Cost Accounting

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JoetheDowd
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230747
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Cost Accounting
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2013-08-20 22:20:07
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Cost accounting terms at Metro State lesson one
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  1. What must accountants understand about an organization’s structure and business environment to perform effectively in that organization?
    • Organizational Strategy – a plan of how the firm will fulfill its goals and objectives by deploying its resources to create value for customers and shareholders
    •  a.   Most companies compete using either a “cost leadership” or “product differentiation” strategy.
    •       i.     Cost leadership refers to a company’s ability to maintain its competitive edge by undercutting competitor prices (e.g., Wal-Mart). 
    •      ii.    Product differentiation refers to a company’s ability to offer superior quality products or more unique services than competitors; such products and services are, however, generally sold at premium prices. (e.g.,  Mercedes-Benz G-Class). 

    Organizational Structure -- reflects the way in which authority and responsibility for making decisions are distributed in an organization.
  2. Cost leadership
    Cost leadership refers to a company’s ability to maintain its competitive edge by undercutting competitor prices (e.g., Wal-Mart).
  3. Product differentiation
    Product differentiation refers to a company’s ability to offer superior quality products or more unique services than competitors; such products and services are, however, generally sold at premium prices. (e.g.,  Mercedes-Benz G-Class).
  4. What is a value chain, and what are the major value chain functions?
    • Value Chain
    • a.    The value chain is a set of value-adding functions or processes that convert inputs into products and services for the organization’s customers                           
    • i.        Research and Development—experimenting to reduce costs or improve quality.                          
    • ii.        Design—developing alternative product, service, or process designs.                        
    • iii.        Supply—managing raw materials received from vendors to reduce costs and improve quality.                        
    • iv.        Production—acquiring and assembling resources to produce a product or render a service.                         
    • v.        Marketing—promoting a product or service to current and prospective customers.                       
    • vi.        Distribution—delivering a product or service to a customer.                       
    • vii.        Customer Service—supporting customers after the sale of a product or service. 
    • b.    Cost accountants help design the communication network that is used to communicate corporate strategy to all members in the value chain so that the strategy can be effectively implemented.
  5. Value Chain
    The value chain is a set of value-adding functions or processes that convert inputs into products and services for the organization’s customers
  6. How is a balanced scorecard used to implement an organization’s strategy?
    • a.    The balanced scorecard (BSC) is a framework that restates an organization’s strategy into clear and objective performance measures focused on customers, internal business processes, employees, and shareholders. 
    • b.    The BSC includes long-term and short-term, internal and external, financial and nonfinancial measures to balance management’s view and execution of strategy. 
    • c.    The balanced scorecard has four perspectives:                        
    •       i.      The learning and growth perspective focuses on using the organization’s intellectual capital to adapt to changing customer needs or to influence new customers’ needs and expectations through product or service innovations.                      
    •   ii.      The internal business perspective focuses on those things that the organization needs to do well to meet customer needs and expectations.                   
    •     iii.      The customer value perspective addresses how well the organization is doing relative to important customer criteria such as speed (lead time), quality, service, and price (both purchase and after purchase).                
    •      iv.     The financial perspective addresses the concerns of stockholders and other stakeholders about profitability and organizational growth.
  7. balanced scorecard
    The balanced scorecard (BSC) is a framework that restates an organization’s strategy into clear and objective performance measures focused on customers, internal business processes, employees, and shareholders.
  8. The balanced scorecard has four perspectives
    The learning and growth perspective

    The internal business perspective

    The customer value perspective

    The financial perspective
  9. The learning and growth perspective
    he learning and growth perspective focuses on using the organization’s intellectual capital to adapt to changing customer needs or to influence new customers’ needs and expectations through product or service innovations.
  10. The internal business perspective
    The internal business perspective focuses on those things that the organization needs to do well to meet customer needs and expectations.
  11. The customer value perspective
    The customer value perspective addresses how well the organization is doing relative to important customer criteria such as speed (lead time), quality, service, and price (both purchase and after purchase).
  12. The financial perspective
    The financial perspective addresses the concerns of stockholders and other stakeholders about profitability and organizational growth.

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