The document provides an introduction to management information systems (MIS) in costing. It defines MIS as a process that provides information to manage an organization effectively. The key components of an MIS are management, information, and systems. An MIS captures, processes, stores, retrieves, and disseminates data to support management decision making. Developing an accurate cost management system is an important objective of integrating MIS into an organization's processes. The conceptual design of an MIS involves process, logical, and physical models to map how information flows through the system.

1. INTRODUCTION TO
MANAGEMENT
INFORMATION SYSTEM IN
COSTING
BY – ONKAR B.BHUJBAL

2. INTRODUCTION TO MIS IN
COSTING
• Information systems are a foundation for
conducting business today. Information
systems have become essential for helping
organisations operate in a global economy. In
many industries, survival and even existence is
difficult without extensive use of information
technology.

3. Major Objectives of Todays
Information System

4. Meaning of Management
Information System
• A MIS is a process that provides the information
necessary to manage an organization effectively.
• It generates essential components of prudent and
reasonable business decisions.
• Management Information Systems are processes
used by companies to provide management with
the best information for decision making.
• While many MIS in business today are
computerized, some mutual processes like
information evaluation and dissemination are still
used.

5. Concept of MIS
• The word MIS is a combination of three words
which are explained below:
• MIS= Management + Information + System
• Management:-
Management covers the planning, control, and
administration of the operations of a concern. The
top management handles planning, the middle
management concentrates on controlling, and
lower management is concerned with actual
administration.

6. • Information :-
Information, in MIS means processed data that helps
the management in planning, controlling and
operations. Data means all the facts arising out of the
operations of the concern. Data is processed i.e.
recorded, summarized, compared and finally
presented to the management in the form of MIS
report.
• System:-
Data is processed into information with the help of a
system. A system is made up of inputs, processing,
output and feedback or control.
Thus MIS means a system for processing data in
order to give proper information to the management
for performing its functions.

7. Data
ProcessingLogic
Computers
Human Beings
Database
Intelligence Design Choice
DecisionImplementation
Performance
DecisionMaking
Inform
ation
Data
MIS CONCEPT

8. Concept of Costing
• Costing is any system assigning cost to an
element of a business. Costing may involve
only the assignment of variable costs, which
are those costs that vary from activity ( such as
sales or number of employees)
• Costing may include assigning fixed cost and
variable cost.

9. Definitions of Management
Information System
• Henry C. Lucas:-
“MIS is a set of organized procedures which when executed provide
information to support decision-making.”
• Krober and Watson:-
“MIS as an organized set of processes that provide information to managers
to support the operation and decision making within an organisation.”

10. Characteristics of MIS
• Management oriented:-
The system is designed from the top to work
downwards. It is designed to provide information
directly to the top level management.
• Management directed:-
For the effectiveness of system designed,
management should continuously make reviews
or changes
• Integrated:-
It has to consider the various sub-systems, their
objectives, information requirements, etc.

11. • Common data flows:-
This concept avoids repetition and overlapping in
data collection and storage, combining similar
functions, and simplifying operations wherever
possible.
• Flexibility and ease of use:-
The MIS system is easy to use and more flexible,
such as any information can be stored, forecasted,
and deleted easily.
• Heavy planning element:-
A management information system take long time
for installation such as 2 to 3 years. Hence, it is an
long term planning.

12. Objectives of MIS
• Data capturing:-
MIS capture data from various internal and
external sources of organisation. Data capturing
may be manual or through terminals.
• Processing of Data:-
It may be processed to convert into required
information.
• Storage of Information:-
MIS stores the processed data or unprocessed
data for future use.

13. Objectives of MIS
• Retrieval of Information:-
MIS retrieves information from its stores as and
when required by various users.
• Dissemination of Information:-
Information, which is a finished product of MIS, is
disseminated to the users in the organisation. It is
periodic or online through computer terminals.

14. Functions of MIS
Functions
of MIS
Data
Capturing
Processin
g of Data
Storage
Informati
on
Retrieval
of
Informati
on

15. Advantages of MIS
• Aid in Decision-Making:-
MIS helps to managers and top level
management persons for decisions.
• Better Planning and Control:-
MIS is designed and managed in such a way that
it aggregates information, monitors the company’s
activities.
• Core Competencies:-
MIS provide the tools necessary to gain a better
understanding of the enterprise itself.

16. • Quick Reflexes:-
As a corollary to improved supply chain
management comes an improved ability to react
to changes in the market. Better MIS enables an
enterprise to react more quickly to their
environment.
• Enhance Supply Chain Management:-
With better information on the production
process, comes the ability to improve the
management of the supply chain, including
everything from the sourcing of materials to the
manufacturing and distribution of the finished
product.

