To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com CHAPTER 12 INTRODUCTION TO COST MANAGEMENT SYSTEMS Learning Objectives After reading and studying Chapter 12, you should be able to answer the following questions: Why organizations have management control systems? What is a cost management system? What are the organizational roles of a cost management system? What factors influence the design of a cost management system? What are the three groups of elements that comprise a cost management system, and what are the purposes of these elements? What is gap analysis and how is it used in the evolution of a cost management system? ©2011 Cengage Learning All Rights Reserved SM Cost Accounting 8th Edition by Raiborn and Kinney Visit http://downloadslide.blogspot.com to download more slides, ebooks, solution manual, and test bank To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Chapter 12: Introduction to Cost Management Systems IM Terminology Black box: an operation whose exact nature cannot be observed Cost management system (CMS): a set of formal methods developed for planning and controlling an organization’s cost-generating activities relative to its short term objectives and long term strategies Cost structure: the relative composition of an organization’s fixed and variable costs and, thus, how costs change relative to changes in production or sales volume Enterprise resource planning (ERP) systems: packaged business software systems usually involving a large number of separate modules that collect data from individual processes in the firm (sales, shipping, distribution, and so forth) and assemble that data in a form accessible by all managers Gap analysis: the study of the differences between two information systems, often a current system and a proposed system Management control system (MCS): an information system that helps managers gather information about actual organizational occurrences, make comparisons against plans, effect changes when they are necessary, and communicate among appropriate parties; it should serve to guide organizations in designing and implementing strategies so that organizational goals and objectives are achieved Management information system (MIS): a structure of interrelated elements that collects, organizes, and communicates data to managers to help them plan, control, make decisions, and evaluate performance Organizational culture: the underlying set of assumptions about the entity and the goals, processes, practices, and values that its members share Organizational form: an entity’s legal nature (for example, sole proprietorship, partnership, corporation) Profit sharing: an incentive payment to employees that is contingent on the level of organizational profit generated Radio frequency identification (RFID): a process that uses exceptionally small “flakes” of silicon to transmit a code for the item to which it is attached; used for bar code readers ©2011 Cengage Learning All Rights Reserved SM Cost Accounting 8th Edition by Raiborn and Kinney Visit http://downloadslide.blogspot.com to download more slides, ebooks, solution manual, and test bank To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Chapter 12: Introduction to Cost Management Systems IM Lecture Outline LO.1: Why organizations have management control systems? A Introduction A fundamental concern of managers is identifying levers that affect organizational costs and benefits Managers use models and information systems to improve their understanding of costs and benefits and to identify drivers of costs and revenues Even though directly linked to the managerial functions of planning, controlling, decision making, and performance evaluation, cost accounting information is frequently found to be of limited value to managers because that information is shaped by the more dominant financial reporting demands In designing cost accounting systems, the general internal use of information and the specific application of information to manage costs are receiving increased attention This chapter introduces management information and control systems, which offer a foundation and context for understanding the roles of the cost management system (CMS), a system first introduced in Chapter a The chapter also discusses concepts and approaches to designing information systems that support the internal use of accounting and other information to manage costs, giving particular emphasis to the main factors that determine the structure and success of a CMS, the factors that influence the design of such a system, and the elements that compose the system B Introduction to Management Information and Control Systems A Cost Management System (CMS) is part of an overall management information and control system Text Exhibit 12-1 illustrates the types of information needed in an organization to meet the requirements of individuals in performing their managerial functions as well as requirements of external parties in performing their investment and credit-granting functions A management information system (MIS) is a structure of interrelated elements used to collect, organize, and communicate data to managers so they can plan, control, make decisions and evaluate performance a The emphasis in an MIS is satisfying internal demands for information rather than external demands b In most modern organizations, the MIS is computerized for ease of access to information, reliability of input and processing, and ability to simulate outcomes of alternative situations ©2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Chapter 12: Introduction to Cost Management Systems IM 4 The accounting function is charged with the task of providing information to interested external parties such as creditors and suppliers relative to payments and purchases as well as to the government for mandatory reporting to regulatory agencies Managers use internally and externally generated information to manage their organizations The MIS is part of the management control system a As illustrated in text Exhibit 12-2, a control system has the following four primary components: i a detector or