DIVINE WORD COLLEGE OF LEGAZPI

School of Business, Management and Accountancy

ACCOUNTING Ed 18 – STRATEGIC COST MANAGEMENT

Instructor: TRESSA ADELFA M. MORTOLA

Dear Students:

Hello again and congratulations for reaching this far.

Everyone is quite frantic about the uncertainty in the “new normal”; but surviving two grueling years (one semester of
which was in an “abnormal” learning environment) simply proves that you are made of a sterner stuff - one which
future accountants and accounting heads possess. As the old adage states: “when the going gets tough, the tough gets
going”. So pandemic or no pandemic, the learning of accounting continues.

So, welcome to your Strategic Cost Accounting class! Similar to your other accounting courses, it is also a 3-unit
course which is equivalent to 54 contact hours. As a specialized discipline which makes use of a lot of reasoning and
common sense, it will entail a lot of patience.

As BSA/BSMAc students, please take note of the following:

I. Course Outline
Week Topic/s Activity # Quiz #
PRELIMINARY
1 1. Review of cost accounting 1
2. Introduction to strategic cost management
a. Cost Management definition
2 b. Cost Management nature and scope 2 1
c. Benefits of effective cost management
d. Cost avoidance, reduction and control
e. Traditional cost management and strategic cost management differentiated 2
f. Strategic cost management linked to strategies
(1) Strategies defined
(2) Competitive advantage
(a) Cost leadership
3 (b) Product differentiation 3
(c) focusing 3
g. Factors influencing cost management
h. Prior vs. contemporary business environment
i. Key components of a cost management system
3. Strategic Cost Management (SCM)
a. Definition
b. Stages 4
c. Importance
4 d. Components 4
 e. Themes
(1) Value chain analysis 5
(2) Strategic positioning analysis
(3) Cost driver analysis
5 Preliminary Examination
MIDTERM
4. Conventional vs. strategic cost analysis
a. Traditional cost cutting strategies
b. differences
c. when to employ 5 6
6 d. dangers
e. opportunities
5. Value chain concept and managing costs (Value Chain Analysis)
a. Value chain definition 6 7
b. Porter’s value chain model
6. Cost Analysis Consideration in Value Chain Analysis
a. Competitive advantage
(1) Cost
7 (2) differentiation 7 8
b. Activities
(1) Primary
(2) support
7. Strategically Adapted Cost Management (Strategic Positioning Analysis)
a. Strategic position assessment
(1) The external environment
8 (2) The resources of the organization 8 9
(3) Expectations and influence of stakeholders
(4) Beliefs and assumptions within an organization
(5) Consideration of all relevant features
b. Key strategic models
(1) SWOT analysis
(2) External environment analysis
(a) PEST analysis
9 (b) Porter’s five forces model
(c) Porter’s diamond model
(3) Internal analysis 9 10
(a) Porter’s value chain
(b) Critical success factors and core competencies
(c) Product life cycle analysis
(d) The Ms Model
10 Midterm Examination
PRE-FINAL
c. Profit variance analysis
(1) Calculation of profit variance
(2) Types of profit variance
(a) Gross profit variance
(b) Operating profit variance
(c) Net profit variance
11 (3) Profit variance implications 10, 11,
to (4) Calculating profit growth 11, & 12, &
13 (5) Calculating net profit, and operating profit margin 12 13
(6) Revenue and Expense variances
(a) Purchase price variance
(b) Materials usage variance
(c) Labor efficiency variance
(d) Labor rate variance
(e) Sales volume variance
(f) Selling price variance
(g) Overhead efficiency variance
(h) Overhead spending variance
 (7) Determining favorable or unfavorable variance
d. Non-financial performance measures 13 14
14 Prefinal Examination
FINAL
8. Cost Driver Analysis
a. Determinants
(1) Structural cost drivers
(2) Executional cost drivers 14 15
15 b. Cost driver
To (1) Significance
17 (2) Cost allocation
c. Activity based costing 15 16
9. Contemporary strategic analysis 16 17
10. Company-level Analysis 18
18 Departmental Final Examination

Notes:
1 - Submission of each activity and the schedule of each quiz will be announced in the
google classroom. Periodic examinations (Preliminary, Midterm, Prefinal and Final) will
be synchronous; however, those who are unable to join due to poor or non-internet
connectivity may make arrangements.
2 – The schedules stipulated above are projected and subject to change.
3 - Sub-topics will be posted in the Google Classroom
4 - Reference Materials: any Strategic Cost Management book

II. Grading System

Since the classes will be conducted online, there will be slight modification in the grading system. You
will be graded according to the following criteria: 40% for your activities, 20% for the quizzes and 40%
for the periodic examination. The highest grade is 95%.

When dropping the subject, please accomplish the dropping form. Failure to do so would result to a failing
grade.

There will be four (4) grading periods: Preliminary, Midterm, Prefinal and Final – all with equal weights.
Your grade in the final grading period will be considered as a tentative final grade since your final grade
will be the average of the four (4) [e.g., Prelim Grade = 1.5, Midterm Grade = 2.0, Pre-final Grade = 2.5,
Tentative Final Grade, 1.8; the final grade will be 1.95 or 2.0 computed as follows: the sum of 1.5 + 2.0 +
2.5 + 1.8 divided by 4].

The following will be the formula for the computation of the equivalence of your scores: (score/total # of
items) x 30 + 65.

By the way, cheating is strictly prohibited. Your output will not be checked with your result recorded as
zero.

III. Google Classroom

Classes will be conducted, and learning materials, instructions and activities posted in the Google
Classroom during our class schedule; thus, you must use your school issued Gmail account. Please check
the said classroom regularly and take note of the stipulated deadlines for submission of outputs. Delay in
submission would mean a deduction from your scores.
For those with connectivity issues, please feel free to request hard copies of the learning materials. Just indicate your
address and the same will be delivered to a partner institution near your residence. For soft copies, they may be sent
through your messenger account.

Remember, if there are lessons you do not fully comprehend, you just have to inform me.

Good luck, keep safe and God bless….

Sincerely,

Mam Morts