Cost Management and Strategy - Chapter One
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Questions and Answers

Cost management information includes both financial and nonfinancial ______ that helps implement an organization’s strategy.

information

Management accounting involves partnering in management decision making and providing expertise in financial ______ and control.

reporting

The contemporary business environment has heavily influenced cost management by requiring organizations to adapt to ______ strategies.

competitive

Understanding the principles and rules of professional ______ is essential for management accountants.

<p>ethics</p> Signup and view all the answers

Cost management is developed and used by the management ______ to enhance organizational strategies.

<p>accountant</p> Signup and view all the answers

The highest position in an organization is the ______.

<p>Chief Executive Officer (CEO)</p> Signup and view all the answers

One of the four functions of management is ______.

<p>Planning and Decision Making</p> Signup and view all the answers

Cost management information is essential for ______ management.

<p>Strategic</p> Signup and view all the answers

The function that requires identifying inefficient operations is ______.

<p>Management and Operational Control</p> Signup and view all the answers

Organizations must adhere to ______ reporting requirements.

<p>regulatory</p> Signup and view all the answers

A key aspect of strategic emphasis is to satisfy ______ needs.

<p>customers'</p> Signup and view all the answers

______ organizations focus on providing services rather than goods.

<p>Service</p> Signup and view all the answers

The types of organizations include manufacturers, wholesalers, and ______.

<p>Retailers</p> Signup and view all the answers

Life-cycle costing requires monitoring costs throughout a product’s entire life cycle, from research and development to ______.

<p>sales</p> Signup and view all the answers

Benchmarking involves identifying a firm’s critical success factors (CSFs) and studying the best practices of other firms to institute ______.

<p>change</p> Signup and view all the answers

The basis of competitive advantage in cost leadership is the ______ cost in the industry.

<p>lowest</p> Signup and view all the answers

Total Quality Management develops policies to ensure products and services exceed customer’s ______.

<p>expectations</p> Signup and view all the answers

In differentiation, the product line is characterized by a ______ variety.

<p>wide</p> Signup and view all the answers

Lean accounting measures the financial benefits of a firm’s progress in implementing ______ manufacturing.

<p>lean</p> Signup and view all the answers

The first step in strategic decision making is to determine the strategic ______ surrounding the problem.

<p>issues</p> Signup and view all the answers

The Theory of Constraints helps firms improve ______-time by enhancing the conversion of raw materials into finished products.

<p>cycle</p> Signup and view all the answers

Sustainability involves balancing the company’s short and long-term goals across social, environmental, and ______ dimensions.

<p>financial</p> Signup and view all the answers

The organizations that provide guidelines and regulations include the Securities and Exchange ______.

<p>Commission</p> Signup and view all the answers

Innovative features are emphasized in ______ strategies.

<p>differentiation</p> Signup and view all the answers

Cost leadership is a competitive strategy that focuses on outperforming competitors by producing at the lowest ______.

<p>cost</p> Signup and view all the answers

Differentiation in competitive strategy involves creating value for the customer through product innovation, features, and ______.

<p>customer service</p> Signup and view all the answers

Professional organizations such as the American Institute of Certified Public ______ promote professionalism.

<p>Accountants</p> Signup and view all the answers

To evaluate effectiveness after implementation, one must provide an ongoing evaluation of the ______ of implementation.

<p>effectiveness</p> Signup and view all the answers

The Philippine Institute of Certified Public Accountants is an example of an organization that promotes ______ and expertise.

<p>professionalism</p> Signup and view all the answers

The three important certifications relevant for management accountants are CMA, CPA, and ______.

<p>CGMA</p> Signup and view all the answers

Competence, confidentiality, integrity, and ______ are the standards of ethical professional practice.

<p>credibility</p> Signup and view all the answers

Cost management information is used in all four of the management functions and is crucial for achieving a firm’s ______.

<p>mission</p> Signup and view all the answers

The two main competitive strategies in cost management are cost leadership and ______.

<p>differentiation</p> Signup and view all the answers

Management accountants look to professional organizations for guidance, training, and ______.

<p>support</p> Signup and view all the answers

Strategic decision making in management accounting involves several steps, typically involving ______ analysis.

<p>cost</p> Signup and view all the answers

A commitment to the standards of ethical practice is necessary for management accountants to provide a useful ______ to management.

<p>service</p> Signup and view all the answers

Maintaining a high standard of ethical behavior is expected from management accountants, including ______, confidentiality, integrity, and credibility.

<p>competence</p> Signup and view all the answers

Study Notes

Cost Management and Strategy

  • Cost Management Information includes both financial and non-financial data essential for implementing an organization's strategy.
  • Cost management is primarily the responsibility of the management accountant.

Four Functions of Management

  • Strategic Management: Establishes goals and action plans for maintaining competitive advantage.
  • Planning and Decision Making: Involves supporting day-to-day decisions such as production scheduling and pricing.
  • Management and Operational Control: Aids in identifying inefficiencies and recognizing effective practices.
  • Preparation of Financial Statements: Ensures compliance with regulatory requirements.

Contemporary Business Environment

  • Life-Cycle Costing emphasizes monitoring costs throughout a product’s entire lifecycle, from development to service.
  • Benchmarking involves identifying critical success factors (CSFs) and adopting best practices from leading firms.
  • Business Process Improvement focuses on continuous enhancement in quality and CSFs.
  • Total Quality Management ensures products and services exceed customer expectations.

Management Techniques

  • Lean Accounting evaluates the benefits from implementing lean manufacturing techniques.
  • The Theory of Constraints aims at improving cycle-time, the speed of converting raw materials to finished goods.
  • Sustainability balances social, environmental, and financial goals.
  • Enterprise Risk Management provides a framework for addressing risks that impact an organization’s success.

Competitive Strategy

  • Success depends on a strategic plan aimed at using resources to meet sustainable goals in a competitive marketplace.
  • Michael Porter describes two main strategies:
    • Cost Leadership: Competing by being the lowest cost producer, maintaining necessary quality.
    • Differentiation: Offering unique value through product features or superior service, allowing for higher prices.

Strategic Decision Making

  • Key steps include identifying strategic issues, analyzing alternatives, implementing decisions, and evaluating outcomes.

Professional Environment

  • Various professional organizations set regulations and guidelines, including the Bureau of Internal Revenue (BIR) and the Securities and Exchange Commission (SEC).
  • Organizations promote management accounting professionalism include PICPA and IMA.

Professional Certifications

  • Important qualifications for management accountants include:
    • Certified Management Accountant (CMA)
    • Certified Public Accountant (CPA)
    • Chartered Global Management Accountant (CGMA)

Ethical Standards in Management Accounting

  • IMA’s ethical principles involve competence, confidentiality, integrity, and credibility, which guide management accountants in their professional conduct.

Summary of Key Points

  • Cost management is vital for achieving organizational goals and is integrated into all four management functions.
  • Increased competition necessitates evolving roles for management accountants.
  • The competitive strategies of cost leadership and differentiation form the basis for strategic planning and decision making.
  • Ethical adherence and obtaining professional certifications enhance the credibility and effectiveness of management accountants.

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Description

Explore the foundational concepts of cost management and its strategic role in organizations as outlined in the first chapter of 'Cost Management: A Strategic Emphasis' by Blocher, Juras, and Smith. This quiz will assess your understanding of how cost management informs the four functions of management and its application across different organizational types.

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