sensor, which is a measuring device that identifies what is actually happening in the process being controlled; ii an assessor, which is a device for determining the significance of what is happening Usually, significance is assessed by comparing the information on what is actually happening with some standard or expectation of what should be happening; iii an effector, which is a device that alters behavior if the assessor indicates the need for doing so This device is often called “feedback;” and iv a communications network, which transmits information between the detector and the assessor and between the assessor and the effector b A management control system is not merely a mechanical process, it also requires the application of judgment i Thus, a management control system can be referred to as a black box, which is defined as an operation whose exact nature cannot be observed LO 2: What is a cost management system? C Defining a Cost Management System A cost management system (CMS) consists of a set of formal methods developed for planning and controlling an organization’s cost-generating activities relative to its short term objectives and long term strategies An effective CMS helps managers face two major challenges: a achieving profitability In the short-run; and b maintaining a competitive position in the long-run Text Exhibit 12-3 illustrates the organizational role of a cost management system which is providing information useful for managing the organization’s core competencies Text Exhibit 12-4 summarizes the differences in the information requirements for organizational success in the short-run and long-run Text Exhibit 12-5 illustrates how a CMS should integrate information from all areas of the firm and provide managers faster access to more cost information that is relevant, detailed, and appropriate for short-and-long-term decision making ©2011 Cengage Learning All Rights Reserved SM Cost Accounting 8th Edition by Raiborn and Kinney Visit http://downloadslide.blogspot.com to download more slides, ebooks, solution manual, and test bank To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Chapter 12: Introduction to Cost Management Systems IM LO.3: What are the organizational roles of a cost management system? D The Roles of a Cost Management System A CMS can be viewed as having six primary goals: a to develop reasonably accurate product costs, especially through the use of cost drivers; b to assess product/service life-cycle performance; c to improve understanding of processes and activities; d to control costs; e to measure performance; and f to allow the pursuit of organizational strategies A CMS should primarily provide the means of developing accurate product or service costs a Thus, the system must be designed to use cost driver information to trace costs to products and services b Traceability has been made easier by improved information technology, including bar coding and radio frequency identification (RFID), which uses exceptionally small “flakes” of silicon to transmit a code for the item to which it is attached The product/service costs generated by the CMS constitute the input to managerial processes and such costs are used to plan, prepare financial statements, assess individual product/service profitability and period profitability, establish prices for cost-plus contracts, and create a basis for performance measurements The financial accounting system does not reflect life-cycle information a The CMS should provide information about the life-cycle performance of a product or service Without life-cycle information, managers will not have a basis to relate costs incurred in one part of the life cycle to costs and profitability of other parts A CMS should help managers understand business processes and organizational activities so that they can make cost-beneficial improvements in production and processing systems The cost accounting system’s original purpose was to control costs, and in today’s global competitive environment, that is still an important function a A cost can be controlled only when the related activity is monitored, the cost driver is known, and the information is available The information produced by a CMS should help managers measure and evaluate performance To maintain its competitive position, a firm must generate information necessary to define and implement its organizational strategies Therefore, the CMS must be flexible ©2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Chapter 12: Introduction to Cost Management Systems IM LO.4: What factors influence the design of a cost management system? E Designing a Cost Management System The CMS must be tailored to the unique characteristics of the firm a Some overriding factors important in designing a CMS are shown in text Exhibit 12-6 and described in the text Organizational form, structure, and culture a An entity’s legal nature is reflected in its organizational form A firm may operate in the form of a corporation, a general partnership, a limited partnership, a limited liability partnership (LLP), and a limited liability company (LLC) b Organizational structure refers to how authority and responsibility for decision making are distributed in an entity i Although the current competitive environment is conducive to a high degree of delegation, top managers usually retain authority over operations that can be performed more economically centrally because of scale economies ii In designing the organizational structure, top managers normally try to group subunits either geographically or by similar missions or natural product clusters These aggregation processes provide effective cost management because of proximity or similarity of the subunits under a single manager’s control iii Text Exhibit 12-7 describes the three generic missions that business subunits can pursue (build, harvest, or hold) Subunits pursuing a “build” mission use more cash than they generate Such subunits invest cash today with an expectation of future returns These are the high growth oriented subunits of the firm At the other extreme, subunits pursuing a “harvest” mission