Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
27 Cards in this Set
- Front
- Back
- 3rd side (hint)
|
What is cost control system?
|
is a logical structure that contains all formal + informal activities which will influent cost. Also, it allows management to analyze / evaluate how well the expenditure is managed
|
- includes what?
- how to help manager? |
|
|
What is cost consciousnes?
|
is the organizationwide employee attitude toward cost understanding, cost containment, cost avoidance, and cost reduction
|
to educate employee about cost
|
|
|
Why we need cost control?
|
- provide manager information to plan,
- provide manager information to determine if operation is efficient |
How does it help manager?
|
|
|
An effective cost control system includes 2 things
|
-Cost control system
-Cost consciousness |
|
|
|
What is the layout of an effective cost control system?
|
(i)Begin -> preventive [plan]
(ii)During -> Corrective [carry out as expected and allows correction (iii)After -> diagnostic [provide guidelines for future] |
|
|
|
What are the controlling methods for the beginning?
|
budgets, standard, qualitative & quantitative objectives, policy
|
|
|
|
What are the controlling methods during the process?
|
- periodic monitoring system
- Comparison btw actual and the target cost - avoid excessive expenditure |
|
|
|
What are the cost controlling methods at the after?
|
feedback, variance analysis, responsibility reports
|
|
|
|
What are the 4 topics of costing that we have to make sure employees understand?
|
- cost understanding
- cost containment - cost avoidance - cost reduction |
|
|
|
What is cost understanding?
|
employees have to understand how the cost difference btw target values and the actual values arisen
=> ways to affect cost |
|
|
|
There are 6 topics which will affect cost difference of targeted and actual
|
- by purchase quantity
- by cost behaviour - by inflation/deflation - by supplier cost - by quantity of suppliers - by advanced technology |
|
|
|
What is cost behaviour?
|
cost is responsed to the level of activities changed.
|
|
|
|
How cost diff. related to cost behaviour?
|
unit var. cost and mixed cost are changed when level of activities changed.
-var. cost is changed in direct proportionally to level of activities. -mixed cost is changed in total as level of activities changed. |
|
|
|
How does purchased quantity affect cost?
|
inc. purchased quantity, reduced cost or use purchase in a group
|
|
|
|
how does inflation/deflation change the cost?
|
inflation = increase in total general price level of everything
=> the cost of goods/services will be affected in the same direction |
|
|
|
How does supply affect cost?
|
high demand, low supply -> price increase
BUT, low demand, high supply[or remained unchange], price reduced |
|
|
|
How does advanced technology affect cost?
|
advanced technology reduced cost of production; reduced price to customer.
|
|
|
|
How does # of suppliers affect cost?
|
Large # of suppliers, price is low
Small # of suppliers, price is high => since price can be controlled |
|
|
|
Other ways that suppliers may used to affect price?
|
price fixing => fix price at certain level
-vertical price fixing => suppliers does not allow wholesaler, retailer to sell above / below the fixed price => anticompetition -hortizontal price fixing: all competitors agree to sell goods at a fixed cost. |
|
|
|
What are the ways to minimize the cost?
|
-cost containment
-cost avoidance -cost reduction |
|
|
|
What is cost containment?
|
a process to minimize variable cost per unit / total fixed cost which increase from period to period
|
|
|
|
What are the possible cost increased that can or cannot be handled by containment?
|
CAN
-reduced competition -seasonality -purchase quantity CANNOT -tax -regulatory changes -supply & demand adj. -inflation |
|
|
|
how containment helps?
|
-find alternative supplier who provide goods at relative low price
-but new suppliers should be investigate the quality, quantity, and time demand - long-term and single source contract can reduce cost - seasonal factor can be reduced by purchase in advance, delay purchase, JIT, safty stock level, economic order quantity, material requirement planning |
|
|
|
what is cost avoidance?
|
avoid high cost by finding alternatives
& not spending money on unnessary things |
|
|
|
what is cost reduction?
|
lower current cost especially, the in excess of nessary cost
|
|
|
|
Ways for cost reduction
|
- removed NVA activities
- temps only used when there is a time limit for skills in demand - temps only used when it is at the seasonal peak - or temps only used when spealty is in needed - cost can also be reduced by outsourcing specify functions but not the core competencies or competitive advantages |
|
|
|
5 steps to implement cost control
|
1. recognized cost type, cost driver [fixed, var, prod, per]
2. cost consciousness must be communicated to all employees 3. educate employees by teaching them the cost techniques and motivate them to share ideas about cost control 4. compare actual and expected cost => generate reports, and variance for future improvement 5. view cost control as long term process |
|
