Fasab handbook of federal accounting standards and other. Chapter 3 basic cost management concepts learning objectives 1. Basic cost management concept free download as powerpoint presentation. Basic cost management concepts and accounting for mass customization operations multiple choice questions 1. Investment fundamentals an introduction to the basic concepts of investing this guide has been produced for educational purposes only and should not be regarded as a substitute for investment advice. Initially, cost accounting confined itself to cost ascertainment and presentation of the same mainly to find out product cost. Basic cost conceptsbasic cost concepts a cost object is any item, such as products, customers, departments, projects, activities, and so on, for which costs are measured and assigned. But the most widely accepted are functions of management given by koontz and odonnel i. Management accounting and managerial accounting are synonymous. The worldcom controller allegedly did not perform his professional duties in accordance with relevant laws, regulations, and ethical standards for practitioners of managerial. After studying this chapter, you should be able to. Full external financial reporting especially inventory and cost of sales analyzing economic performance cost type contracts programming normal pricing decisions 2. Basic concept of business management in a single page for non mba types published on may 21, 2015 may 21, 2015 30 likes 3 comments.
Adhering to the far and contract pricing reference guides cprg, you will learn not only the basics of conducting a cost and price analysis, but also master the necessary quantitative tools. The first variable could be labeled goal difficulty, and the second, amount of insurance sold. Basic concepts of cost accounting slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. A project management plan is created by a project manager. Basic concepts of strategic cost management by joshua b on prezi. A closer look basicnonbasic classification of debt instruments under frs 102 the accounting for financial instruments will be one of the biggest challenges for entities adopting frs 102 the financial reporting standard applicable in the uk and republic of ireland for the first time. Project budgeting explained learn what project budgeting is, why it is important, and how to prepare a budget for your project. Because something is limited, we need to make decisions regarding how we use and allocate our resources.
Functions of management planning, organizing, staffing. The cost management information system, on the other hand, produces outputs for internal users, and the criteria that govern inputs and processes are directly related to management objectives. Investment fundamentals an introduction to the basic concepts. Basic concept of business management in a single page for non.
Cost management is a method of reducing operating or production expenses in order to provide less expensive products or services to consumers. For theoretical purposes, it may be convenient to separate the function of management but practically these functions are overlapping in nature i. Knowing how to perform cost and price analyses is vital to your projects budgetary success. In 1995, the united states published the statement of federal financial accounting standards sffas. Pdf chapter 2 basic cost management concepts hg7d4k. Project cost estimating tools and techniques learn which project cost estimating tools and techniques can help you develop more accurate cost estimates for your projects. T his paper addresses cost management and its primary. Introduction and basic concepts of costing in any manufacturing activity understanding the nature and behavior of costs is of fundamental significance. Rather, fixed manufacturing cost is treated as a period cost and, like selling and administrative expenses, it is charged off in its entirety against revenue each period. The cost management information system is primarily concerned with producing outputs for internal users using inputs and processes needed to satisfy management objectives.
We can define management in many ways like, manage man tactfully or management is an art of getting things done by others. Summary organizational activities and cost drivers basic concepts key. Theories, models and basic concepts introduction in this chapter we cover some of the basic theories and models that form the underpinnings on which the rest of the book are based and in the next chapter, we go into some issues of human performance in more detail. The life of a business unit is indefinite as per the going concern concept. Basic cost management concepts focus on ethics located before the chapter summary in the text. An activity is a basic unit of work performed within an organization. A bicycle is a cost object when you are determining the cost to produce a bicycle. Chapter 3 basic cost management concepts chapter 3 basic. Cost control is the practice of identifying and reducing business expenses to increase profits, and it starts with the budgeting process.
