Transcript
Page 1: Value!Chain!&!Supply!Chain!Management! - …€¢ Substitutes" • Cash"availability"! Strategic"Cost"Management"–"cost"management"pertaining"to"strategic"issues"" Value!Chain!&!Supply!Chain!Management!

• Substitutes"• Cash"availability"

! Strategic"Cost"Management"–"cost"management"pertaining"to"strategic"issues""

Value!Chain!&!Supply!Chain!Management!Value!Chain!Analysis!

! Value)Chain)–"sequence"of"business"functions"in"which"customer"usefulness"is"added"to"products"or"services"

Function" Description"R&D" Generate"and"experiment"with"ideas"related"to"

new"products/service/processes"Design"of"products/service/process" Detailed"planning"and"engineering"of"

products/services/processes"Production" Acquiring,"coordinating"and"assembling"

resources"to"product"a"product/deliver"a"service"

Marketing"(Sales)" Promoting"and"selling"products"or"services"to"customers"or"prospective"customers"

Distribution" Delivering"products"or"services"to"customers"Customer"Service" Providing"after!sales"support"to"customers""

! Customer"Relationship"Management"–"strategy"(w/"people"and"tech)"to"enhace"relationship"with"customers,"suppliers"and"distribution"

! Management"accountants"track"costs"in"each"value"chain"category"to"reduce"them"and"improve"efficiency"• Improve"cost!benefits"

Supply!Chain!Analysis!! Supply)Chain"–"flow"of"goods,"services"and"information"from"initial"sources"to"the"customer"! Management"accountants"coordinate"activities"inter"functionally"and"inter"organisationally"

to"reduce"costs"and"maximise"value""

Indicators!of!Success!! Need"to"track"performance"(relative"to"competitors)"!"benchmarking""

• Facilitate"continuous"improvement""! Cost)and)Efficiency"–"reduce"costs"of"products/services""

• Monitor"tasks"that"incur"costs"and"marketplace"! Quality""

• Total"Quality"Management"(TQM)"–"management"improve"operations"throughout"the"value"chain"to"exceed"customer"expectations"

o Includes"designing"of"product/service"that"exceed"customer"expectations"o Minimise"wastes"and"effects"o Cost"and"benefits"need"to"be"evaluated"

! Time""• Time"for"product"development"• Pace"of"technological"innovation"• Response"to"changes"in"consumer"demands""

! Innovation)"

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• Ongoing"innovation"!"ongoing"success"• Evaluate"investment"and"R&D"

Decision!Making,!Planning!and!Control!! Planning"Decisions"–"decisions"about"what"tasks"should"be"performed"and"how"to"complete"

those"tasks"• Short!term"decisions"–"lower"level"management"• Long!term"decisions"–"top"level"management"

! Control"Decisions"–"decisions"regarding"how"to"evaluate"performance,"and"providing"feedback"and"learning"to"help"future"decision"making"• Taking"actions"that"implement"the"planning"decisions"

"

STEP) DESCRIPTIONS)1.)Identify)the)Problem) What"is"the"challenge"that"needs"to"be"overcome""2.)Collect)Relevant)Information))

Gathering"information"reduces"uncertainties"Involves"past"information"and"future"predictions"

3.)Determine)Options)and)Consider)the)Consequences)

Consider"all"possible"options"for"actions"and"the"potential"consequences"that"would"result""

4.)Evaluate)Options)and)Determine)the)Most)Appropriate)

Evaluate"the"options"against"set"objectives"and"select"the"best"course"of"action"as"a"result""Budget"(quantitative"expression"of"proposed"plan"of"action)"

5.)Implement,)Evaluate)and)Learn)

Implement"the"budget"and"collect"actual"information"and"compare"to"budgeted"performance"Control"–"take"actions"to"improve"future"performance"–"evaluating"performance""Learn"–"examine"past"performance"and"systematically"explore"alternatives"–"may"open"up"new"problems!"

"

! Budgets"not"only"can"be"used"as"planning,"but"also"a"control"–"benchmark"for"evaluating"performance""• Can"use"financial"and"non!financial"plans"for"evaluating"performance"

! Plans"should"remain"flexible"!"able"to"change"with"different"environments""

Management!Accounting!Guidelines!!! CostRBenefit)Approach)

• Assessment"of"whether"expected"benefits"will"exceed"expected"costs""• Often"difficult"to"quantify"some"benefits"and"costs"

! Behavioural"and"Technical"Considerations"• Technical"–"managers"make"economic"decisions"with"desired"information"(costs)"in"an"

appropriate"format"(actual"v"budgets)"at"a"preferred"frequency"(monthly)"• Behavioural"–"motivating"managers"and"employees"to"aim"for"goals"of"the"organisation""

