管理會計英語7

1、.Management Accounting and Control Systems:Assessing Performance over the Value ChainChapter 7 .2Management Accountingand Control SystemlGenerates and uses information to help decision makers assess whether an organization is achieving its objectiveslA cost management system is one of the central pe

2、rformance measurement systems at the core of a larger entity known as a management accounting and control system.3“Control” In ManagementAccounting And ControllA set of:ProceduresToolsPerformance measuresSystemslUsed by organizations to guide and motivate employees to achieve organizational objectiv

3、es.4In ControllA system is in control if it is on the path to achieving its strategic objectiveslFor the process of control to have meaning and credibility, the organization must have the knowledge and ability to correct situations that it identifies as out of control.5Five Stages Of ControllPlannin

4、g lExecutionlMonitoringlEvaluationlCorrection.6Stages of Control: PlanningDeveloping an organizations objectivesChoosing activities to accomplish the objectivesSelecting measures to determine how well the objectives were met.7Stages of Control: Execution and MonitoringlExecutionImplementing the plan

5、lMonitoring The process of measuring the systems current level of performance.8Stages Of Control: Evaluation and CorrectinglEvaluationWhen feedback about the systems current level of performance is compared to the planned level so that any discrepancies can be identified and corrective action prescr

6、ibedlCorrecting Taking the appropriate actions to return the system to a state of in control.9A Well-Designed MACSlDesigners of management accounting and control systems (MACS) have both behavioral and technical considerations to meetlThe technical considerations fall into two categoriesRelevance of

7、 the information generatedScope of the system.10Characteristics of Well-defined MACSlAccuratelTimelylConsistentlFlexible.11Scope Of The SystemlMust be comprehensive and include all activities across the entire value chain of the organizationlIf the MACS measures and assesses performance in only the

8、actual production process, it ignores the performance of:SuppliersDesign activitiesPostproduction activities associated with productslWithout a comprehensive set of information, managers can only make limited decisions.12The Value Chain lA sequence of activities that should contribute more to the ul

9、timate value of the product than to its costlAll products flow through the value chain:Begins with research, development, and engineeringMoves through manufacturingContinues on to customersCustomers may require service and will eitherlconsume the product ldispose of it after it has served its intend

10、ed purpose.13The Value ChainlThe value chain may be divided into cycles, which correspond to different cost control approachesResearch, Development & Engineering CycleManufacturing CyclePost-Sale Service and Disposal CycleTarget Costing & Value EngineeringKaizen CostingTotal-Life-Cycle Costi

11、ngEnvironmental CostingBenchmarking.14Total-Life-Cycle Costing (lTotal-life-cycle costing (TLCC) is the name of the process of managing all costs along the value chainlTLCC is also known as managing costs “from the cradle to the grave”.15Total-Life-Cycle CostinglA TLCC system provides information fo

12、r managers to understand and manage costs through a products stages .16Total-Life-Cycle Costing lDeciding how to allocate resources over the life cycle usually is an iterative processlOpportunity costs play a heightened role in a total-life-cycle cost perspective.17Total-Life-Cycle Costing lNumerous

13、 life-cycle concepts have emerged in various functional areas of businesslA TLCC perspective integrates the concepts so that they can be understood in their entiretylFrom the manufacturers perspective, total-life-cycle product costing integrates functional life-cycle concepts:.18Research, Developmen

14、t, And Engineering (RD&E) CycleThe RD&E Cycle has three stages:lMarket researchlProduct designlProduct development.19Cost Control in the RD&E CyclelBy some estimates, 80% to 85% of a products total life costs are committed by decisions made in the RD&E cyclelDecisions made in this cy

15、cle are critical:An additional dollar spent on activities that occur during this cycle can save at least $8 to $10 on manufacturing and post-manufacturing activities:lDesign changeslService costs.20Manufacturing CyclelAfter the RD&E cycle, the company begins the manufacturing cycle lUsually at t

16、his stage there is not as much room for engineering flexibility to influence product costs and product design because they have been set in the previous cycle.21Cost Control in theManufacturing CyclelOperations management methods help to reduce manufacturing life-cycle product costslCompanies have b

17、egun to use management accounting methods such as activity-based cost management to identify and reduce non-value-added activities in an effort to reduce costs in the manufacturing cycle .22Post-sale Service & Disposal CyclelThe service cycle begins once the first unit of a product is in the han

18、ds of the customerlDisposal occurs at the end of a products life and lasts until the customer retires the final unit of a productlThe costs for service and disposal are committed in the RD&E stage.23The Service CyclelThe service cycle typically consists of three stages:Rapid growthlFrom the firs

19、t time the product is shipped to the growth stage of its salesTransitionlFrom the peak of sales to the peak in the service cycleMaturitylFrom the peak in the service cycle to the time of the last shipment made to a customer.24The Disposal CyclelDisposal occurs at the end of a products life and lasts

20、 until the customer retires the final unit of a productlDisposal costs often include those associated with eliminating any harmful effects associated with the end of a products useful lifelProducts whose disposal could involve harmful effects to the environment, such as nuclear waste or toxic chemic

21、als, often incur very high costs.25Life-Cycle CostslThe following table illustrates four types of products and the percentage of life-cycle costs incurred in each cycleCombatJetsCommercialAircraftNuclearMissilesComputerSoftwareRD&EManufacturingService & DisposalAverage Years in Life Cycle21%

