Management Accounting chapter 1

Cost management

A philosophy, attitude, and set of techniques to create more customer value and achieve lower cost

Commitment

Continually finding ways to create more customer value at lower cost

Attitude

Proactively being apart of management decisions to develop and improve products and efficiency

Decision-making framework

Setting goals and objectives, gathering information, evaluating alternatives, planning and execution, and obtaining feedback

High risk, high reward

Build

Medium-to-high risk, medium-to-high reward

Hold

Medium-to-low risk, medium-to-low reward

Harvest

Low risk, low reward

Divest

Value chain

Begins with obtaining physical and human resources and ends by providing products or services that customers value, to create a competitive advantage

Porter's five forces

Existing competitors, new competitors, customer power, supplier power, threat of substitutes

Operational performance analysis

Evaluating plan for short-term performance

Strategic performance analysis

Evaluating plan for long-term performance

Cost benefit analysis

Quantitative and qualitative information about a proposed plan

Variance analysis

Differences between the expected and actual costs of business operations

IMA

Institute of management accountants

IMA ethical principles

Honesty, fairness, responsibility, objectivity

SOX

Sarbanes-Oxley Act

Who are responsible for their company's financial statement?

CEO and CFO must sign the statements and take responsibility

Internal control systems exist to assure that a company achieves:

Effectiveness in operations, reliability in financial reporting, and compliance with laws and regulations