Chapter One and Three

Questions

1-5

History shows that innovations in management accounting were and continue to be driven by the information needs of new strategies as companies become more complex, technologies change and new competitors appear. Innovations in costing systems took place when controlling and reduction in cost was important. New management control systems were developed to monitor and manage complex enterprises when companies started to gain an advantage from scale and diversification. New systems for cost and performance were developed when the competition started to gain an advantage on how well they deployed and managed their intangible assets, customer relationships, process quality, innovation and employees.

1-6

After a strategy has been selected, management accounting information plays a big role in the strategy being implemented, sources to be allocated, communicating the strategy, and link employees and operational processes to achieve the strategy. Management accounting information will provide feedback as to where the strategy is working and where it is not. In addition, the information can be used to guide the actions to improve the performance to meet the full expectations.

3-9

A relevant cost is a cost that will change as a result of some decisions (Atkinson, Kaplan, Matsumura & Young, 2012). When it comes to decision making in the business profession, most if not every decision involves a certain degree of risk. Knowing this, decision makers should focus on relevant cost and make decisions with the highest probability of success, in accordance with regulations and that gives the organization the best chance to meet goals and customers’ expectations. Depending on the decisions, different types of cost and benefits are considered. Relevant costs needs to be the main focus because they have a bearing on the future and differ under various decision alternatives.

Reference

Atkinson, A. A., Kaplan, R. S., Matsumura, E. M., & Young, S. M.,...