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  Learning Objectives After reading and studying Chapter 1, you should be able to answer the following questions: 1. What are the relationships among financial, managerial, and cost accounting?  2. What are two common organizational strategies?  3. What is the value chain and what are the major value chain functions?  4. How is a balanced scorecard used to implement an organization’s strategy?  5. Why must accountants understand an organization’s structure to perform effectively in  that organization?  6. What are the sources of ethical standards for cost accountants?  7. What are the sources of authoritative pronouncements for the practice of cost accounting? 1 INTRODUCTION TO COST ACCOUNTING  CHAPTER 1
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Chapter 1:  Introduction to Cost Accounting Terminology Authority:  The right (usually by virtue of position or rank) to use resources to accomplish a task  or achieve an objective Balanced scorecard:  A framework that restates an organization’s strategy into clear and  objective performance measures focused on customers, internal business processes, employees  and shareholders Competence:  Means that individuals will develop and maintain the skills needed to practice  their profession Confidentiality:   Means individuals will refrain from disclosing company information to  inappropriate parties (such as competitors) Core competency:  Any critical function or activity in which an organization seeks a higher  proficiency than its competitors, making it the root of competitiveness and competitive  advantage Cost accounting:   A discipline that addresses the demands of both financial and management  accounting by providing product cost information to (1) external parties (stockholders, creditors,  and various regulatory bodies) for investment and credit decisions and (2) internal managers who  are responsible for planning, controlling, decision making, and evaluation of performance Cost leadership:   A company’s ability to maintain its competitive advantage by undercutting  competitor prices Cost management:  Reflects managements concern for continuously reducing costs while  concurrently improving customer satisfaction Customer value perspective:  Addresses how well the organization is doing relative to  important customer criteria such as speed (lead time), quality, service, and price (both purchase  and after purchase) Downstream costs:   Costs such as marketing, distribution, and customer service which are  typically incurred after production of the product as opposed to upstream costs of research and  development and product design Financial perspective:  Addresses the concerns of stockholders and other stakeholders about  profitability and organizational growth 2
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This note was uploaded on 11/13/2010 for the course BUS BUS 371 taught by Professor Wray during the Fall '07 term at Peru State.

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