! Different"Costs"for"Different"Purposes"• One"size"does"not"fit"all"!"eg."Accounting"for"advertising"should"be"expensed"by"AASB,"

but"can"be"amortised"by""• Financial"Reporting"costing"does"not"have"to"be"the"same"as"for"managerial"accounting""

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Management!Accountants!in!Organisations!! Line)Management"–"directly"responsible"for"attaining"the"goals"of"the"organisation"

• Production,"marketing"and"distribution"management"! Staff)Management"–"provide"advice"and"assistance"to"line"management"

• Management"accountants,"IT,"HR,"CFO"

Professional!Ethics!! Accountants"have"obligation"regarding"ethics"to"maintain"integrity"in"providing"financial"

information"to"internal"and"external"parties"

Costs!! COST"–"measure"of"resources"given"up"(ssacrificed)"to"achieve"a"particular"purpose"

• Actual)Cost"–"cost"incurred"(historical,"past)"• Budgeted)Cost)–"predicted/forecasted"cost"(future"cost)"

o Compare"actuals"and"budget"to"analyse"performance"and"make"decisions"about"the"future"

• Cost)Object)–"anything"of"which"a"measurement"of"cost"is"desired"• Cost)Accumulation"–"collection"of"cost"data"in"some"organised"way"by"means"of"an"

accounting"system"o Cost)Assignment)–"allocation"of"costs"to"different"cost"objects"

" Includes"both"cost"tracing"and"cost"allocation""• Direct)Cost)(of"cost"object)"–"related"to"the"particular"cost"object"that"can"be"traced"to"it"

in"an"economically"feasible"(cost!effective)"way"o Can"see"the"association"with"production"o Cost)Tracing)–"describe"the"assignment"of"direct"costs"to"a"particular"object"

• Indirect)Cost"(of"a"cost"object)"–"related"to"the"particular"cost"object"but"cannot)be)traced"to"it"in"an"economically)feasible)(costReffective))way"

o Cannot"see"the"association"with"production""o Cost)Allocation"–"assignment"of"indirect"costs"to"a"particular"cost"object""

• Controllable"Cost"–"a"cost"that"can"be"significantly"influenced"by"a"manager""• Uncontrollable"Cost"–"a"cost"that"cannot"be"influenced"by"the"manager"• Opportunity"Cost"–"potential"benefit"that"is"given"up"when"one"alternative"is"selected"

over"another""• Sunk"Costs"–"all"costs"incurred"in"the"past"that"cannot"be"changed"by"ae"decision"made"in"

the"present"or"future"o Should"not"be"considered"in"decision"making"

• Differential"Cost"–"the"difference"between"the"costs"of"two"alternatives""• Product)Costs"–"costs"associated"with"goods)for)sale"until"the"time"period"during"which"

the"products"are"sold"at"which"the"costs"become"expenses"o Inventory"is"capitalised"until"the"good"is"sold"o COGS)

• Period)Costs"–"costs"that"are"expensed"during"the"time"period"in"which"they"are"incurred"o Operating"Expenses"–"income"statement"items"

• Expenses"–"Consumption"of"assets"for"the"purposes"of"generating"revenue""• "

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Fixed"Cost"="Total"–"Variable"9700!(0.9*9000)"="1600"""""""""""""""""""""6100!(0.9*5000)"="1600"

! LeastRSquares)Regression)Method"o Determine"the"relationship"between"variables"(activity"and"cost)"

CVP!Analysis!! Assumptions"

o Changes"in"revenue)+)cost"are"due"to"changes"in"units)produced)and)sold"o Revenue"and"Costs"–"fixed"and"variable"components"respective"of"output"o Selling"price,"unit"variable"costs,"fixed"costs"are"fixed"o Note"–"time"value"of"money"not"included"

!"#$%&'()!!"#$%& = !"#$%!!"#$%"& − !"#$ − !"#$%&'()!!"#$#""

!"×! − !"×! − !" = !"#$%&)Contribution!Margin!

! Contribution"Margin"–"total"revenues"left"over"after"deducting"variable"costs"able"to"be"used"to"cover"fixed"costs"

!"#$%&'($&"#!!"#$%& = !"##$%&!!"#$% − !"#$"%&'!!"#$#)

!"% = !"/!"#$!"##$%&!!"#$%)

• CM%"multiplied"by"Revenue"="CM"as"a"total"figure"

Break!Even!!!"×! − !"#×! − !" = !"#$%&'()!!"#$%&!

• Letting!Operating!Income!be!zero!gives!Break!Even!Point!! Contr ibution!Margin!Methods!

• Break!Even!Units!

!"# = !"!"#!

• Break!Even!Points!(Revenue!required)!

!"# = !"!"#!

! Graphical!Method!

!


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