Absorption costing, calculation of, 32–36
Accounting
records, 2
types of, 1–5
Accruals, in cost accounting, 4
Activity-based budgeting, development of, 74–75
Activity-based costing
calculation of, 36–42
full costing vs., 39–40
Activity-based management (ABM), basic principles of, 146–147
Activity cost pools, definition and examples of, 31–32, 38
Activity levels, break-even analysis and, 121
Actual fixed overhead (AFO), 93–94
Actual hours (AH)
direct labor variances and, 89–90
variable overhead variances and, 91–92
Actual price (AP), direct material variances and, 87
Actual quantity (AQ), direct material variances and, 87
Actual rate (AR), direct labor variances and, 89–90
Actual sales margin (ASM), 95–96
Actual sales price (ASP), 95–96
Actual sales volume (ASV), 95–96
Actual variable overhead (AVO), 91–92
Adelmann, R. L., 129
Administration overhead, classification of, 29–30
Adoption/communication, in total quality management, 152
Agreement, creation of, balanced scoredcard technique, 141
Al-Hazmi, M. H., 137
Allocation costing
overhead analysis, 33–36
service centers, 36
Alternative strategies, cost of, 7
Anderson, S. R., 41–42
Anomalies in budget variances, 102–103
Audit procedures, in strategic cost analysis, 14
Balanced scorecard, strategic cost management and, 139–141
Bank of Norway case study, strategic cost accounting and, 10
Behavior problems, performance measurement of cost systems and, 20–21
Benchmarking, in total quality management, 152
Big data
characteristics of, 156–157
defined, 155–156
uses of, 157
Bottom–up budgets, budgetary control of, 69–70
Break-even analysis, managerial decision making and, 113–121
Brierly, J., 141
Budget centers, development of, 76–77
Budget padding, performance measurement of cost systems and, 21
Budget variances, 96–103
contradictions and anomalies in, 102–103
control charts, 102
dollars and percentages in, 100
Budgetary control
advantages of, 66
approaches to, 67–71
budget development process and, 71–75
flexible budgets, 103–106
functional/operational budget integration and, 77–82
implementation procedures, 75–77
monitoring and, 85–108
overview of, 64–66
scenario planning, 70–71
strategic cost planning and, 57–58, 64–83
strengths and weaknesses of, 106–107
top down budgets, 68
Budgeted fixed overheads (BFO), 93–94
Buy-in, creation of consensus and, 140
Capacity costs, activity-based costing and, 39
Capital expenses, financial and management accounting and, 4
Commercial organizations, strategic cost analysis for, 10
Company size, top down budgets and, 69
Construction costs, life-cycle costing and, 145
Contingency theory, strategic cost analysis and, 8
Continuous improvement paradigm, in total quality management, 153–154
Continuous output, strategic cost accounting and, 12
Contradictions in budget variances, 102–103
Contribution margin
break-even analysis and, 116–121
limiting factors and, 126–128
multiple product analysis, 119–121
profit analysis and, 125–126
Control charts, budget variances and, 102
Control loop, strategic cost analysis plan comparisons, 17–18
Control systems, strategic cost analysis and, 85–108
Core competencies, strategic cost management, 136–137
Corporate strategy, strategic cost analysis and, 8
Cost
accounting, types of, 1–5
ascertaining total, 32–42
concepts and methods, 25–26
cost pools and cost allocation, 31–32
factors shaping costing system, 8–13
four key questions, 6–8
job costing for manufacturing and service organizations, 43–48
nature of, 26–31
performance measurement, 18–21
predetermined overheads, 42
process costing in manufacturing, 50–54
in services sector, 48–50
strategic cost analysis, 5–6
process of, 13–18
Cost accounting
accruals in, 4
data collection for, 5–6
dominant characteristics of, 3–4
full or absorption costing, 32–36
improvements in, 7–8
an internal information system, 8
managerial decision making and, 112
as with financial accounting, 4–5
Cost allocation
definition and examples of, 31–32
performance evaluation and, 150–151
Cost behavior, managerial decision making and, 110–112
Cost centers (CCs), managerial information needs and, 13
comparisons of, 7
