John Molson School of Business Strategic Management and Cost Management Concepts April 8, 2010 Section G Table of Contents Introduction 2 1. Overview of Cost Management and Strategy 3 2. Implementing Strategy 5 3. Basic Concepts 10 Conclusion 14 References 15 Appendix I: Product & Period Costs 18 Appendix 2: Balanced Scorecard 19 Companies are constantly trying to improve their business and the quality of their products. While Marketing
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on product cost. This case study was performed in order to see if Allied Office Products should switch and implement the Sales Based Pricing System. “ABC” based service costs for the TFC business were calculated and Total Cost/Expense were found to be $1,550,000 Storage, $1,801,000 Requisition Handling, $ 761,000 Basic Warehouse Stock Selection, $734,000 “Pick-up” Activity, $612,000 Data entry, and $250,000 Desk Top Delivery for a total of $5,708,000. After finding the Total Cost we were able
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indirect costs to products/services through a single, or a few rates. Firstly, indirect expenses are assigned to production and service departments. After that, the costs from the service departments are moved to production departments. Separate rates are made per department and indirect costs are assigned to products/services through direct labor or machine hours. What we will see with ABC is that this method differs so that activities are used instead of departments and indirect costs are assigned
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000 in direct costs in 2007. These costs must be allocated to Ruger’s three revenue-producing patient services departments using the direct method. Two cost drivers are under consideration :patient services revenue and hours of housekeeping services used. The patient services departments generated $5 million in total revenues in 2007, and to support these clinical activities, they used 5,000 hours of housekeeping services. 1. What is the value of the cost pool? The value of cost pool is 100,000
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1(d).Value Chain Analysis: A Way to profit improvement & cost Reduction Learning Objective 1. how to identify the value added activity 2. how to rectify the non –value added activity 3. application in profit planning & cost reduction INTRODUCTION Competitive advantage for a company means not just matching or surpassing their competitors, discovering what the customers want and then profitably satisfying, and even exceeding
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high proportion of overheads, Wilkerson should abandon its existing cost system and move to activity-‐based costing. The profitability analysis indicates that the company earns healthy margins on pumps and valves. However, the margin of flow controllers at actual usage of capacity is negative. Wilkerson should consider action targeted at cost reduction (changes in flow controllers design or in their production
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1. What does the term cost management mean? Who in the typical firm or organization is responsible for cost management? = Cost Management is the process of effectively planning and controlling the costs involved in a business. The one who’s responsible for cost management is management accountant. 2. List the four functions of management. Explain what type of cost management information is appropriate for each. = 1. Strategic Management. Cost management information is needed to make sound
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Project #2 – Cost Accounting Classifications The first business I observed was Little Caesars. Little Caesars is a pizza chain, similar to Pizza Hut and Dominos. I met up with the store manager, Norma, so that she could show me around the store. We started at the back of the store where she introduced me to Omar and Miguel who have the very important job of making the dough every morning. We walked towards the front of the store where Paula was prepping toppings for the pizza and getting ready
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sales. This causes the larger segments to carry more cost automatically. For Southlake, Textbooks generate the most income, however the gross profit percentage is only 26%. Clothing has one of the best gross profits and generates the 2nd most income. With traditional costing, computers are operating at a loss. Under Traditional Costing, all operating expenses are allocated by percent of sales. This causes the larger segments to carry more cost automatically. For Southlake, Textbooks generate the
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aware of. The wide variety of costs involved with serving such a broad range of customers proved to be problematic. Super Bakery decided to implement an ABC costing system, whose main focus is capturing cost by customer order rather than by a specific product. Consumptions of costs are recorded directly when then occur, or through the use of cost drivers as needed. Super Bakery uses historical costs when actual costs or unavailable, and costs drivers when historical cost and direct costing are unattainable
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