22、45%34%3020%40%40%2520%60%20%2 to 2575%*25%5.26Target CostinglA method of profit planning and cost management that focuses on products with discrete manufacturing processeslIts goal is to design costs out of products in the RD&E stage of a products total life cyclelIt is a relevant example of:How

23、 a well-designed MACS can be used for strategic purposesHow critical it is for organizations to have a system in place that considers performance measurement across the entire value chain.27The Traditional MethodlBegins with market research into customer requirements followed by product specificatio

24、nlCompanies engage in product design and engineering and obtain prices from supplierslAfter the engineers and designers have determined product design, cost is estimate.28Target Costing Method (lAlthough the initial steps appear similar to traditional costing, there are some notable differences:Mark

25、eting research is customer-drivenCosts are managed using concurrent design and engineering The total-life-cycle concept is used by making it a key goal to minimize the cost of ownership of a product over its useful life.29The Target Costing MethodlPrice-lead costing used to determine a target sellin

26、g price and target product volume based on the companys perceived value of the product to the customerlThe target profit margin results from a long-run profit analysis, often based on return on sales lThe target cost is the difference between the target selling price and the target profit margin.30T

27、he Target Costing Method lOnce the target cost has been set, the company must determine target costs for each componentlThe value engineering process includes examination of each component of a product to determine whether it is possible to reduce costs while maintaining functionality and performanc

28、elSeveral iterations usually are needed before it is possible to determine the final target cost.31The Target Costing Method lTwo other differences characterize the process:Cross-functional product teams make up of individuals representing the entire value chain guide the process throughout Supplier

29、s play a critical role in making target costing work.32Cost Analysis - examplelCost analysis requires 5 sub-activities:1. Develop a list of product components and functions2. Do a functional cost breakdown3. Determine a relative ranking of customer requirements4. Relate features to functions5. Devel

30、op relative functional rankings.33Conduct Value Engineering - examplelValue engineering organized effort directed at the various components for the purpose of achieving these functions at the lowest overall cost without reductions in required performance, reliability, maintainability, quality, safet

31、y, recyclability, and usability.34Conduct Value Engineering - examplelTwo sub-activities: Identify components for cost reduction by computing a value index (ratio of the value to the customer and the percentage of total cost devoted to each component)Generate cost reduction ideas.35Concerns About Ta

32、rget CostinglSome studies of target costing in Japan indicate that there are potential problems in implementing the systemlCompanies may manage many of these factors.36Examples of Problems with Target CostinglLack of understanding of the target costing conceptlPoor implementation of the teamwork con

33、ceptlEmployee burnoutlOverly-long development time.37Kaizen CostinglAlso focused on cost-reduction lFocuses on reducing costs during the manufacturing stage of the total life cycle of a productlKaizen is the Japanese term for making improvements to a process through small, incremental amounts rather

34、 than through large innovations.38Kaizen Costing (2 of 2)lKaizen costings goal is to ensure that actual production costs are less than the prior year costlKaizens goals are tied to the profit-planning systemlIf the cost of disruptions to production are greater than the savings due to kaizen costing,

35、 then it will not be applied.39Example From Auto PlantlAn annual budgeted profit target is allocated to each plantlEach automobile has a predetermined cost base, which is equal to the actual cost of that automobile in the previous yearlAll cost reductions use this cost base as their starting pointlT

36、he targeted cost reduction is the amount the cost base must be reduced to reach the profit target.40Example From Auto PlantlThe target reduction rate is the ratio of the target reduction amount to the cost baselThis rate is applied over time to all variable costs lThen management makes comparisons o

37、f actual reduction amounts across all variable costs to the pre-established targeted reduction amountslIf differences exist, variances for the plant are determined.41Concerns About Kaizen CostinglThe system places enormous pressure on employees to reduce every conceivable costlKaizen costing leads t

38、o incremental rather than radical process improvementsThis can cause myopia as management tends to focus on the details rather than the overall system.42Environmental CostinglEnvironmental remediation, compliance, and management have become critical aspects of many businesseslAll parts of the value

39、chain, and their costs, are affected by environmental issueslThese issues are being incorporated into cost management systems and overall MACS design.43Controlling Environmental CostslOnly when managers and employees become aware of how the activities in which they engage create environmental costs

40、will they be able to control and reduce themThe activities that cause environmental costs have to be identifiedThe costs associated with the activities have to be determinedThese costs must be assigned to the most appropriate products, distribution channels, and customers.44Types of Environmental Co

41、stslEnvironmental costs fall into two categories:Explicit costsImplicit costs .45BenchmarkinglA way for organizations to gather information regarding the best practices of otherslOften highly cost effectivelSelecting appropriate benchmarking partners is a critical aspect of the processlThe process t

42、ypically consists of five stages.46Stage 1lInternal study and preliminary competitive analysesThe organization decides which key areas to benchmark for study The company determines how it currently performs on these dimensions by initiatinglPreliminary internal competitive analysislPreliminary external competitive analyses Both types of analyses will determine the scope and significance of the study for each area.47Stage 2 (1 of 2)lDeveloping long-term commitment to the benchmarking project and coalescing the benchmarking teamthe level of commitment to benchmarking must be long term Long-te