defined, 6
performance measurement of cost centers and, 20–21
Cost drivers, definition and examples of, 38–40
Cost identification, in strategic cost analysis, 16–17
Cost leadership, 15–16
five forces model of strategic cost analysis, 15
total quality management and, 152
Cost management program, extension of, in strategic cost analysis, 14
Cost object
for alternative courses of action, 7
of external organizations, 7
improving methods, 7–8
standards and conducting comparisons, 7
strategy for, 8
Cost object/cost unit
allocation costing and, 35
organizational outputs and, 11
service operations costing, 49–50
Cost of sales, budget variances and, 98–103
Cost-plus model, target costing and, 142–143
Cost plus policy, job costing calculations and, 47
Cost reduction, strategic cost management and, 141–147
Cost strategy and performance, 154–155
Cost unit, definition of, 11
Cost volume profit (CVP)
break-even analysis and, 115–121
incremental analysis and, 131–132
variable and relevant costs and, 133
Cost/management accounting, dominant characteristics of, 3–4
Cowton, C., 141
Critical success factors (CSFS), balanced scorecard technique and, 139–141
Customer perspective, strategic cost management and, 139
Customer relationships, total quality management and, 152
Data, rules of analyzing, 157
Decision making, managerial decision making, 109–134
Detectable material costs, 28
Differential costs, incremental analysis and, 128–132
Direct costs
basic properties of, 28–29
definition and examples of, 27
in production budgets, 81–82
variances in, 86–90
Direct labor efficiency, variances in, 89–90
Direct labor rate, variances in, 89–90
Direct labor variances, 89–90
Direct materials variances, 86–88
Discrete output, strategic cost accounting and, 12
Discretionary costs, break-even analysis and, 121
Dollar costs, budget variances and, 100
Drury, C., 141
Du Mee, L., 141
Elkington, J., 32
Employee empowerment, in total quality management, 152
Equivalent units, manufacturing process costing and, 52–54
Expectations of performance, organizational constituents and, 10
External organizations, costs of, 7
Failure of internal markets, performance measurement of cost centers and, 19
defined, 2
dominant characteristics of, 3
Financial perspective, strategic cost management and, 139
Finished goods, manufacturing costs and, 147
Five forces model of strategic cost analysis, 14–16
Fixed costs
break-even analysis and, 113–121
definition and examples of, 27
managerial decision making concerning, 110–112
Fixed overhead variances, 93–94
product line closing decisions and, 123–124
special order pricing and, 124–125
Fixed overheads allocation rate (FOAR), 93–94
Fixed per unit costs, break-even analysis and, 115–121
Flexible budgets
control and monitoring of, 103–106
development of, 74
Flexible manufacturing, in total quality management, 152
Fluctuating activity
break-even analysis and, 121
flexible budgets and, 103
managerial decision making and, 110–113
Foss, N. J., 14–15
Full costing
activity-based costing vs, 39–40
calculation of, 32–36
Functional budgets, operational budget integration with, 77–82
Funding sources, top down budgets and, 68–69
Hamel, G., 136–137
Harvard Business Review, 142
High-low cost analysis, managerial decision making and, 114
Idle time/down time, manufacturing costs and, 147
Implementation plan, balanced scorecard technique, 140
Improvements in strategic cost analysis, procedures for, 18
Income generation, standard costing and, 58–62
Income statement, in sales budget, 79–81
Incremental budgeting
development of, 71–72
managerial decision making and, 128–132
Indirect costs
basic properties of, 29–31
cost allocation and, 150–151
definition and examples of, 27
Interim financial statements, financial and management accounting and, 4–5
Internal business process perspective, strategic cost management and, 139–140
Internal cost, scope of, in strategic cost analysis, 14
Inventory costs
break-even analysis and, 121
variable costing and, 122–128
Investigating variances, budget variances and, 100
Investment centers (ICs), managerial information needs and, 13