are expected to generate excess cash and have a much shorter investment horizon Between the build and harvest missions is the hold mission which applies to those subunits that are pursuing a balance between growth and profit generation iv The extent to which managers delegate also determines who will be held accountable for cost management and organizational control Thus, the CMS must provide relevant and timely information to persons who are making decisions c Organizational culture refers to the underlying set of assumptions about an entity and the goals, processes, practices, and values its members share i For example, a well-designed CMS is instrumental in providing a foundation for companies with an organizational culture that emphasizes cost savings and continuous improvement ©2011 Cengage Learning All Rights Reserved SM Cost Accounting 8th Edition by Raiborn and Kinney Visit http://downloadslide.blogspot.com to download more slides, ebooks, solution manual, and test bank To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Chapter 12: Introduction to Cost Management Systems IM Organizational mission and core competencies a Knowledge of the organization’s mission and core competencies are essential in designing a CMS i The mission provides a long-term goal toward which the organization wishes to move b In pursuing their mission, companies can either avoid or confront competition i ii Differentiation is the most common approach to avoiding competition Differentiation involves the avoidance of competition by attempting to be more adept in some way than other entities Products can be differentiated based on quality, functionality, and markets served Another way to avoid competition is to establish a position of cost leadership by becoming the low cost producer or provider; competition is held in abeyance because prices can be set that emphasize the cost efficiencies iii Confrontation is a strategy in which companies still try to differentiate their products by introducing new features or try to develop a price leadership position by dropping prices c Text Exhibit 12-8 illustrates how the strategy of the firm, together with the life cycle stages of products, determines what a firm must well to be successful at any point in time i The exhibit also illustrates how the information requirements of managers change over time as the life cycle evolves and therefore depend on the strategy being pursued d An organization can clarify its mission by identifying core competencies i Core competencies are the operational dimensions that are key to an organization’s survival ii Most organizations consider timeliness, quality, customer service, efficiency and cost control, and responsiveness to change as five critical competencies iii Once competencies are identified, the CMS can be designed to gather information related to measurement of those items and to generate output about those competencies in forms that are useful to interested parties Operations and Competitive Environment and Strategies a Managers can assess internal specifics related to the design of a CMS once the organizational “big picture” has been established b The firm’s cost structure is a primary consideration ©2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Chapter 12: Introduction to Cost Management Systems IM i Cost structure has traditionally been defined in terms of relative proportions of fixed and variable costs and, thus, how costs change relative to changes in production or sales volume ii The percentage of fixed (or long-term variable) costs within organizational cost structures has increased dramatically in recent years mostly due to the increased use of automated technology iii The cost management implications of this shift in cost structure are significant Fewer costs are susceptible to short-run control so cost management efforts are increasingly directed toward the long run iv The management of fixed costs is partially a matter of capacity management: high capacity utilization (if accompanied by high sales volumes) allows a firm to decrease its unit fixed costs in following a low-cost production strategy v c A firm has less flexibility to implement short-term actions to effect a change in the level of fixed or long-term variable costs when such costs have increased due to higher levels of technological investment In pursuing either a differentiation or cost leadership strategy, the management of high technology costs requires beating competitors to the market with new products d A company that is first to market may be able to set a price that provides the opportunity to obtain a large market share which may lead to an industry position of cost leadership i Time to market is critical in the high-tech industry because profitability depends o selling an adequate number of units at an acceptable price before competitors surface ii Faster time to market and shorter product life cycles are pushing companies into more frequent product transitions, requiring managers to confront the potential rewards and challenges associated with product introductions and phase outs iii Reducing time to market is one way a company can cut costs Text Exhibit 12-9 describes other techniques e Expeditious time to market requires a short development stage in the product life cycle Thus, getting to market quickly and profitably may require a compromise between product innovation and superior product design i f A firm may have to incur costs associated with design flaws (such as the cost of engineering changes) that could have been avoided if more time had been allowed during development Time to market is important because of the competitive advantages it offers and because of compressed product life cycles The faster a product gets to market, the greater market share that can be captured Text Exhibit 12-10 demonstrates the relationship between time to market and market share g Supplier relationships constitute another aspect of an organization’s operating environment Many companies that have formed strategic alliances with suppliers have found such relationships to be effective cost control