Kế toán - Kiểm toán - Chapter 15: Managing costs and time for customer value

Nội dung text: Kế toán - Kiểm toán - Chapter 15: Managing costs and time for customer value

1. Chapter 15 Managing costs and time for customer value Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
2. Cost management s Improvement of an organisation’s cost effectiveness through understanding and managing the real causes of cost s Main focus is on cost reduction, but also focus on improving other aspects of performance such as quality and delivery. Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 2 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
3. Conventional versus contemporary approaches s Drivers of cost ÙConventional: managers control costs by bringing them into line with some predetermined goal ÙContemporary: reduces costs by identifying waste and eliminating it through identifying the real cost drivers continued Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 3 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
4. Conventional versus contemporary approaches s Strategic perspective ÙConventional: control costs within the organisation ÙContemporary: cost management also concerned with achieving value for the customer vA strategic perspective continued Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 4 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
5. Conventional versus contemporary approaches s Process perspective ÙConventional: control costs by reporting results for responsibility centres based on functional areas of the business ÙContemporary: recognises that customers’ needs are met by processes which flow across the business Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 5 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
6. Activity-based management (ABM) s Process of using information from activity- based costing to analyse activities, cost drivers and performance so that customer value and profitability are improved s Customer value ÙThe value a customer places on particular features of a product or service Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 6 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
7. Using ABM to reduce costs s Identify the major opportunities for cost reduction s Determine the real causes of these costs s Develop a program to eliminate the causes, and, therefore, the costs s Introduce performance measures to monitor the effectiveness of cost reduction efforts Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 7 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
8. Identifying the major opportunities s Value-added activities ÙProvide essential value to the customer, or are essential to the functioning of the business s Non-value-added activities ÙDo not add value to a product or service from the customers’ perspective or for the business and, therefore, can be eliminated Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 8 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
9. Building activities into processes s Eliminating non-value-added activities requires a clear understanding of the way work is done in an organisation s Linking activities into processes ÙA series of activities that are linked together to achieve a specific objective ÙOften cross the boundaries of responsibility centres, such as functional departments Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 9 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
10. Cost driver analysis s Identification of root-cause cost drivers for the major non-value-added activities s Analysis of root-cause cost drivers of value- added activities may also lead to more efficient use of resources s Value-added management (or value analysis) ÙThe process of targeting and eliminating non- value-added activities Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 10 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
11. Measuring performance in cost reduction s Activity-based performance measures can be used to monitor the effectiveness of cost reduction effort s Performance measures may be based on previous activities Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 11 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
12. Impediments to implementing ABM s Lack of awareness of ABM s Uncertainty over potential benefits s Extensive resource requirements to implement s Resistance to change Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 12 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
13. Business process re-engineering s The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical areas of performance such as cost, quality and delivery s Focus is on strategic processes ÙThose processes that focus on achieving a company’s business objectives and strategies continued Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 13 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
14. Business process re-engineering s Preparing a business process map s Establish goals s Reorganise work flow s Implement the program Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 14 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
15. Business process re-engineering versus ABM s ABM focuses on incremental, continuous improvement of processes s Business process re-engineering involves fundamental changes to the way processes are structured s Both use activity analysis to identify processes and activities Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 15 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
16. Life cycle costing s Accumulate and manage costs over the life cycle of the product s Four stages of the product life cycle ÙProduct planning and initial concept design ÙProduct design and development ÙProduction ÙDistribution and customer (logistic) support Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 16 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
17. Life cycle budgeting s Involves estimating the expected costs and revenues for each year of the expected life of a product s Useful in product mix or pricing decisions Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 17 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
18. Managing costs through a life cycle costing s A lack of awareness, or uncertainty about how to calculate life cycle costs s Not easy for products with longer lives as it is more difficult to assess ÙChanges in consumer tastes ÙImpact of competitors’ actions ÙEffects of inflation Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 18 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
19. Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 19 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
20. Target costing s A system of profit planning and cost management that determines the life cycle cost at which a proposed product must be produced to generate the desired level of profit s Three steps in the target costing process Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 20 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
21. The target costing process s Market-driven costing ÙDetermine target selling prices ÙDetermine target profit margin ÙCalculate allowable cost vThe target cost at which a product must be produced if it is to be sold at the target selling price and generate the required rate of return continued Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 21 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
22. The target costing process s Product-level costing ÙCost reduction objective is the degree of cost reduction needed to achieve the allowable cost ÙNeed to estimate the current cost—the cost that the product could be manufactured for, prior to any cost reduction objectives ÙProduct level target cost is the difference between the current cost and the target cost reduction objective continued Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 22 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
23. The target costing process s Component-level costing ÙBreaking down the product-level target cost into target costs for components ÙValue engineering (VE): reviewing the product or process design to make changes to reduce cost, while still maintaining the functionality of the product s Pursue continuous improvement once production begins Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 23 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
24. Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 24 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
25. Key features of target costing for cost management s It is price led s Focuses on the customer and customer expectations s Based on principles of life cycle management, placing primary emphasis on managing downstream and manufacturing costs s Cross-functional, involving managers from across the value chain Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 25 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
26. Managing time s Time dictates the rate at which products are produced and revenue generated s Time determines how long resources are tied up in processes, and unavailable for other uses s Time delays lead to inventory build-ups s Time to develop new products and delivering products to customers may be key to innovation Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 26 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
27. Time-based management s Measures for developing new products and services ÙNew product development time: time from identification of initial concept to release of product to the market ÙBreak-even time (BET): the time from identification of initial concept to when a product has generated enough profit to pay back the original investment continued Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 27 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
28. Time-based management s Time take to fulfil a customer’s order ÙMeasures of customer response time, order receipt time, production lead time (cycle time), s Reliability in meeting scheduled delivery dates Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 28 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
29. Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 29 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith
30. Managing throughput s The theory of constraints ÙFocuses on identifying and removing bottlenecks to improve the rate of throughput ÙRecognises the rate of production is limited to the capacity of the constraints (or bottlenecks) that exist s Throughput accounting ÙMeasuring effects of bottleneck and other operational decisions using measures of throughput, inventory and operating expenses Copyright  2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Management Accounting: An 30 Australian Perspective 3/e by Langfield-Smith, Thorne & Hilton Slides prepared by Kim Langfield-Smith