OVERVIEW OF STRATEGIC COST MANAGEMENT AND STRATEGY

Question 1

Why is strategy important in business?

Answer 1

-sets the tone and action plan

-provides direction and action plan

-identifies trend

-defines accountability

-improves communication

-proper allocation of resources

-framework for decision-making

-gives you a competitive edge/advantage

Question 2

set of policies, procedures and approaches to business that produce long-term success

Answer 2

Strategy

Question 3

involves the development of cost management information to facilitate the principle management function which is strategic management.

Answer 3

Strategic cost management

Question 4

information that the manager needs to effectively manage the firm, profit-oriented as well as not-for-profit organization

Answer 4

Cost management information

Question 5

includes both financial information about cost and revenues as well as relevant nonfinancial information about productivity, quality and other key success factors for the firm

Answer 5

Cost management information

Question 6

practice of accounting in which the accountant develops and uses cost management information

Answer 6

Cost management

Question 7

If a firm is to compete successfully, importance should be given to nonfinancial and long-term measure operating performance such as

Answer 7

-product and manufacturing advances

-product quality

-customer loyalty

Question 8

a value-added concept

Answer 8

Cost management information

Question 9

adds value by helping a firm be more competitive.

Answer 9

Cost management information

Question 10

involves anticipating changes

Answer 10

Strategic thinking

Question 11

designed to accommodate expected changes in customer demands

Answer 11

Products and production processes

Question 12

is important

Answer 12

Flexibility

Question 13

critical as a result of the demand of the new management concepts of e-commerce, speed to market, and flexible manufacturing.

Answer 13

ability to make fast changes

Question 14

time from the introduction of a new product to its removal from the market

Answer 14

Product life cycle

Question 15

expected to become shorter and shorter

Answer 15

Product life cycle

Question 16

USERS OF COST MANAGEMENT INFORMATION

Answer 16

-business firms

-governmental units

-not-for-profit organizations

Question 17

Cost management information is needed for each of the following management functions, namely:

Answer 17

1. strategic management

2.planning and decision-making

3.management and operational control

4.reportorial and compliance to legal requirements

Question 18

involves the development of a sustainable competitive position in which the firm’s competitive advantage spells continued success

Answer 18

Strategic management

Question 19

set of goals and specific action plans that if achieved, provide the desired competitive advantage

Answer 19

strategy

Question 20

involves identifying and implementing these goals and action plans.

Answer 20

Strategic management

Question 21

management must make sound strategic decisions regarding the choice of products, manufacturing methods, marketing techniques and channels and other long-term issues

Answer 21

Strategic management

Question 22

needed to support recurring decisions such as replacing and maintaining equipment, managing cash flows, budgeting raw materials purchases, scheduling production, pricing and managing distribution of products to customers, and so forth

Answer 22

Cost management information

Question 23

involves budgeting and profit planning, cash flow management and other decision related to the firm’s operation such as deciding whether to lease or buy a facility, whether to replace or just repair as equipment, when to change a marketing plan or when to begin new product development

Answer 23

Planning and decision-making

Question 24

Cost management information is needed to provide a fair and effective basis for identifying inefficient operations and to reward and motivate the most effective managers.

Answer 24

Management and Operational Control

Question 25

needed to provide a fair and effective basis for identifying inefficient operations and to reward and motivate the most effective managers.

Answer 25

Cost management information

Question 26

takes place when mid-level managers (e.g., product managers, regional managers) monitors the activities of operating-level managers and employees (e.g., production supervisions, department heads).

Answer 26

Operational Control

Question 27

evaluation of mid-level manager by upper-level manager (e.g., Controller or the Chief Financial Officer (CFO))

Answer 27

Management control

Question 28

mid-level managers

Answer 28

-production managers -regional managers

Question 29

operating-level managers and employees

Answer 29

-production supervisors -department heads

Question 30

upper-level manager

Answer 30

Controller or the Chief Financial Officer (CFO)

Question 31

Reportorial and compliance responsibilities require management to comply with the financial reporting requirements to regulatory agencies such as the Securities and Exchange Commission (SEC) Bureau of Internal Revenue (BIR), and other relevant government authorities and agencies

Answer 31

Reportorial and Compliance to Legal Requirements

Question 32

require management to comply with the financial reporting requirements to regulatory agencies such as the Securities and Exchange Commission (SEC) Bureau of Internal Revenue (BIR), and other relevant government authorities and agencies

Answer 32

Reportorial and compliance responsibilities

Question 33

regulatory agencies

Answer 33

- securities and exchange commission (SEC) -bureau of internal revenue (BIR) -other relevant government authorities and agencies

Question 34

are the accounting professionals who develop and analyze cost management information and other accounting information

Answer 34

Management accountants

Question 35

involves the applicant of appropriate techniques and concepts to economic data so as to assist management in establishing plans for reasonable economic objectives and in the making of rational decisions with a view towards achieving these objectives

Answer 35

Management Accounting

Question 36

process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of financial information, which is used by management to plan, evaluate and control activities within an organization.

