【文章內(nèi)容簡介】 de what information to gather we need to assess the value of the information and the cost of collecting it.Costsof collecting informationTime spent designing, setting up and maintaining an information systemTime spent collecting, reporting and interpreting dataInformation technologycosts– the setup and runningcostsof puter terminals, scanners, servers and networks used to collect, store and report dataInformation overload: So much data is collected and reported that managers may be unable to absorb what is significantBehaviouralcosts: Staff may resist providing new data and even deliberately feed in incorrect dataBenefits of informationImproved decisionmaking due to more accurate and plete informationCompetitive advantage over rivals working with less accurate informationBalancingcostsand benefitsBefore mitting to any significant informationgathering project we need to weigh up both the likely benefits of the information and the cost of collecting it. This is difficult because:Behaviourcostsare almost impossible to value yet may be significantIt is difficult to quantify the benefits of information in monetary termsWe should still identify thecostsand benefits. Where these can’t easily be quantified in monetary terms we should still rate their relative importance taking account of:Competitive strategy . information on delivery times is critical to a pizza firm using prompt delivery as a key selling point but not to one using low prices as its key selling pointInformationproblem warning signs . unexpectedly losing tenders may indicate inaccurate cost information, production holdups due to unexpected ponent shortages may indicate inaccurate production data3. Cost FlowsThe cost of a product or service represents the value of the resources used to make it. These resources don’t simultaneously e together – they’re added to the product or service over a period of time. Tracking this flow of resources is an important management accountingtask and the focus of this topic.Learning outesOnce you’ve pleted this topic you should be able to:Outline the flow ofcostsin manufacturing firmsOutline the flow ofcostsin service firmsDemonstrate an understanding of the value chainManufacturing Cost FlowsTraditional manufacturing cost trackingTraditional costaccountinghas focused on production cost flows with no tracking of upstream and downstreamcoststo products. These productioncostsare made up of:Direct materials: the physical ponents that go into the productDirectlabour: the wages of those making the productProduction overhead: the machinery, power and other factory resources thatlabourneeds to convert direct material into finished productRecording cost flowsAccountingentries record the addition of resources and the flow of product through the business. Once recorded using manualjournals today entries are likely to be puterised. Entries would include:Purchase raw materials: Debit Raw materialsinventoryCredit Accounts payableIssue raw materials to work in process (WIP):Debit WIPinventoryCredit Raw materialsinventoryRecord directlabourcosts: Debit WIPinventoryCredit WagesexpenseAllocate manufacturing overhead: Debit WIPinventoryCredit Manufacturing overheadexpenseIndividual overhead expenses such as power and factory rent would first be recorded individually and then transferred to manufacturing overheadexpenseTransfer finished product toinventory:Debit FinishedgoodsinventoryCredit WIPinventoryRecord cost of product sold:Debit Cost ofgoodssold Credit FinishedgoodsinventoryService Firm Cost FlowsDifferences from manufacturing cost flows:Service outputs are intangibleUnlike products,servicesare not inventoriableServicestend to be heterogenous varying from client to client. Manufactured products tend to be homogenous . one can of Watties tomato sauce is the same as the nextDirect material is a separate ponent for manufacturers but is usually included within overheads for service firmsService firms don’t distinguish between production and nonproduction overheadService costing challenges:The true cost of the service varies greatly from customer to customer but is often unknown。 the oneoff nature ofservices means that the effort to calculate an accurate cost may not be justifiedClose tracking of the work carried out by specific employees is critical to accurate costing but may be resisted by employeesOverheads are a significant cost for service firms but most don’t track how differentservicesactually use overhead resourcesThe Value ChainMichael Porter introduced the concept of the value chain in his 1985 bookCompetitive Advantage: Creating and Sustaining Superior Performance. The value chain views business as a sequence of activities that convert inputs into outputs valued by customers. The value chain model applies to:Whole industries . from a farmer raising lambs through to a supermarket selling sheep meatIndividual businessesBreaking down a business into its key activities helps managers to assess which activities are petitive strengths and which are weaknesses. The activities are grouped into:Primary activities: activities directly involved in creating and delivering a product/serviceSupport activities: activities not directly involved in production but that assist effectiveness orefficiencyPrimary activitiesInbound logistics: receiving and storing materialsOperations: the manufacture of products andservicesOutbound logistics: gettinggoodsandservicesto buyersMarketing and sales: informing customers aboutgoodsandservicesService: aftersale support of thegoods/servicesSupport activitiesProcurement: sourcing and negotiating resourcesupplyHuman resource management: recruiting, developing and rewarding employeesTechnology development: managing information processing and protectionInfrastructure: various suppo