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Solution Manual Cost Management A Strategic Emphasis Blocher Juras Smith 9th edition - Updated 2024

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Cost Management

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Cost Management

Solution Manual Cost Management A Strategic Emphasis Blocher Juras Smith 9th edition - Updated 2024 Complete Solution Manual

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solution manual cost management a strategic
solution manual cost management

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Cost Management
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Cost Management
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Cost Management

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1–1 Give four examples of firms you believe would be significant users of cost
management information and explain why.
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. Dell: 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 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 Give three examples of firms you believe would not be significant users of
cost management information and explain why.

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 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, Coach , and
Armani: for reasons similar to Versace
4. Major league sports: dependent primarily on the development of fan
support, good coaching and player acquisition

1–3 What does the term cost management mean? Who in the typical firm or
organization is responsible for cost management?

1-3 Cost management information is a broad concept. It is the information

Copyright © 2022 by McGraw Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill.

, 1-3 Cost management information is a broad concept. It is the information
the manager needs to effectively manage the firm or not-for-profit
organization -- both financial information about costs and revenues
and relevant non-financial information about productivity, quality, and
other key success factors for the firm. Typically, cost management is
the responsibility of the Chief Financial Officer (CFO) who often
delegates much of this responsibility to the Controller.

1–4 Name three professional cost management organizations and explain their
roles and objectives.

1-4 In the private sector, the Financial Accounting Standards Board, an
independent organization, and the American Institute of Certified
Public Accountants (AICPA) supply guidance regarding financial
reporting practices. The Sarbanes-Okley Act of 2002 also created the
Public Company Accounting Oversight Board which reports to the
SEC to oversee auditing standards and practices. The AICPA also
provides educational opportunities. In the public sector, The Cost
Accounting Standards Board (CASB) sets cost accounting standards
for those doing business with the federal government, especially
defense contractors. The Institute of Management Accountants
(IMA) is the principal organization devoted primarily to management
accountants in the United States. The IMA has magazines,
newsletters, research reports, management accounting practice
reports, professional development seminars, and monthly technical
meetings that serve the broad purpose of providing continuing
educational opportunities for management accountants. In Canada,
the Society of Management Accountants provides a similar role.
Similar organizations are present in most other countries around the
world. The Financial Executive International (FEI) organization
provides services much like the IMA for financial managers, including
controllers and treasurers. Because of the nature of its membership,
the FEI tends to focus on management and operational control
issues, and less on the product costing, planning, and decision-
making functions.

1–5 What type of professional certification is most relevant for the management
accountant and why?

1-5 The Certificate in Management Accounting (CMA) is the most
relevant certification program for management accountants since it
focuses on the types of skills that are most in demand for
management accountants: economics, finance, and management,
financial accounting and reporting, management analysis and
reporting, and decision analysis and information systems. Other
relevant certifications include the Chartered Global Management
Accountant (CGMA), the Certificate in Financial Management (CFM)
and the Certified Public Accountant (CPA).
1–6 List the four functions of management. Explain what type of cost management informa

Copyright © 2022 by McGraw Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill.

, 1–6 List the four functions of management. Explain what type of cost management informa
each.

1-6 The four functions of management are:
1. Strategic Management -- information is needed by management
to make sound strategic decisions regarding choice of products,
manufacturing methods, marketing techniques and channels, and
other long term issues.
2. Planning and Decision Making -- information is needed to support
recurring decisions regarding replacement of equipment, managing
cash flow, budgeting raw materials purchases, scheduling
production, and pricing.
3. Management and Operational Control -- information is needed to
provide a fair and effective basis for identifying inefficient operations,
and to reward and support the most effective managers.
4. Preparation of Financial Statements -- information is needed to
provide accurate accounting for inventory and other assets, in
compliance with reporting requirements, for the preparation of
financial reports and for use in the three other management
functions.

1–7 Which is the most important function of management? Explain why?

1-7 Strategic management is the most important management function
since it most directly relates to the overall success of the firm. In
strategic management, top managers determine how the firm is to
compete and what specific goals it must set and achieve to be
successful. The determination of these strategies and goals drives
all other activities in the firm.

1–8 Identify the different types of business firms and other organizations
that use cost management information, and explain how the information is
used.

1-8 Merchandising firms purchase goods for resale. Merchandisers that
sell to other merchandisers are called wholesalers, while those
selling directly to consumers are called retailers. Examples of
merchandising firms include the large retailers, such as Sears, Wal-
Mart, and Target. Merchandisers use cost management information
to control stocking, distribution, and customer service.
Manufacturing firms use raw materials, labor, and
manufacturing facilities and equipment to produce products. These
products are sold to merchandising firms or to other manufacturers
as raw materials for additional products. Examples of manufacturers
include General Motors, IBM, and Samsung. These firms use cost
management information to control production costs.
Service firms provide a service to customers that offers
convenience, freedom, safety, or comfort. Common services include

Copyright © 2022 by McGraw Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill.

, convenience, freedom, safety, or comfort. Common services include
transportation, financial services (banking, insurance, accounting),
personal services (physical training, hair styling), 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
government or philanthropic organizations. These organizations use
cost management information to determine and control the costs of
the services they provide.

1–9 Name a firm or organization you know of that you are reasonably sure
uses strategic cost management and explain why it does so. Does it use
cost leadership or differentiation, and why?

1-9 The answers here can vary from large manufacturers such as Hewlett-
Packard (HP) to small retail stores. If the class has trouble getting
started, the instructor might use some of the firms mentioned in
question 1-1, or from the instructor’s own experience and
understanding. Again, if the students have a hard time, the instructor
might ask them to think of firms close to their homes, or to think of firms
in a given industry, etc.
1–10 Many firms rely on the Internet extensively. Explain how firms using
cost leadership and firms using differentiation might use the Internet.

1-10 For some firms, a popular web site can be an important differentiating
factor. Firms such as Amazon.com, Etrade and eBay and many
retailers have achieved powerful competitive advantage through their
web sites, offering fast deliver and enhanced customer service. Other
firms such as Walmart.com use the Internet to achieve cost advantage
by using Internet based systems for transactions processing,
production scheduling, purchasing, employee recruiting, etc.

1–11 The management accountant is a full business partner with
management in which of the four stages of cost system development, and
why?

1-11 The management accountant is a full business partner with
management in Stage 4 of cost system development. At this
stage, the highest level, the management accountant has an
integral role with management to implement the organization’s
strategy.

Copyright © 2022 by McGraw Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill.

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