Cost Accounting Traditions and Innovations
Cost Accounting Traditions and Innovations
Cost Accounting Traditions and Innovations
Chapter 1
Introduction to Cost and Management
Accounting in a Global Business
Environment
Learning Objectives (1 of 3)
• Explain the relationship between financial and
management accounting
• Describe the relationships among cost,
financial, and management accounting
• Describe the role of ethics in guiding
workforce behavior
• Identify the factors that influence the
globalization of business
Learning Objectives (2 of 3)
• List the primary factors and constraints that
influence an organization’s strategy
• Explain the impact of the competitive
environment on an organization’s strategy
• Clarify the impact of the accounting
function on achievement of strategic goals
and objectives
Learning Objectives (3 of 3)
• Explain the effect of the product life cycle
on the company segment’s mission
• Describe the importance of the value chain
Accounting
The
Language
of
Business
Accounting
• Provides information to external parties
– Stockholders, creditors, regulators
• Estimates the cost of products produced and
services provided
• Provides information to internal decision makers
– To plan, control, and evaluate performance
Two Types of Accounting
Financial Management
• Meet external • Meet internal
information needs information needs
• Comply with GAAP • Provide product
costing information
Financial Accounting Should
Provide information to
stockholders, creditors, and
various regulatory bodies
Provide information
useful for
making decisions
and controlling
operations
Accounting Differences
Financial Managerial
• External • Internal
• Aggregated • Segmented
• Historical • Current/Forecasted
• Quantitative • Quantitative/Qualitative
• Monetary • Monetary/Nonmonetary
• Verifiable • Timely/Reasonable estimate
• GAAP • Benefits exceed costs
Relationship of Financial,
Management, and Cost
Accounting
Members agreed
to allow duty-free
transfer of goods
under certain
conditions
General Agreement on
Tariffs and Trade (GATT)
To provide a “level playing field” for
trade among the 100+ signatory nations
Global Business Environment
Risks
• Strategic
– Environment and Organization
• Operating
• Financial
• Information
Global Business Environment
Ethical Considerations
– Is it legal?
– Does it comply with our values?
– How will it look in the newspaper?
– If you do it, will you feel bad?
Tactical
Planning
Organizational
Strategy
Organizational Strategy
• Organizational Structure
• Core Competencies
• Organizational Constraints
• Organizational Culture
• Environmental Constraints
Organizational Strategy
• Organizational Structure
Centralization Decentralization
Organizational Strategy
• Organizational Structure
• Core Competencies
– A higher proficiency than the competitors
– Technological innovation
– Engineering
– Product development
– After-sale service
Organizational Strategy
• Organizational Structure
• Core Competencies
• Organizational Constraints
– Monetary Capital
– Intellectual Capital
• Human Capital
• Structural Capital
• Relationship Capital
Organizational Strategy
• Organizational Structure
• Core Competencies
• Organizational Constraints
• Organizational Culture
– An organization’s norms
• internal and external
• formal and informal
Organizational Strategy
• Organizational Structure
• Core Competencies
• Organizational Constraints
• Organizational Culture
• Environmental Constraints
– Limitations on strategy caused by external
differences in culture, competitive market
structures, fiscal policy, laws, or political situations
Business Intelligence System
Formal process for gathering and analyzing
information and producing intelligence to
meet decision-making needs
Competitive Intelligence
Competitor
Analysis