Cost Accounting

: COST MANAGEMENT AND STRATEGY -- AN OVERVIEW

QUESTIONS

1-1 Firms Using Cost Management. Here are some examples; there are many possible answers.

1. Wal-Mart: to keep costs low by streamlining restocking and sales

2. COMPAQ: to keep costs low by improving manufacturing performance and by using target costing and other management techniques

3. Citicorp: to keep costs low by using activity analysis (see problem 1-23) to identify key operations and to find those that add little or no value

4. A local school district or public agency: to keep costs low in order to provide the best possible service given available funds

5. Procter & Gamble: to assess the profitability of its different products

6. Any other large, diversified manufacturer, like Procter & Gamble: which needs to be able to analyze the relative profitability of its different products, using cost management

7. A small machine shop: which needs cost management to determine whether it should repair or replace a machine

8. A dance studio: to analyze and choose between different compensation plans for its teachers; and to determine whether it should open a new studio

1-2 Firms not expected to be significant users of cost management information:

1. Microsoft: here the focus is on forming strategic alliances, innovation and competition; cost management is more important for other firms in the information technology business, such as COMPAQ, Hewlett Packard, and IBM that compete in part on innovation but also on price

2. Versace: a high fashion firm competes on innovation and product leadership; the development and communication of attractive new ideas is the key to competitive success rather than cost management

3. Other firms in the fashion industry, such as Chanel, Givency, and Armani: for reasons similar to Versace

4. Major league sports: dependent primarily on the development of fan support, good coaching and player...