Investment strategic business units, 149
Job characteristics, job costing and identification of, 43–44
Job costing, manufacturing and service organizations, 43–48
Kaplan, R. S., 41–42
Key performance indicators (KPIs), 10
performance measurement of cost systems and, 20–21
classification of, 29
direct labor variances, 89–90
standard costing analysis, 59–60
Labor hour rate, allocation costing, 35
Learning and growth perspective, strategic cost management and, 140
Lewy, C., 141
Life-cycle costing, cost reduction and, 144–146
Limiting factors, contribution margins and, 126–128
Machine hour rate, allocation costing, 35–36
Maintenance support costs, life-cycle costing and, 145
Management accounting
bottom–up budgets, 69–70
budget implementation and, 75–76
defined, 2
dominant characteristics of, 3–4
managerial decision making and, 112
managerial style, 68
top–down budgets and, 68
Managerial decision making
break-even analysis, 113–121
fluctuating activity and costs, 110–113
guidelines for, 109–134
incremental analysis, 128–132
top management support and, 141
variable costing, 121–128
Managerial information needs, strategic cost accounting and, 12–13
Managerial style, top–down budgets and, 68
Manufacturing
job costing for, 43–48
non-value-added activities and, 147
process costing in, 50–54
Marginal costing, break-even analysis and, 115–121
Market forces, top-down budgets and, 69
Material costs
classification of, 28–29
direct materials variances, 86–88
standard costing analysis, 59–60
storage and transport costs, 147
Measurable material costs, 28
Measurement techniques
balanced scorecard technique and, 141
in total quality management, 152
Mixed cost
definition and examples of, 27
managerial decision making concerning, 112–113
Monitoring procedures, strategic cost analysis and, 85–108
Monthly budget, variance calculations and, 97–100
Multiple product analysis, break-even analysis and, 119–121
Non-profit organizations, 9
Non-value-added activities, manufacturing costs and, 147
Objectives development, balanced scorecard technique, 140
Open organization structure, in total quality management, 152
Operation costs, life-cycle costing and, 145
Opportunity costs, incremental analysis and, 128–132
Organization, type of, 9–10
Organizational constituents, strategic cost accounting and, 10–11
Organizational overheads, full or absorption costing, 33–36
Organizational structure
budget implementation and, 75
strategic cost analysis and, 9–10
in total quality management, 153–154
Output from organizational activities, strategic cost accounting and, 11–12
Overhead
allocation costing of, 33–36
basic properties, 29–31
direct cost variances in, 90–94
fixed variances in, 93–94
variable variances in, 91–92
Per unit data, multiple product analysis, 119–121
Percentage calculations, budget variances and, 100
Performance measurement, 18–21
affect behavior in workplace, 20–21
autonomy for, 18–20
standard costing, 59–62
strategic cost analysis, 18–21, 147–151
Period costs, definition and examples of, 27
Plan comparisons, strategic cost analysis, 17–18
Planned costs, defined, 7
Porter, M. E., 14–15
Prahalad, C. K., 136–137
Predetermined overheads, cost analysis of, 42
Preliminary evaluation, balanced scorecard technique, 140
Previous costs, for same activity, 7
Pricing decisions, special order pricing, 124–125
Procedural structures, budget implementation and, 76
Process costing, 4
financial and management accounting and, 4–5
in manufacturing, 50–54
Process improvement, in total quality management, 152
Procurement, standard costing analysis, 61
Product costs, definition and examples of, 27
Product differentiation, five forces model of strategic cost analysis, 15–16
Product line closings, variable costing and, 123–128
Product rankings, profit analysis and, 125–126
Production budget
creation of, 81–82
life-cycle costing and, 145
Production costs, for products, 31
Production overhead, classification of, 29–30
Profit analysis
inventory costs and, 122–124
variable costing decisions and, 125–128
Profit centers, managerial information needs and, 13
Profit strategic business units, 149
Pyhrr, P. A., 72