mechanisms ©2011 Cengage Learning All Rights Reserved SM Cost Accounting 8th Edition by Raiborn and Kinney Visit http://downloadslide.blogspot.com to download more slides, ebooks, solution manual, and test bank To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Chapter 12: Introduction to Cost Management Systems IM h The need to integrate an organization’s current information system is another operating environment consideration in the design of a CMS The “feeder” systems (such as payroll, inventory valuation, budgeting, and costing) that are in place should be evaluated to determine answers to the following questions: i What input data are being gathered and in what form?; ii What outputs are being generated and in what form?; iii How the current systems interact with one another and how effective are those interactions?; iv Is the current chart of accounts appropriate for the cost management information desired?; and v i j What significant information issues (such as yield, spoilage, and cycle time) are not presently being addressed by the information system and could those issues be integrated into the current feeder systems? With knowledge of the previous information, management must analyze the cost-benefit tradeoffs that relate to the design of the CMS i As the costs of gathering, processing, and communicating information decrease, or as the quantity and intensity of competition increase, more sophisticated cost management systems are required ii As companies focus on customer satisfaction and their product and service offerings expand, the generation of better cost information is essential to long-run organizational survival and short-run profitability Proper incentives and reporting systems must be incorporated into the CMS to motivate managers to make decisions that are consistent with organizational strategies LO.5: What are the three groups of elements that comprise a cost management system, and what are the purposes of these elements? F Determine Desired Components of CMS A CMS is composed of three primary elements: motivational elements, informational elements, and reporting elements as detailed in Text Exhibit 12-11 Motivational elements a Performance measures are chosen to be consistent with organizational goals and objectives and to “drive” managers toward designated achievements i These measurements may be quantitative or nonquantitative, financial or nonfinancial, and short-term or long-term b The motivational elements create a linkage between the internal information systems and the performance of the firm as perceived by the stockholders ©2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Chapter 12: Introduction to Cost Management Systems i c IM 10 Text Exhibit 12-12 indicates how this linkage typically is operationalized The motivational elements can also create dysfunctional behaviors if they create performance pressure on managers that is too intense i Among possible dysfunctional behaviors is the intentional misstatement of transactions and accruals by managers to distort the performance measurements of the accounting system d Firms develop internal controls to protect the integrity of financial reports and to safeguard assets i The Sarbanes-Oxley Act of 2002 (Section 404) requires companies to establish and maintain an adequate system of internal controls over financial reporting and report on any material weaknesses within that system e The performance measurement system should be designed to: i support the organization’s mission and competitive strategies; ii motivate employees and managers to act in the best interest of the organization and its subunits; and iii help recruit and retain qualified employees f Different forms of rewards have different incentive effects and can reflect different time orientations i Longer-term incentives generally encourage managers to be more long-term oriented in their decisions ii Short-term incentives encourage managers to focus on the near future g Performance rewards for top managers may consist of both short-term (e.g., cash) and long-term incentives (e.g., stock options) h The rewards for subunit managers should be based on the specific subunit’s mission i i Today’s companies experiment with a variety of incentives as carrots to induce employees and managers to act in the best interest of shareholders i j For example, managers of subunits charged with a “build” mission should receive long-term incentives and be evaluated based on longer-term performance measures while managers of subunits charged with a “harvest” mission must be more oriented to the short term Profit sharing refers to compensation that is contingent on the level of organizational profit generated Performance measurement selection and the reward structure are significant since managers evaluate decision alternatives based on how the outcomes may impact the selected performance measurement and reward criteria ©2011 Cengage Learning All Rights Reserved SM Cost Accounting 8th Edition by Raiborn and Kinney Visit http://downloadslide.blogspot.com to download more slides, ebooks, solution manual, and test bank To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Chapter 12: Introduction to Cost Management Systems k IM 11 Performance measurement is meaningful only in a comparative or relative sense Typically, current performance is assessed relative to past or expected performance or relative to customer expectations Information elements a A CMS should be able to provide the financial information necessary for budget preparation Budgets provide both a specification of expected achievement as well as a benchmark against which to compare actual performance b Firms must place greater emphasis on management of the product life cycle as competitive advantage becomes more and more difficult to maintain The life cycle of many products will shorten as firms become more adept at duplicating their competitors’ offerings i In the future, managers will confront the fact that products will spend less time in the maturity stage of the product life cycle and thus firms will be forced to find ways to continue to squeeze cash from