Bài giảng Fundamentals of cost accounting - Chapter 1: Cost Accounting: Information for Decision Making

© 2014 by McGraw-Hill Education.  This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.  This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.  Cost Accounting: Information for Decision MakingChapter 1Learning ObjectivesLO 1-1 Describe the way managers use accounting information to create value in organizations.LO 1-2 Distinguish between the uses and users of cost accounting and financial accounting information. LO 1-3 Explain how cost accounting information is used for decision making and performance evaluation in organizations.LO 1-4 Identify current trends in cost accounting.LO 1-5 Understand ethical issues faced by accountants and ways to deal with ethical problems that you face in your career.Value ChainThe value chain describes a set of activities that transforms raw materials and resources into the goods and services end users purchase and consume.LO 1-1 Describe the way managers use accounting information to create value in organizations.LO 1-1Value-Added ActivitiesThose activities thatcustomers perceive asadding utility to the goods or services they purchase.The Value Chain ComponentsProductionLO 1-1Accounting SystemsFinancialaccountingFinancialposition andincomeReportsCostaccountingInformationabout costsReportsLO 1-2 Distinguish between the uses and users of cost accounting and financial accounting information. LO 1-2Accounting SystemsThe financial data prepared for this purpose are governed by generally accepted accounting principles (GAAP) in the United States and by international financial reporting (IFRS) in many other countries.The primary purpose of financial accounting is to provide investors and creditors information regarding company and management performance.Cost data for managerial use need not comply with GAAP or IFRS.LO 1-2Customers of AccountingDifferent uses of accounting information require different types of accounting information.Accountants must work with the users of cost accounting information to provide the best possible information for managerial purposes.LO 1-2Managerial DecisionsIndividuals make decisions.Decisions determine the performance of the organization.Managers use information from the accounting system to make decisions.Owners evaluate organizational and managerial performance with accounting information.LO 1-3 Explain how cost accounting information is used for decision making and performance evaluation in organizations.LO 1-3Cost Data for ManagerialDecisionsCosts for decision makingCosts for control and evaluationsDifferent data for different decisionsLO 1-3Costs for Decision MakingCarmen’s Cookies has been making and selling cookies through a small store downtown.One of her customers suggests that she expand operations and sell to wholesalers and retailers.Should Carmen expand operations?LO 1-3Carmen’s Cost DriversDriverCostRentInsuranceLaborIngredientsNumber of cookiesLO 1-3Differential CostsCosts that change in response to a particular course of action.Differential costs change (differ) between actions.LO 1-3Differential RevenuesRevenues that change in response to a particular course of action.Differential revenues change (differ) between actions.LO 1-3Differential Costs, Revenues, and ProfitsSales revenueCosts: Food Labor Utilities Rent OtherTotal costsOperating profits$6,300 1,800 1,000 400 1,250 1,000$5,450$ 850$8,505a 2,700b 1,500b 600b 1,250 1,200c$7,250$1,255$2,205 900 500 200 -0- 200$1,800$ 405(1)Status QuoOriginal ShopSales Only(2) AlternativeWholesale & RetailDistribution(3) DifferenceCarmen’s CookiesProjected Income Statement for One Week(a) 35 percent higher than status quo(b) 50 percent higher than status quo(c) 20 percent higher than status quoLO 1-3Costs for Control and EvaluationA responsibility center is a specific unit of an organization assigned to a manager who is held accountable for its operations and resources.LO 1-3Responsibility Centers,Revenues, and CostsCarmen DiazPresidentRay AdamsVice-PresidentRetail OperationsCathy PetersonVice-PresidentWholesale OperationsLO 1-3Carmen’s CookiesIncome Statement For the Month Ending April 30Sales revenueDepartment costs: Food Labora Utilities RentTotal department costsCenter marginbGeneral and admin. costs: General manager’s salaryc Other (administrative)Total general and admin. costsOperating profit$28,400 13,500 4,500 1,800 5,000$24,800$ 3,600$23,600 9,800 3,200 2,100 2,500$17,600$ 6,000$52,000 23,300 7,700 3,900 7,500$42,400$ 9,600 5,000 3,200$ 8,200$ 1,400RetailOperationsWholesaleOperationsTotal(a) Includes department managers’ salaries but excludes Carmen’s salary(b) The difference between revenues and costs attributable to a responsibility center(c) Carmen’s salaryLO 1-3Responsibility Centers,Revenues, and CostsCarmen’s CookiesRetail Responsibility CenterBudgeted versus Actual CostsFor the Month Ending April 30Food: Flour Eggs Chocolate Nuts OtherTotal foodLabor: Manager OtherTotal laborUtilitiesRentTotal cookie costsNumber of cookies sold$ 2,100 5,200 2,000 2,000 2,200$13,500 3,000 1,500$ 4,500 1,800 5,000$24,800 32,000$ 2,200 4,700 1,900 1,900 2,200$12,900 3,000 1,500$ 4,500 1,800 5,000$24,200 32,000$ (100) 500 100 100 -0- $ 600 -0- -0- $ -0- -0- -0- $ 600 -0-ActualBudgetDifferenceLO 1-3Responsibility Centers,Revenues, and CostsTrends in Cost Accounting Research and development Design Purchasing