Recurring variances, budget variances as, 100–101
Regression analysis, managerial decision making and, 112
Relative value of costs, 28
Relevant costing, managerial decision making and, 128–132
Research and development, life-cycle costing and, 145
Resource scarcity, variable costing and, 126–128
Retirement and disposal costs, lifecycle costing and, 145
Revenue centers (RCs), managerial information needs and, 13
Revenue expenses, 4
budget variances and, 98–103
financial and management accounting and, 4
flexible budgets and, 104–105
Revenue strategic business units, 149
Rolling budgets, development of, 73
Sales budget, development of, 78–81
Sales margin variance, 95–96
Sales variances, 94–96
contribution margins and, 126
Scattergraphs, managerial decision making and, 112
Scenario planning, budgetary control and, 70–71
Selling overhead, classification of, 29–30
Service centers, allocation costing of, 36
Service costing, defined, 48–49
Services sector
cost object in, 49–50
costing calculations in, 48–50
defined, 48–49
Sheehan, N. T., 14–15
SMART criteria, performance measurement of cost systems and, 20
Special order pricing, variable costing and, 124–125
Standard cost variances, 86–96
direct cost variances, 86–90
direct labor variance, 89–90
overhead variances, 90–94
sales variances, 94–96
Standard costing
key definition, 58–62
monitoring and control and, 85–108
reasons for success of, 58
setting standards, 59–62
strategic cost planning and, 57
variance calculations, 62–64
Standard hours (SH)
for actual of number of units produced (SHAP), variable overhead variances and, 91–92
direct labor variances and, 89–90
Standard price (SP), direct material variances and, 87
Standard quantity (SQ), direct material variances and, 87
Standard rate (SR), direct labor variances and, 89–90
Standard sales margin (SSM), 95–96
Standard sales price (SSP), 95–96
Standard sales volume (SSV), 95–96
Static budgets, flexible budgets and, 103–106
Stepped costs, managerial decision making concerning, 112–113
Storage/raw materials transport, manufacturing costs and, 147
Strategic architecture, core competencies and, 137
Strategic business units (SBUs), 148–150
cost allocation and, 150–151
performance measurement and, 148–150
types of, 149
Strategic cost analysis (SCA), 5–6
big data and analytics, 155–157
connected to human behavior, 10–11
core competencies, 136–137
cost identification in, 16–17
cost reduction, 141–147
five forces model of, 14–16
performance evaluation and improvement, 147–151, 154–155
performance measurement, 18–21
plan comparisons in, 17–18
process of, 13–14
comparing with plans, 17–18
costs identification, 16–17
Five Forces model, 14–16
seeking improvements, 18
strategic positioning, 137–141
total quality management and, 151–154
Strategic cost planning, basic concepts and applications, 57–83
Strategic positioning, cost analysis and, 137–141
Supplier relationships, total quality management and, 152
Target analysis, balanced scoredcard technique, 141
Target costing, cost reduction and, 142–143
Time-driven activity-based costing, 41–42
Time value of money, life-cycle costing and, 145
Top–down budgets, budgetary control and, 68
Total cost
calculation of, 32–42
incremental analysis and, 131–132
job costing and calculation of, 44–48
managerial decision making concerning, 110–112
standard costing and, 59–62
Total quality management (TQM), basic principles, 151–154
Traceable costs, 28
Training, in total quality management, 152
Trend analysis, budget variances and, 101–102
Value chain analysis, strategic positioning and, 137–139
Variable cost variances
break-even analysis and, 113–121
flexible budgets and, 103–106
managerial decision making and, 110–112, 121–128
resource scarcity and, 126–128
Variable costs, definition and examples of, 27
Variable overhead absorption rate (VOAR), 91–92
Variable overhead variances, 91–92
Variance calculations
budget variances, 96–103
standard costing, 62–64, 85–96
Work in process (WIP), manufacturing process costing and, 52–54, 147
Zero-base budgeting, development of, 72–73
Zero-defects mentality, in total quality management, 152