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Cost accounting
1. Chapter 1
Introduction to Cost and Management
Accounting in a Global Business
Environment
Cost Accounting
Traditions and Innovations
Barfield, Raiborn, Kinney
2. Learning Objectives (1 of 3)
• Explain the relationship between financial
and management accounting
• Describe the relationships among cost,
financial, and management accounting
• Describe the role of ethics in guiding
workforce behavior
• Identify the factors that influence the
globalization of business
3. Learning Objectives (2 of 3)
• List the primary factors and constraints that
influence an organization’s strategy
• Explain the impact of the competitive
environment on an organization’s strategy
• Clarify the impact of the accounting
function on achievement of strategic goals
and objectives
4. Learning Objectives (3 of 3)
• Explain the effect of the product life cycle
on the company segment’s mission
• Describe the importance of the value chain
6. Accounting
• Provides information to external parties
– Stockholders, creditors, regulators
• Estimates the cost of products produced and
services provided
• Provides information to internal decision
makers
– To plan, control, and evaluate performance
7. Two Types of Accounting
Financial
• Meet external
information needs
• Comply with GAAP
Management
• Meet internal
information needs
• Provide product
costing information
9. Management Accounting Should
Provide information
useful for
making decisions
and controlling
operations
Provide product costing information
for external financial statements
15. International trade of goods
and services
International movement of
labor
International flows of
capital and information
Global Business Environment
16. Global Business Challenges
• Understand the factors influencing
international business markets
• Devise a long-term plan to achieve
organizational goals
• Develop information systems that keep the
company’s operations consistent with its
plans and goals
17. Global Business Environment
• Electronic Commerce
• Trade Agreements
– North American Free Trade Agreement
(NAFTA)
– General Agreement on Tariffs and Trade
(GATT)
18. Members agreed
to allow duty-free
transfer of goods
under certain
conditions
North American Free Trade
Agreement (NAFTA)
19. General Agreement on
Tariffs and Trade (GATT)
To provide a “level playing field” for
trade among the 100+ signatory nations
21. Ethical Considerations
– Is it legal?
– Does it comply with our values?
– How will it look in the newspaper?
– If you do it, will you feel bad?
– If it’s wrong, don’t do it.
– If you’re not sure, ask.
Global Business Environment
25. Organizational Strategy
• Organizational Structure
• Core Competencies
– A higher proficiency than the competitors
– Technological innovation
– Engineering
– Product development
– After-sale service
26. Organizational Strategy
• Organizational Structure
• Core Competencies
• Organizational Constraints
– Monetary Capital
– Intellectual Capital
• Human Capital
• Structural Capital
• Relationship Capital
27. Organizational Strategy
• Organizational Structure
• Core Competencies
• Organizational Constraints
• Organizational Culture
– An organization’s norms
• internal and external
• formal and informal
28. Organizational Strategy
• Organizational Structure
• Core Competencies
• Organizational Constraints
• Organizational Culture
• Environmental Constraints
– Limitations on strategy caused by external
differences in culture, competitive market
structures, fiscal policy, laws, or political
situations
29. Business Intelligence System
• Information about internal processes
• Knowledge of markets, technologies,
and competitors
Formal process for gathering and analyzing
information and producing intelligence to
meet decision-making needs
32. Accounting Information
• Strategic Resource Management
– Planning for deployment of resources to create
value for customers and shareholders
• Value Chain—Foundation of SRM
– Set of processes that convert inputs into
products and services
Use accounting information to evaluate the
value chain to improve strategic resource
management
33. The Accountant’s Role
• Accountants provide information that is used to
– make strategic decisions
– measure and evaluate management
– provide appropriate incentives
– provide information about the value chain
34. Questions
• What is the relationship among cost,
financial, and management accounting?
• How do ethics guide workforce behavior?
• What is the impact of the accounting
function on achievement of strategic goals
and objectives?
