Benefits of Cost Accounting

Benefits of Cost Accounting

Discuss cost management as a profession

According to Drury (2007), cost management is the technique where budgets of a business are planned and controlled . The process allows a firm to forecast anticipated expenses to help stay within the stated budget. The process involves collecting data of expected prices, analyzing the data, evaluating the results and reporting the results in budgeting. Past data of the firm’s operations are used to establish the trends of the expenditure. The stated figures in the budget are used as a guideline when making purchases to ensure that resources are properly managed.

Name three professional cost management organizations and explain their roles.

Professional Cost Management Group Ltd., Society of Cost Management and Sacramento Cost Management Consultants are three professional cost management organizations. Hansen (2009) stated that the goal of Professional Cost Management Group Ltd. is to serve as a consultant agency where they evaluate operating costs of an individual business and come with a formula of reducing them. Society of Cost Management offers assistance to accountants on how they can reform their costs operations to increase the profitability of business. Sacramento Cost Management Consultants identifies areas where there is pilferage of costs and seal them for increased excellent services with cost savings.

Where in the corporate, not for profit, areas would cost accountants work and what types of work would they do?

A person with cost management qualifications can work as a budget analyst, financial analyst, and accounting manager. A budget analyst creates budgets for a firm as well as planning financial tasks. The analyst monitors trends of revenue to recommend cost spending. A financial analyst identifies opportunities for investment by planning and controlling the use of revenues in investment costs. The financial analyst checks the implementation of budgets (Drury, 2007). An accounting manager audits firms spending to ensure they are within the stipulated budget. The manager oversees the operation of the company within laid down financial regulations .

Differentiate between financial and cost accounting as well as its opportunities and applications.

According to Hansen (2009), financial accounting involves using financial statements to calculate the profitability and financial health of the firm. Cost accounting relies on the fixed, sunk and variable cost to arrive at the cost of a product. Financial accounting involves preparing a report after a fiscal period while cost accounting requires preparing a report in each production cycle based on prices and quantities of raw materials. Cost accounting relies on the cost price to make a valuation of inventory. Financial accounting relies on either cost price or market price whichever is less to evaluate inventory .

Discuss and explain how cost management information is developed and used within the organizations information value chain.

Druryn (2007) noted that market research is done on the prevailing market prices for goods and inserted in a production budget by a budget analyst. The purchasing officer relies on the prices given to choose the supplier offering the most realistic price within ranges in the budget. The process involves inviting the supplier to bid for tender in order to get the most appropriate price. The aim of adhering to pricing on the budget is to reduce operating costs in the firm. The finance department relies on the budget prepared to allocate enough funds to fund the purchase process.

Explain how cost management fits into a corporate strategy given the global competitive environment? What role does the Internet play in the information gathered by cost management?

Firms now compete on pricing for the level of quality of products is the same, but the production cost is different. Cost accounting budgets help to purchase officers to identify suppliers offering the highest quality of investors at the lowest price (Hansen, 2009). The internet comes as an aid for it is used to search for potential vendors who can provide goods at a stipulated price in the budget. The internet can be used to organize virtual meetings via tools like Skype where they can negotiate for a price to be within the said anticipated price to operate within the budget.

References

Drury, C. (2007). Management and cost accounting. London: Thomson Learning.

Hansen, D. R., Mowen, M. M., & Guan, L. (2009). Cost management: Accounting and control. Mason, Ohio: South-Western.

Next Steps

1. The first step I would suggest is that you elaborate on your cost management as a profession area. You need more clarity here. I know you go into further detail about what people in cost management do in the types of works section, but in this first section you want to give an overview of the profession as a whole. For instance, what is the history of the profession? what is the type of education a person will need? In a broad sense, what do folks in this profession do as a whole group? Find answers to these questions and put them in your own words. Your course books would be a great place to begin.

2. After you do that, go back and look at your organization for the corporate/non-profit section. You do not divide the different roles and type of work based on corporate/non-profit. You should go back and do this. You should be able to find this type of information in your course books and course notes. That is how I would approach this particular issue.

3. Active and Passive Voice is probably more of a pet peeve of mine than anything else, but it does contribute to clarity issues. What you should do for this is go back and look at the things I marked as passive voice. You should follow the hyperlink and review what active versus passive voice is and why it can present an issue in formal academic writing.

Good luck!

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Looks good, but usually the due date comes after the instructor’s name.

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I am not quite sure that you are discussing cost management as a profession here. You are describing what they do, but you do not tell your reader what job titles they usually hold, the education requirements. This is definitely part of the discussion, but you need a bit more.

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You did not completely answer the question that your professor asked here. Your professor wants you to identify where cost accountants would work in the corporate sphere and then in the non-profit sphere. You just identify what job titles they could hold and what type of work they could do.

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As far as I can tell you do not address opportunities and applications, but I may be mistaken because I am not as familiar with finance. Do consider where or not you are covering everything the professor tell you to cover.

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See the hyperlink.

�I would rephrase this to say something like, “The internet plays the role of…”. Choose what role you think it plays.

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See the hyperlink.

�Your references look good.