Article Abstract:
Effective accounting information systems (AIS) will enhance decision making, motivate executives, and increase efficiency in the organization. The AIS used to report and control production spoilage or product defects usually will not achieve all of the three objectives which, consequently, produces conflict between the management personnel. Defective products or work and production spoilage indicates imperfections in labor, materials, or machines and work which can not meet either the satisfaction or the specifications of the customer. A quality defect-reporting system will meet the following objectives: record all defect-related costs; provide executives with enough data for decisions about the levels and reasons of the defects; motivate executives to take the responsibility and to prevent the defects; and allow for feedback for the evaluation of the department's performance and data for corrective action when needed.
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Article Abstract:
A strategic costing system is used mainly to create profitability maps which, in turn, are helpful in determining whether further cost analysis should be conducted. Such maps are part of a cascading cost benefit trade-off which seeks to improve a firm's profitability. The cascading cost/benefit analysis for strategic costing involves the creation of profitability maps using the company's activity-based cost system. These maps show the links between revenue generation and resource usage. They help management identify opportunities for enhancing the firm's profitability, and spot loss-making products that need to be remade or discontinued. The trade-off continues with more research on the impact of resource spending stemming from any decisions made based on the profitability map.
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Article Abstract:
Total cost management (TCM) is a process by which company resources as well as the activities that consume those resources are accounted for. TCM is grounded in process value analysis, which is the basis of developing performance measures, activity based costing (ABC), responsibility accounting, and the framework for investment management. The use of ABC allows costs to be charged directly to products, eliminating the need to allocate or assign costs. The transition to TCM is a four step process that entails: assessing the business' environment, philosophy, organization, and operations; costing activities at the level at which costs are incurred; associating costs to products; and integrating financial data for use in both managerial and financial reporting.
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