their mature products to support new product development ii The future will also place greater emphasis on a firm’s ability to adapt to changing competitive conditions c Text Exhibit 12-13 illustrates the shift in control emphasis of future competitive environments which will increase the importance of competitive flexibility The accounting information system must be able to relate resource consumption and cost to alternative product and process designs in order to provide information relevant to product design and development d The system should produce cost information with minimal distortions from improper or inaccurate allocations or from improper exclusions i Because the information required to support decisions depends on the unique situational factors of the firm and its subunits, the information system must enable the decision maker to evaluate how alternative decision choices would impact the items that are used to measure and evaluate the decision maker’s performance ii Techniques discussed in other chapters, such as relevant costing, quality cost management, job order and process costing, and cost-volume-profit analysis, relate to the role of cost information in decision making Reporting elements a The CMS must be effective in generating fundamental financial statement information including inventory valuation and cost of sales information b A responsibility accounting system provides information to top management about the performance of a subunit and its manager; the responsibility accounting system separately tracks costs and, if appropriate, revenues for each subunit c Performance reports are useful only to the extent that the measured performance of a given manager or subunit can be compared to a meaningful baseline ©2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Chapter 12: Introduction to Cost Management Systems IM 12 d The movement toward delegation of authority, or decentralization, has increased the importance of an effective reporting system e Only by linking costs to activities and activities to strategies, can the yield on costs be understood f i This logic suggests that organizational management is made easier by breaking down operations into subunits ii Top managers can assign responsibility and accountability for distinct subunit missions to a particular manager Costs can be managed effectively by subunit managers only when they are provided with relevant information i Since each manager requires unique information, accountants face the task of providing information that is tailored to each subunit manager’s context ii Managers also need to know how the alternatives are likely to impact their expected rewards g A reporting system provides a comparison of expected to actual performance for each manager i Optimal organizational performance is realized only if there is consistency for each subunit across the elements of motivation, information, and reporting h One of the evolving challenges in today’s business environment is the management of activities across the entire supply chain i Future financial specialists will develop cost management systems that include activities not occurring within single firms but occurring within a supply chain and involving several firms LO.6: What is gap analysis, and how is it used in the evolution of a cost management system? G Perform Gap Analysis and Assess Improvements Gap analysis is the study of the differences between two information systems, often a current system and a proposed system a Gap analysis allows a comparison of the information that is currently available with the information that is needed to assess the degree of conformity between the systems b Any differences represent “gaps” to be overcome c In many situations, it is impossible to eliminate all system gaps in the short term potentially because of software or hardware capability or availability d Methods of reducing or eliminating the gaps should be specified in detail, qualitatively and quantitatively, in terms of costs and benefits ©2011 Cengage Learning All Rights Reserved SM Cost Accounting 8th Edition by Raiborn and Kinney Visit http://downloadslide.blogspot.com to download more slides, ebooks, solution manual, and test bank To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Chapter 12: Introduction to Cost Management Systems IM 13 e Top management must prioritize which gap issues should be addressed and in what order i Once the CMS has been established, previously identified gaps can become irrelevant or can rise in rank of priority ii Only through continuous improvement efforts can the cost management system provide an ongoing, viable network of information to users Technological impact on cost management system design and implementation is significant a With advancements in technology, it is becoming possible to link a company’s feeder systems into a truly integrated CMS i Enterprise resource planning (ERP) systems are packaged business software systems that allow companies to: Manage and coordinate a myriad of organizational activities; Present complex project information in a way that indicates current status; Improve operational efficiencies and timeliness of information; Work effectively by running inventory, supply chain, and distribution functions globally; Take advantage of cost savings from shared service centers; and Contribute substantially to competitive advantage and strategic value ERP software often involves a large number of separate modules that collect data from individual processes in the firm (sales, shipping, distribution, and so forth) and assemble that data in a form accessible by all managers (ERP is discussed in detail in Chapter 19.) H (Appendix) Cost Management System Conceptual Design Principles Computer Aided Manufacturing-International, Inc (CAM-I) formed a consortium of progressive industrial organizations, professional accounting firms, and government agencies to define the role of cost management in the new advanced manufacturing environment A conceptual framework of principles for designing a CMS is provided in text Exhibit 12-14 a If a CMS provides the suggested