A325

Cost Accounting

January 13, 2011

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 What we will do today
1) Introduce the course and ourselves
2) Go over the syllabus
3) Have an abbreviated discussion of
chapters 1 and 2.
4) Get started with Chapter 3

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 Syllabus
Professor: Reed Smith

Class times: Thursday 6:00 – 8:40 PM

Office: BUS 4026

Office Hours: Wednesday and Thursday 4:30 – 5:15 PM

Phone: 274-0867

e-mail: jrsmith2@iupui.edu

Web: bus.iupui.edu/johresmi/index.html

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 Syllabus - materials

Cost Management: A strategic emphasis

Blocher, Chen, Cokins, and Lin (5ed)

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 Syllabus - the way things work
1) Regular updates/modifications to they
syllabus will be on ONCOURSE
a) YOU ARE RESPONSIBLE FOR THESE

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 Syllabus

Exam 1 350 pts

Exam 2 350 pts

Quizzes 300 pts

Total 1000 pts

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 A little about me…
Reed Smith
Accounting
(BS, MAcc Tennessee)
(PhD, Ohio State)
(Faculty: Texas, Oregon,
SUNY-Buffalo, Indiana University)
e-mail: jrsmith2@iupui.edu

I am a big college football enthusiast. I also like to sail and swim.

I play Zimbabwean music on Marimba and Mbira. I used to play
guitar, but don’t find much time to do that any more.

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Four Functions of Management

Strategic Planning and

management decision making

Management and Preparation of

operational control financial statements

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 Strategic Cost Management

Strategic cost management is the

development of cost management
information to facilitate the
principal management function,
strategic management

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 Strategic Management

Strategic management requires:

• Anticipating changes
• Understanding the business and
competitive environment
• Ability to make changes quickly
• Ability to identify and solve problems
from a cross-functional view

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 Types of Organizations

Service Government and

Manufacturers Merchandisers
firms Not-for-profit

Wholesalers Retailers

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 Changes in Business
Environment
1) Increase in global competition
2) Advances in manufacturing technologies
3) Advances in information technologies
4) Greater focus on the customer
5) New forms of management organization
6) Social, political, and cultural changes

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 Target Costing

Identify product opportunity.

Determine price that would

make product competitive.

Determine if product can be made at

cost sufficiently low to provide a
desired profit.

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 The Value Chain

1) The value chain is an analysis tool firms use to

identify the specific steps required to provide
a product or service to the customer
2) An analysis of the firm’s value chain helps
management discover:
a) which steps or activities are not competitive
b) where costs can be reduced
c) which activity should be outsourced

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 The Balanced Scorecard

The balanced scorecard is an accounting

report that includes the firm’s critical
success factors in four areas:
1) Financial performance
2) Customer satisfaction
3) Internal business processes
4) Innovation and learning

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 The Balanced Scorecard
Learning improves
business processes.

Improved business
processes improve
customer satisfaction.

Improving customer
satisfaction improves
financial results.
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 Strategic Positioning

Firms arrive at one of two competitive strategies:

• Cost leadership is a competitive strategy in
which a firm succeeds in producing products or
services at the lowest cost in the industry
• Differentiation is a competitive strategy in
which a firm succeeds by developing and
maintaining a unique value for the product as
perceived by consumers

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