Production Marketing Distribution Customer service8. ERP – Enterprise resource planning9. Creating value in the organizationLO 1-4 Identify current trends in cost accounting.LO 1-4Cost Accounting inResearch and DevelopmentLean manufacturing techniques are not simply about production. Companies partner with suppliers in the development stage to ensure cost-effective deigns for products.LO 1-4Cost Accounting in DesignProduct designers must write detailed specifications on a product’s design. ABC assigns costs of activities needed to make a product, then sums the cost of those activities to compute the total cost of the product.This is often referred to as design for manufacturing (DFM).LO 1-4Cost Accounting in PurchasingPerformance measurement indicates how well a process is working.It minimizes unnecessary transaction processes.Benchmarking methods measure products, services, and activities against the best performance.Benchmarking is an ongoing process resulting in continuous improvement.LO 1-4Cost Accounting in ProductionA lean accounting system provides measures at a work cell or process level.JIT is an inventory system designed to lower the cost of maintaining excess inventory.LO 1-4Cost Accounting in MarketingCost relationship management (CRM) is a system that allows firms to target profitable customers by assessing customer revenues and costs. Harrah’s Entertainment provides “complimentary” services to some customers. (typically called “comping”).LO 1-4Cost Accounting in DistributionOutsourcing occurs when a firm’s activities are performed by another organization or individual in the supply or distribution chain.Nikon, for example, relies on UPS for distribution.LO 1-4Cost Accounting inCustomer ServiceTQM is a management method which focuses on excelling in all dimensions.Cost of quality is a system that identifies the cost of producing low quality items.The emphasis is placed on quality. Quality is defined by the customer.LO 1-4Enterprise Resource PlanningInformation technology linking various processes of the enterprise into a single comprehensive information systemTechnologyPurchasingHuman ResourcesMarketingProductionFinanceLO 1-4Key Financial Playersin an OrganizationChief financialofficer (CFO)Manages entire financeand accounting functionSigns off on financialstatementsMajor ResponsibilitiesExample ActivitiesTitleLO 1-4Ethical Issues for AccountantsThe design of the cost accounting system has the potential to be misused to defraud customers, employees, or shareholders.LO 1-5 Understand ethical issues faced by accountants and ways to deal with ethical problems that you face in your career.LO 1-5EthicsFollow the Institute of Management Accountants (IMA) guidelines:CLARIFY the relevant issues and concepts by discussion with a disinterested party or contact the appropriate confidential ethics “hotline.”DISCUSS conflicts with the immediate superior, unless the superior is involved. If so, go to the next authority level.CONSULT an attorney about your rights and obligations.LO 1-5Sarbanes-Oxley Act of 2002What is theintent?Who isimpacted?How arecorporationsimpacted?Address problemof corporategovernanceAccounting firmsandcorporationsCorporateresponsibilityLO 1-5Corporate ResponsibilityWho is impacted?What is the impact? CEO – Chief Executive Officer – Manages entire corporation CFO – Chief Financial Officer – Manages accounting and finance The officers of the corporation must sign the financial reports stipulating that the financial statements do not omit material information. The company must disclose the evaluation of their internal controls.LO 1-5Appendix: Institute of Management Accountants Code of EthicsCompetenceConfidentialityIntegrityCredibilityCompetenceMembers have a responsibility to:1. Maintain an appropriate level of professional expertise by continually developing knowledge and skills.2. Perform professional duties in accordance with relevant laws, regulations, and technical standards.3. Provide decision support information and recommendations that are accurate, clear, concise, and timely.4. Recognize and communicate professional limitations or other constraints that would preclude responsible judgment or successful performance of activity.ConfidentialityMembers have a responsibility to:1. Keep information confidential except when disclosure is authorized or legally required.2. Inform all relevant parties regarding appropriate use of confidential information.3. Refrain from using confidential information for unethical or illegal advantage.4. Monitor subordinates’ activities to ensure compliance.IntegrityMembers have a responsibility to:1. Mitigate actual conflicts of interest, regularly communicate with business associates to avoid apparent conflicts of interest. Advise all parties of any potential conflicts.2. Refrain from engaging in any conduct that would prejudice carrying out duties ethically.3. Abstain from engaging in or supporting any activity that might discredit the profession.CredibilityMembers have a responsibility to:1. Communicate information fairly and objectively.2. Disclose all relevant information that could reasonably be expected to influence an intended user’s understanding of the reports, analyses, or recommendations.3. Disclose delays or deficiencies in information, timeliness, processing, or internal controls in conformance with organization policy and/or applicable law.End of Chapter 1