information on costs, performance measurements, and investment management, that system will be relevant to management’s decision-making needs b The set of principles as a whole suggests a radical departure from traditional practices, even though the principles are compatible with existing accounting systems i The principles focus management attention on organizational activities, product life cycles, integrating cost management and performance measurement, and integrating investment management and strategic management ©2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Chapter 12: Introduction to Cost Management Systems IM 14 Multiple Choice Questions (LO.1) Select the incorrect statement concerning the historical relationship between cost accounting systems and financial accounting systems a The two systems often compete b Financial accounting systems have been the dominant system c For financial reporting requirements, cost information must be highly segmented d Information provided by the financial reporting system is often of little value for cost management purposes (LO.1) A structure of interrelated elements that collects, organizes, and communicates data to managers so they can plan, control, make decisions, and evaluate performance is a: a cost management system (CMS) b enterprise resource planning (ERP) system c management control system (MCS) d management information system (MIS) (LO.1)Which of the following is not a primary component of a management control system? a Assessor b Black box c Effector d Sensor (LO.2) Which of the following is not an organizational role of a cost management system? a Help manage core competencies b Link plans and strategies to actual organizational performance c Help identify tactics to fend off organizational threats d Identify the organization’s mission (LO.3) Which of the following is not a primary goal of a cost management system? a Assess product/service life-cycle performance b Develop accurate product costs c Identify the company’s least profitable customers d Measure performance (LO.3) The product/service costs generated by the CMS are used for which of the following purposes? a Prepare financial statements b Create a basis for performance measurements c Establish prices for cost-plus contracts d All of the above (LO.4) The relative composition of an organization’s fixed and variable costs and, thus, how costs change relative to changes in production or sales volume is referred to as its: a cost behavior b cost horizon c cost pattern d cost structure (LO.4) The underlying set of assumptions about the entity and the goals, processes, practices, and values that its member share is referred to as its: a mission b strategic plan c organizational culture d organizational structure ©2011 Cengage Learning All Rights Reserved SM Cost Accounting 8th Edition by Raiborn and Kinney Visit http://downloadslide.blogspot.com to download more slides, ebooks, solution manual, and test bank To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Chapter 12: Introduction to Cost Management Systems IM 15 (LO.4) The strategy of identifying and exploiting temporary opportunities for advantage is known as a a confrontational strategy b cost leadership strategy c differentiation strategy d systematic strategy 10 (LO.4) Core competencies which are the operational dimensions that are key to the company’s survival include: a quality b customer service c cost control d all of the above 11 (LO.4) Select the incorrect statement from the following a High-tech companies can’t pursue a cost leadership strategy due to the high costs of technology b Management of high technology costs requires beating competitors to the market with new products c Often, getting products to market quickly and profitably requires a compromise between product innovation and superior product design d The faster a product gets to market, the fewer competitive products will exist 12 (LO.4) Cost control (Cost Leadership), product replacement (Product Differentiation), and Distribution channel development (Confrontation) are activities for which product life cycle? a Build b Harvest c Hold d Grow 13 (LO.5) Stock options are an example of a: a cash incentive plan b short-term performance incentive c long-term performance incentive d none of the above 14 (LO.5) Select the item that incorrectly details the shift in control emphasis in future competitive environments? a Performance Measurement: From concentrating on multiple types of critical success measures to concentrating on financial results b Cost Standards: from using expected standards to using ideal standards c Budgeting: From developing annual budgets to developing rolling budgets d Product Offerings: From developing a limited number of product styles to engaging in mass customization to entice a wide variety of customers 15 (LO.6) Which of the following is not an objective of enterprise resource planning systems? a Manage and coordinate a myriad of organizational activities b Maintain the company’s various legacy information systems c Improve operational efficiencies d Take advantage of cost savings from shared service centers ©2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Chapter 12: Introduction to Cost Management Systems IM 16 Multiple Choice Solutions c d b d c d d c a 10 d 11 a 12 b 13 c 14 a 15 b ©2011 Cengage Learning All Rights Reserved SM Cost Accounting 8th Edition by Raiborn and Kinney Visit http://downloadslide.blogspot.com to download more slides, ebooks, solution manual, and test bank ... SM Cost Accounting 8th Edition by Raiborn and Kinney Visit http://downloadslide.blogspot.com to download more slides, ebooks, solution manual, and test bank To download more slides, ebook, solutions... SM Cost Accounting 8th Edition by Raiborn and Kinney Visit http://downloadslide.blogspot.com to download more slides, ebooks, solution manual, and test bank To download more slides, ebook, solutions... SM Cost Accounting 8th Edition by Raiborn and Kinney Visit http://downloadslide.blogspot.com to download more slides, ebooks, solution manual, and test bank To download more slides, ebook, solutions