 23 (Strategic Cost Management) | College of Commerce |
University of San Agustin, Iloilo City, 5000, Philippines
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d. Contemporary Cost Management Techniques
2021-2022 Module Packets for AE 23 (Strategic Cost Management) | College of Commerce |
University of San Agustin, Iloilo City, 5000, Philippines
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COLLEGE OF COMMERCE
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2021-2022 Module Packets for AE 23 (Strategic Cost Management) | College of Commerce |
University of San Agustin, Iloilo City, 5000, Philippines
Page 10 of 17
COLLEGE OF COMMERCE
BACHELOR OF SCIENCE IN ACCOUNTANCY PROGRAM
2021-2022 Module Packets for AE 23 (Strategic Cost Management) | College of Commerce |
University of San Agustin, Iloilo City, 5000, Philippines
Page 11 of 17
COLLEGE OF COMMERCE
BACHELOR OF SCIENCE IN ACCOUNTANCY PROGRAM
2021-2022 Module Packets for AE 23 (Strategic Cost Management) | College of Commerce |
University of San Agustin, Iloilo City, 5000, Philippines
Page 12 of 17
COLLEGE OF COMMERCE
BACHELOR OF SCIENCE IN ACCOUNTANCY PROGRAM
2021-2022 Module Packets for AE 23 (Strategic Cost Management) | College of Commerce |
University of San Agustin, Iloilo City, 5000, Philippines
Page 13 of 17
COLLEGE OF COMMERCE
BACHELOR OF SCIENCE IN ACCOUNTANCY PROGRAM
2021-2022 Module Packets for AE 23 (Strategic Cost Management) | College of Commerce |
University of San Agustin, Iloilo City, 5000, Philippines
Page 14 of 17
COLLEGE OF COMMERCE
BACHELOR OF SCIENCE IN ACCOUNTANCY PROGRAM
2021-2022 Module Packets for AE 23 (Strategic Cost Management) | College of Commerce |
University of San Agustin, Iloilo City, 5000, Philippines
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COLLEGE OF COMMERCE
BACHELOR OF SCIENCE IN ACCOUNTANCY PROGRAM
2021-2022 Module Packets for AE 23 (Strategic Cost Management) | College of Commerce |
University of San Agustin, Iloilo City, 5000, Philippines
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COLLEGE OF COMMERCE
BACHELOR OF SCIENCE IN ACCOUNTANCY PROGRAM
SOURCE: Cabrera, Ma. Elenita B. and Cabrera, Gilbert Anthony B. (2019). Strategic Cost Management. GIC Enterprises & Co., Inc.
2021-2022 Module Packets for AE 23 (Strategic Cost Management) | College of Commerce |
University of San Agustin, Iloilo City, 5000, Philippines
Page 17 of 17
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