17. Design of Management Information
System (Procedure of MIS)
Micro
Computer

18. Steps to be followed
1. Identify the information needs at all levels of
management.
2. List the objectives of MIS and anticipated
benefits.
3. Identify the systems constraints (Internal and
External)
4. Determine the information needs and
resources.
5. Develop the alternative conceptual design and
selecting one.
6. Preparing the conceptual design report.

19. COST
MANAGEMENT
SYSTEM WITH MIS

20. Meaning
• A cost management system (CMS) is a set of
formal methods developed for planning and
controlling an organisations cost managing
activities relative to its short-term activities and
long term strategies.
• It is primarily concerned with producing outputs
for internal users using inputs and processes
needed to satisfy management objectives.

21. Characteristics of Information in
Cost Management System
• Accuracy:-
Every information related to management or
accounting is accurate in MIS.
• Form:-
In cist management system, the information value
increases if the form in which it is to be supplied
matches the required.
• Timeliness:-
The information should be available when required.
Delayed information have less value as a resource.
• Relevance:-
The available information needs to be updated all the
time so that it could match its current utility.

22. Objectives of Cost Management
System
• Provide means to Develop Accurate Product or
Service Costs:-
CMS should provide means to develop accurate
product or service costs. Example, traceability has
been made easier by bar codes and radio frequency
identification (RFID).
• Provide Information about Life-Cycle
Performance of a Product or Service:-
The CMS provide information about life-cycle
performance of a product or service. This information
gives managers a basis to relate costs incurred in
one stage of the two costs and profitability of other
stages.

23. • Help Managers to Understand Processes and
Activities:-
A CMS helps managers to understand processes and
activities, so that they can make cost-beneficial
improvements in production and processing systems.
• Cost controlling:-
Control of costs for the purpose of cost management
systems, is still important.
• Generate Information to Managers:-
The CMS generates information helping managers for
evaluation of performance, including not only human
equipment but also future investment opportunities.
• Implements organizational strategies:-
It helps to implement the strategies and new policies which
are decided on time-to-time decisions of managers.

24. Designing a Cost Management
System
• In designing or revising a cost management
system (CMS), managers and accountants
must be attuned to the unique characteristics of
their firms. A generic cost management system
cannot be taken “off the shelf” and applied to
any organization because the CMS should be
tailored to the specific situation of each firm.

25. Steps for designing Cost
Management System
1) Organizational Form,
Structure, and Culture.
2) Organizational Mission and
Core Competencies.
3) Operations and Competitive
Environment and Strategies.

26. Determine Desired Components
of CMS
MOTIVATIONAL
ELEMENTS
INFORMATIONAL
ELEMENTS
REPORTING
ELEMENTS
 PERFORMANCE MEASUREMENTS.
 REWARD STRUCTURE.
 SUPPORT OF ORGANIZATIONAL
MISSION AND COMPETITIVE STRATEGY.
 SUPPORT OF BUDGETING PROCESS.
 EMPHASIS ON PRODUCT LIFE CYCLE.
 DIFFERENTIATION OF VALUE-ADDED
AND NON-VALUE ADDED ACTIVITIES.
 SUPPORT OF COST REDUCTION
INITIATIVES.
 FOCUS ON COST CONTROL
 ASSESSMENT OF CORE COMPETENCIES
AND ANALYSIS OF MAKE-OR-
OUTSOURCE DECISIONS.
 PREPARATION OF FINANCIAL
STATEMENTS.
 PROVISION OF DETAILS FOR
RESPONSIBILITY ACCOUNTING SYSTEM.

27. Conceptual Design of MIS
Process
Model
Logical
Model
Physical
Model

28. Contents of conceptual design of
MIS
• Process Model of MIS:-
A process needs the following entities to
function:-
a) Methods or Procedures.
b) Trained Operators.
c) Knowledge of Method and Machinery.
d) Materials.
e) Machinery.

29. • Logical Models of MIS:-
It should have the following functions such as:-
a) MIS
b) Science and Technology.
c) Management Science.
d) Data Information Technology.
These are usually graphical depiction of the
relationship between the resources, activities, outputs
and outcomes of a program. Logical models are
mostly used in the evaluation stage of program they
can however used during planning and
implementation.

30. Physical Model of MIS
Data
Capturing
Reporting
Data
Processing
Control
Support
Data Storage
and Retrieval
Design
Support
Modelling
and
Simulation