Answer 36

Management Accounting

Question 37

comprises the preparation of financial reports for non-management groups such as shareholders, creditors, regulatory agencies and tax authorities

Answer 37

Management Accounting

Question 38

non-management groups

Answer 38

-shareholders -creditors -regulatory agencies -tax authorities

Question 39

concerned with providing information to managers, that is, people inside an organization who direct and control the operations.

Answer 39

Management Accountants (including cost accountants)

Question 40

provide a variety of reports

Answer 40

Management Accountants

Question 41

at appropriate levels are involved actively in the process of managing the entity

Answer 41

Management Accountants

Question 42

participates, as part of management, in assuring that the organization operates as unified whole in its long-run intermediate and short-run best interests.

Answer 42

Management Accountants

Question 43

process of managing the entity includes:

Answer 43

-making strategic, tactical, and operating decisions -helping to coordinate the efforts of the entire organization

Question 44

concerned primarily with providing information to internal managers who are charged with planning and controlling the operations of the firm and making a variety of management decisions

Answer 44

Management accounting

Question 45

Generally, management accountants do the following tasks:

Answer 45

-scorekeeping or data accumulation -interpreting and reporting of information -problem-solving or quantification of relative merits of possible courses of action as well as recommendation as to the best procedure

Question 46

enables both internal and external parties to evaluate organizational performance and position.

Answer 46

Scorekeeping or data accumulation

Question 47

helps manager to focus on operating problems, opportunities as well as inefficiencies.

Answer 47

Interpreting and reporting of information

Question 48

commonly associated with current planning and control and the analysis and investigations of recurring routine internal accounting reports to signal situations in which management action may be required.

Answer 48

Interpreting and reporting of information

Question 49

commonly associated with non-recurring decisions

Answer 49

Problem-solving or quantification of relative merits of possible courses of action as well as recommendation as to the best procedure

Question 50

Three important guidelines help management accountants provide the most value when scorekeeping, problem-solving and attention directing (interpreting and reporting)

Answer 50

- employ cost-benefit approach -recognize behavioral as well as technical considerations -use appropriate cost concepts for different purpose

Question 51

should be spent if they are expected to better attain company goals in relation to the expected cost of those resources.

Answer 51

Resources

Question 52

should be used in making these decisions

Answer 52

cost-benefit approach

Question 53

useful for making resource -allocation decisions

Answer 53

cost-benefit approach

Question 54

administrative functions

Answer 54

- planning - controlling - decision-making

Question 55

involves setting of goals for the firm, evaluating the various ways to meet the goals and picking out what appears to be the best way to meet the goals

Answer 55

Planning

Question 56

involves the evaluation of whether actual performance conforms with planned goals

Answer 56

Controlling

Question 57

involves determination of predictive information (e.g., relevant costs) for making important business decisions

Answer 57

Decision making

Question 58

key activity for all companies

Answer 58

Planning

Question 59

involves identifying alternatives and selecting a course of action and specifying how the action will be implemented to further the organization's objectives.

Answer 59

Planning

Question 60

Control of organizations is achieved by evaluating the performance of managers and the operations for which they are responsible

Answer 60

Control

Question 61

some of the accounting control reports used to inform manages when activities which are part of their responsibility are deviating from the plan

Answer 61

- cost variance analysis - financial statements analysis -gross profit variance analysis

Question 62

reports used evaluate the performance of managers and the operations they control

Answer 62

performance reports

Question 63

Planning and control process

Answer 63

-plan -actions taken to implement plan -results -comparison of planned and actual results -evaluation -decisions to change operations or revise -decisions to reward or punish managers

Question 64

serves management at all stages of the management process, from the formulation of objectives and so on up to the feedback of performance information which in turn helps in the reformulation objectives.

Answer 64

accounting

Question 65

helps in the reformulation objectives.

Answer 65

feedback of performance information

Question 66

part of the planning and control process

Answer 66

decision making

Question 67

made to reward or punish managers

Answer 67

decisions

Question 68

made to change operations or revise plans.

Answer 68

decisions

Question 69

develops cost management information for the Chief Financial Officer, other managers and employee teams to use to manage the firm and make the firm more competitive and successful

Answer 69

management accountant

Question 70

needs the output of cost accounting.

Answer 70

Cost Management

Question 71

purpose is to provide managers with information which aids decision

Answer 71

Cost Management

Question 72

systematic set of procedures for recording and reporting measurements of the cost of manufacturing goods and performing services in the aggregate and in detail

Answer 72

Cost Accounting

Question 73

includes methods for recognizing, classifying, allocating, aggregating and reporting such costs and comparing them with standard costs

Answer 73

Cost Accounting