Chapter2 - 2 Chapter CXXXX 41137 2 9/10/07 4:33 PM Page 1...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
2 I n 1999, Nissan Motor Company had a problem. With no cash div- idends and a net loss of over ¥684 billion yen (approximately $4.1 bil- lion), CEO Carlos Ghosn knew he had to do something. In his words: “The lack of profit is like a fever. When your business is not profitable, that’s a serious signal that something is wrong. Either the products are not right, or marketing is inefficient, or the cost base is too high—some- thing is wrong. If you ignore a fever, you can get very sick. If you ignore unprofitability, the situation can only worsen.” Ghosn launched the Nissan Revival Plan that turned the company around by designing and marketing new models, investing in new plant technologies, slashing supply costs, and emphasizing the company’s most profitable products. Five years later, Nissan’s annual operating income tops ¥861 billion yen (approximately $7.6 billion). Building Blocks of Managerial Accounting 2 Chapter Cxxxx 41137 page 1 09/07/07—mp 2 Chapter CXXXX 41137 9/10/07 4:33 PM Page 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 Chapter Cxxxx 41137 page 3 09/07/07—mp Nissan’s operating margin is now the highest in the automotive industry, and it is paying its shareholders cash dividends at record levels. Before Nissan could attack its problems, it had to know where its costs were incurred, and whether it could control those costs by making different decisions. Was the company spending too much in production, using outdated equipment and technologies? Was it spending enough on designing new products that better met customers’ needs and desires? Was it targeting the right audiences in its television advertis- ing? In this chapter, we talk about many costs: Costs that both man- agers and management accountants must understand to successfully run a business. Sources:;; and Nissan Motor Co., Ltd., Annual Reports 2002, 2003, 2004. j Learning Objectives Distinguish among service, merchandising, and manufacturing companies Describe the value chain and its elements Distinguish between direct and indirect costs Identify the inventoriable product costs and period costs of merchandising and manufacturing firms Prepare the financial statements for service, merchandising, and manufacturing companies Describe costs that are relevant and irrelevant for decision making Classify costs as fixed or variable and calculate total and average costs at different volumes S o far, we have seen how managerial accounting provides information that managers use to run their businesses more efficiently. Managers must understand basic managerial accounting terms and concepts before they can use the information to make good decisions. This terminology provides the “common ground” through which managers and accountants communicate. Without a common understanding of these concepts, managers may ask for, and accountants may provide, the wrong information for making decisions. As you will see, different types of costs are useful for different purposes. Both managers and accountants must have a
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/13/2012 for the course ACCOUNTING 2302 taught by Professor Harris during the Fall '11 term at Dallas Colleges.

Page1 / 58

Chapter2 - 2 Chapter CXXXX 41137 2 9/10/07 4:33 PM Page 1...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online