Strategic Cost Management

Ranie B.
Monteclaro
MACC 317 - Strategic Cost Management
A-31
1. Give four examples of firms you think would be significant

users of cost management information and explain why.
 Virginia Food Inc. - I think cost management information is

significant to them because it allows them to keep cost low
by analyzing and identifying those operations that adds
value and no value.
 Government Agencies – Cost management information is
important for them because it allows them to have an
analysis on what they are going to do to provide a quality
service out from the funds available.
 Gibson Shoe Factory – Cost management information will help
them to cut or keep cost low by analyzing where to purchase
raw materials and to consider different types of
compensation plan for their employees.
 Procter and Gamble (P&G) – Since this company offers
different kinds of product, cost management information
will help the company to analyze the relationship between
the cost and profit of its product.
2. Identify the different types of business firms and other

organizations that use cost management information and explain
how the information is used.
 Merchandising firms, also called merchandising

companies, are more commonly known as retail companies. A retail
company is a business that sells products it didn't
manufacture.. Examples of merchandising firms include large
retailers, such as Sears, Wal-Mart, and Radio Shack.
Merchandisers use cost management information to control
stocking, distribution, and customer service.
 A manufacturing firm is any business that uses
components, parts or raw materials to make a finished good.
These finished goods can be sold directly to consumers or to
other manufacturing businesses that use them for making a
different product. Manufacturing businesses in today's world are
normally comprised of machines, robots, computers, and humans
that all work in a specific manner to create a product..
Examples of manufacturers include General Motors, IBM, and Sony.
These firms use cost management information to control
production costs.
 Service firms provide a service to customers that
offer convenience, freedom, safety, or comfort. Common services
include transportation, financial services (banking, insurance,
accounting), personal services (physical training, hairstyling),
medical services, and legal services. These firms use cost
management information to identify profitable services and to
control costs incurred in providing services.
 Governmental and not-for-profit organizations provide
services, much like the firms in service industries. However,
the service provided by these organizations is such that there
is often no direct relationship between the amount paid and the
services provided. Instead, both the nature of the services to
be provided and the customers who receive the service are
determined by the government or philanthropic organizations.
These organizations use cost management information to determine
and control the costs of the services they provide.
3. Name a firm or organization you know of that you are

reasonably sure uses strategic cost management and explain why
it does so.
- One firm that surely uses strategic cost management is

Walmart. Walmart's ability to provide customers with "everyday
low prices" and its presence as an economic and political force
of gigantic size and influence, is the result of a process that
was built on some core principles and procedure and I think it
is Strategic Cost Management.
4. What information does cost accounting provide?
Cost accounting is a form of managerial accounting that

aims to capture a company's total cost of production by
assessing the variable costs of each step of production as well
as fixed costs, such as a lease expense. Cost accounting
provides the detailed cost information that management needs to
control current operations and plan for the future. Cost
accounting information is also commonly used in
financial accounting, but its primary function is for use by
managers to facilitate their decision-making. Cost accounting is
used by a company's internal management team to identify all
variable and fixed costs associated with the production process.
It will first measure and record these costs individually, then
compare input costs to output results to aid in measuring
financial performance and making future business decisions.
5. How do cost accountants support strategic decisions?
Accounting is a broad discipline that includes many

functions, and a management accountant supports a company’s
strategic planning activities. Accounting is known as the
language of business, but the audiences to whom accountants
speak include external stakeholders, like government agencies,
as well as internal ones such as corporate executive officers.
Since corporate leaders rarely conduct long range planning and
decision making activities based on qualitative data alone,
accountants who are skilled in the areas of managerial and cost
accounting are frequently called upon to support the generation
of strategic roadmaps, high level plans, and policies with
information derived from the company’s financial data. Cost
accounting is an effective management tool that enables a
company to measure profitability by capturing key information by
recording and tracking the data necessary for operating the
company most efficiently and profitably. Managing costs to
remain profitable is a critical priority across every industry
sector, which means relying on data to make smart and educated
choices. Costing data is the basis for strategic decisions, but
sometimes road blocks get in the way. The methodology must fit
in with the organization’s goals and objectives as well as short
term and long term plans for growth and there must be approval
from the top.

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Ranie B.

MACC 317 - Strategic Cost Management

1. Give four examples of firms you think would be significant

 Virginia Food Inc. - I think cost management information is

2. Identify the different types of business firms and other

 Merchandising firms, also called merchandising

3. Name a firm or organization you know of that you are

- One firm that surely uses strategic cost management is

4. What information does cost accounting provide?

Cost accounting is a form of managerial accounting that

5. How do cost accountants support strategic decisions?

Accounting is a broad discipline that includes many

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