Consequently the cost of a unit of product in inventory or cost of goods sold under this method does not contain any fixed overhead cost. Basic cost management concepts flashcards from annmarie c. Jan 04, 2012 helpful for management begineers to understand basic concepts of management slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. Basic concept of business management in a single page for. They also provide an example to illustrate the concept of relevant cost. The cost accounting information system is a cost management information subsystem designed to assign costs to products, services, and other objects as management needs specify. Explain the cost driver concepts at the activity, volume, structural, and executional levels. The basic terminology and concepts that you will need to know to be able to do any management accounting.
A cost object can be a product, service, process or any items which management requires cost information. Cost management formerly journal of cost management ah. Economics is the study of scarcity and choice scarcity means that there is a finite amount of a good or service basically they are limited. The cost management information system, therefore, has more flexibility than the financial accounting information system. The way that costs are assigned depends on their nature.
High quality cost management systems should have an organizationwide perspective. Apr 15, 2010 the information provided by cost accounting to the management is helpful for cost control and cost reduction through functions of planning, decision making and control. Feb 28, 2015 types of management accounting information and their uses cost, revenue, or asset construction uses historical data future estimates 1. Most of them also crop up in financial accounting and in general discussion of business. A project is a temporary effort to create a unique product, service or result. The operational control information system is a cost management information subsystem designed to provide accurate and timely feedback concerning the performance of managers and others relative to their planning and control of activities. Which of the following would not be a benefit of a cost management system. Basic management skills management is a topic that is as vast as the sky.
Managerial accounting for managers chapter 2 cost concepts duration. Conceptual framework for managerial costing, as well as certainty that the culture. The success of an enterprise in a highly competitive world depends on the ability of the organization to ascertain and control its costs. Professor liburd lecture 1 overview 12414 please visit our website at time stamps 0. Mcgrawhilli rwin basic cost management concepts and accounting for mass customization operations chapter 2 22 process of management decision making directing control planning strategy formulation managers need cost information to perform each of these functions. A closer look basicnonbasic classification of debt. Basic management functions great success in any enter prise comes from a balanced combination of three elements. A cost management subsystem designed to provide accurate and timely feedback concerning the performance of managers and others relative to their planning and control activities is called the. Basic cost management concept cost accounting cost of.
Roger dawson 1 chapter o bjectives establish the bene ts of planning and address the implications of the failure to plan. If you continue browsing the site, you agree to the use of cookies on this website. Describe a cost management information system, its objectives and major subsystems, and indicate how it relates to other operating and information systems. A stepbystep approach to implementing cost management. Basic concepts of management accounting management. Perspectives on cost accounting for government fasab. Youll need to know this stuff even if you never do any accounting yourself but employ others to do it for you. However, for the purpose of management information system, management comprises the. In other words, its the process management uses to analyze its production and streamline its operations to keep costs low and manage expenses in the future.
Cost data, once classified and recorded for a specific application, are appropriate for use in any application. Chapter 02 basic cost management concepts 21 chapter 2 basic cost management concepts learning objectives. Different cost concepts and classifications are used for different purposes. He identifies the need of the moment for particular dimensions and accordingy focuses his on one or more of the 3 dimensions and takes actions. Basic cost management concepts accounting 270 with gifford at state university of new york geneseo studyblue.
Chapter 3 basic cost management concepts chapter 3. Planning, organizing, staffing, directing and controlling. Basic concepts in research and data analysis 5 notice how this statement satisfies the definition for a hypothesis. Planning, organizing, leading, controlling functions of management is a systematic way of doing things. When it comes to the skills that are required to become a good manager, the list may be endless. For many readers, some of the concepts will be old hat, somewhat. A direct costs is easily traceable with a high degree of accuracy and indirect, or overhead, cost cannot be easily identifiable with a particular object. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Management is a process to emphasize that all managers, irrespective of their aptitude or skill, engage in some interrelated functions to achieve their desired goals. An accounting information system is a system consisting of interrelated manual and computer parts, using processes such as collecting, recording, classifying, summarizing, analyzing, and managing data to provide output information to users. The 3 dimensions of management a manager has to have aptitude and do justice to all the above 3 dimensions, to be successful.
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