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Chapter 1 Cost Management and Strategy MCQ PART1 1) Which of the following does not represent a main focus of cost management information? A) Strategic management. B) Performance measurement. C) Planning and decision making. D) Preparation of financial statements. E) Internal audit and control. 2) Strategic management can be defined as the development of a sustainable: A) Chain of command. B) Competitive position. C) Cash flow. D) Business entity. E) Company image. 3) Cost management has moved from a traditional role of product costing and operational control to a broader strategic focus, which places an emphasis on: A) Competitive pricing. B) Domestic marketing. C) Short-term thinking. D) Strategic thinking. E) Independent judgment. 4) All of the following are examples of total quality management practices except: A) Redesign of a product to reduce its parts by 50 percent. B) Reduction in the movement required in a manufacturing job. C) Separating the sales and services functions. D) Raising raw material quality standards. Carl Angelo 100% found this document useful (3 votes) 11K views 6 pages Copyright© Attribution Non-Commercial (BY-NC) Available FormatsDOCX, PDF, TXT or read online from Scribd Share this documentDid you find this document useful?Is this content inappropriate?Report this Document 100% found this document useful (3 votes) 11K views6 pages Cost AccountingUploaded byCarl Angelo Full description In this article, you’ll be introduced to the cost management and gain a deeper understanding of common business accounting systems. One of the key findings of Deloitte’s 2019 annual global cost management survey was that if companies want effective cost management, they need to have in place:
Read: Cost management practices and trends in Europe and Belgium [1] The general consensus is that companies without a strategic imperative struggle to effectively manage costs. Over the past few decades, competitive pressure from the exponential growth in information technology, manufacturing technology, and service sectors has transformed how businesses operate. These major changes in the global economy have prompted the development of relevant and sustainable cost management practices. Cost management and decision-making play a major role in improving business performance. Careful cost analysis helps managers, analysts, and business owners to determine total costs and helps clients to determine their expected invoice. Cost management sets the preface for business costs and governs the actions to track the budget, to avoid going over budget. Cost-management decision-making creates a drive for better value at lower cost, to ensure projects are completed on time and are aligned with set goals and budget. Accounting systemsCost management systems help you to better manage business processes and customer needs. Let’s look at some related accounting systems that play important roles within the cost management information system. Cost accountingCost accounting:
ObjectivesThe objectives of cost accounting include:
Cost accounting provides data for periodical income statements and balance sheets, and actual figures to compare with estimates for different periods. Analysing this information helps business managers with effective decision-making. ScopeThe scope of cost accounting includes:
Collecting, analysing, and measuring costs can be done either by post costing or continuous costing. Post costing uses actual costs, whereas continuous costing analyses costs after an activity is completed. The scope of cost accounting also includes examining individual cost elements using a standard for each cost item and identifying variances. It also involves reviewing monthly or quarterly statements that reflect the cost and income data for an identified sale for that period. Cost accounting helps you to identify cost-effective solutions, informs decision-making, and facilitates cost benefit analysis. Management accountingManagement accounting:
Management accountants need effective communication skills to influence decision-making. Management accounting was once part of cost accounting, but over time it evolved in function and scope. The terms are still often used interchangeably. There are some underlying differences between the two, however, that you might want to consider before applying them to your business strategy.
Read the following article if you would like more information on the evolution of management accounting. Read: The origin and evolution of management accounting: A review of the theoretical framework [3] Financial accountingFinancial accounting is an accounting subsystem that:
This video explains the similarities and differences between financial and management accounting. This is an additional video, hosted on YouTube. Here’s a summarised version of the similarities and differences discussed in the video. References
What are the 4 main functions of cost management?While cost management is viewed as a continuous process, it helps to split the function into four steps: resource planning, estimation, budgeting and control.
What are the main uses of cost and management accounting information?Cost and management accounting is a form of accounting that aims to maximise profit by managing revenues and expenses. It provides data and reports used by managers to inform their strategies around long-term profit and growth.
What is the purpose of cost information?The cost information system is important because it monitors the results of all functions in the company. The detailed analysis of costs, the calculation of production cost, the loss quantification and the estimation of work efficiency provide a solid basis for financial control (Lepădatu, 2010) .
Why is cost management information important?The cost information system plays an important role in every organization within the decision-making process. An important task of management is to ensure the control over operations, processes, activity sectors, and not ultimately on costs.
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