Intro to Strategic Cost Management Flashcards
What is management?
Process of planning, decision making, organizing, leading, motivating, and controlling resources of an organization to reach its goals efficiently and effectively
Four management functions
> > Planning
Organizing
Leading
Controlling
What is planning?
Answer the question “What to do?”
Determine the proper course of action and strategize tactics to enforce in order to achieve the goals set
What is organizing?
Coordinating activities and resources and delegate responsibilities
What is leading?
Guiding people with motivation and direction
What is controlling?
Answers the question “Were we able to achieve the goals?”
Monitoring and evaluating activities to ensure they answer the goals being set
Includes performance evaluations and Variance analysis
»_space;> Actual vs. Goals set; What is the cause of the difference?
What is Accounting?
A service activity that provides quantitative information to be used in making economic decisions
What is Strategic Cost Management?
The use of cost information as a tool for decision making and business development that would support the strategic placement of an entity
Strategic Placement in relation with costs
Cost leadership
»_space;> Lower Costs > Lower Prices > Higher Revenue
»_space;> Many will buy due to cheap prices
Product Differentiation
»_space;> Regulated Costs > Unique Products > Higher Prices > Higher Revenue
»_space;> Many will buy due to unique products
What is Management Accounting?
The use of accounting information to serve as a primary tool for the INTERNAL USERS of accounting information for DECISION MAKING which would add value to the entity
What is a Vision?
It describes how the company sees itself in the future
What is a Mission?
It describes what the company must do to achieve its vision
