This series of articles on cost planning and control were started based on articles in book, How to Control Production Costs by Phil Carroll, Published by McGraw Hill Book Company, in 1953.
Phil Carroll unambiguously states in his preface "Many of the ideas expressed here have been stolen from others."
But each author does a service to the society by taking the idea to more number of people in a medium more accessible to people, in a style more acceptable to people. Ideas will not travel to every nook and corner of the globe. They require carriers once a thinker develops them into practically useful rules or prescriptions.
Why We Need Cost Management?
To provide all of us a better standard of living.
What is cost at conceptual level?
The resources which we are using to produce the goods and services that we are consuming. This includes our time also apart from natural resources and capital accumulated so far. If we want better standard of living. we should be able to produce more. If extra production requires proportionately extra resources, cost per unit will not change, but who is going to give us the extra resources. We have to create the extra resources first and then only we can increase the production of goods and services. Hence if we want more goods and services, we have to reduce their future cost compared to the current cost of production.
Only cost reduction in future will improve our standard of living.
What is Cost Management?
Horngren, Foster and Datar explain that cost management comprises of the activities of managers in short-run and long-run planning and control of costs. Information from accounting systems help managers make such decisions. But the systems and the information by themselves are not cost management.
Planning is deciding on organization goals and developing programs to achievement. The term organization implies a section or a department also. To develop programs to achieve organization goals, various alternative ways are to be identified first and results from them are to be predicted. Based on the estimated or predicted results from various alternative ways, programs are finalised to attain the desired goals.
Control is taking actions to see that desired results are coming out of the programs. Control comprises of targets and standard procedures, performance evaluation, and feedback mechanisms that change the way of things are being done to attain the planned results instead of the current actual results which are not a line with the planned results.
Next knol
The Need for Cost Facts
http://nraombakc.blogspot.com/2012/03/need-for-cost-facts.html
Index of articles on Cost Accounting, Costing and Cost Management
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