IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 1 IES 342: Course Overview Chapter 1 (Blocher et al.) Objectives: Get consensus on class policies Preview of course contents Case Study: The Cappuccino Express

IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 2 Instructor’s Contact Info Instructor: Dr. Karndee Prichanont Office Hours: Wednesday 9 a.m.-12 p.m. or by appointment Phone: ext 2109 Office:IE Office, room 316

IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 3 Course Material Main Textbook: Blocher, Chen, Cokins, and Lin, Cost Management: A Strategic Emphasis, McGraw- Hill/Irwin, 3/2005. Supplements: Blocher, Chen, Cokins, and Lin, Cases and Readings for Use with Cost Management: A Strategic Emphasis, McGraw-Hill/Irwin, 3/2005. Horngren, Datar, and Foster, Cost Accounting: A Managerial Emphasis, 12/2006 Warren, C. S., J. M. Reeve, and P. E. Fess, Financial Accounting, South-Western College, ed 8/2002.

IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 4 Course Webpage Class web page contains: –Class announcement –Class presentations –Additional handout and case studies –Additional reading materials and links to related articles –FAQ to assignments and class material –Previous exams and exam practice problem –Individual grades and scores –Inform me ASAP if you have questions with current grade / grading system If you wish not to have your grades and scores appear on the web, please let me know now.

IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 5 Grading Policies Tentative score distribution Pop Quiz Midterm Exam Final Exam Participation / Attendance / Professional Conduct 10% 40% 10% Tentative grading criterion Final GradeCumulative score A B+, B, C+, C, D+, D F >= 90 Subject to score distribution < 40

IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 6 Class Policies Classroom Behavior Turn-off your cell phone and pager Be on time. The door may be locked after the class starts Minimize class interruption No bathroom break during class session Food and drink are ok Participation Attendance is a minimum requirement for participation Read and analyze the assigned case study before the class begins Active participation in class discussion is anticipated If participation is not active enough, I will call on your name to answer my question Only quality and constructive comments/discussions will receive participation score

IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 7 Class Policies Pop Quiz Pop quiz is randomly scheduled. No advance notification. Close book/note. Calculator may be needed. Strictly no borrowing Cheating will result a minus of full score of that quiz. Exam Policies Open book/note (tentatively) Strictly no borrowing Makeup Policy Only for rare and extreme cases Documented advance notification Dress Code Only in a sensible uniform is allowed to enter the class room

IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 8 General Course Info Part 1 Basic Financial Accounting Part 2 Cost Behavior and Cost System Part 3 Product Costing Part 4 Budgeting

IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 9 Accounting System Costs and Benefits BenefitsCosts Benefits Costs > Benefits < Costs Obtain system Seek alternatives

IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 10 Accounting: Information Process Identification of Users User Information Needs Accounting System Reports Economic Data and Activities User Decisions

IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 11 Part 1: Financial Accounting Understand and develop financial statements Textbooks: Warren, Reeve, and Fess, Financial Accounting, South- Western College, ed 8/2002. Chapters 1, 2, 3 NetSolutions Trial Balance November 30, Cash5,900 14Supplies550 17Land20,000 21Accounts Payable400 31Chris Clark, Capital25,000 32Chris Clark, Drawing2,000 41Fees Earned7,500 51Wages Expense2,125 52Rent Expense800 54Utilities Expense450 55Supplies Expense800 59Miscellaneous Expense27532,900

IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 12 Part 2: Cost Behavior and Cost System $0 $10 $20 $30 $40 $ Units (thousands) Dollars (thousands) Break even sales point 8,000 units or $40,000 Sales revenue line Total expense Fixed expense line Textbook: Blocher, Chen, Cokins, and Lin, Cost Management: A Strategic Emphasis, McGraw-Hill/Irwin, 3/2005. Chapters 3, 6, and 7

IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 13 Part 3: Product Costing Activity-Based Costing (ch 5) Job Costing (ch 4) Process Costing (ch 11) Cost Allocation (ch 12) Product A Product B Product C Cost Drivers Textbook: Blocher, Chen, Cokins, and Lin, Cost Management: A Strategic Emphasis, McGraw-Hill/Irwin, 3/2005.

IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 14 Part 4: Budgeting summarizes the planned activities of all subunits of an organization. Sales Production Distribution Finance Textbook: Blocher, Chen, Cokins, and Lin, Cost Management: A Strategic Emphasis, McGraw-Hill/Irwin, 3/2005. Chapters 8 & 13

IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 15 The uses of cost management information Information managers need to effectively manage an organization. Financial information about costs and revenues. Nonfinancial information about productivity and quality.

IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 16 Strategic Management vs Strategic Cost Management Strategic management requires:  Anticipating changes.  Understanding the business and competitive environment.  Ability to make changes quickly.  Ability to identify and solve problems from a cross-functional view. Strategic management requires:  Anticipating changes.  Understanding the business and competitive environment.  Ability to make changes quickly.  Ability to identify and solve problems from a cross-functional view. Strategic cost management is the development of cost management information to facilitate strategic management. Who are we? Define the goal Explore the environment Allocate resourceIntegrate sub-goals to achieve ultimate goal

IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 17 Competitive Strategy DISCUSSION: Give example of products and/or companies that are evidences of these competitive strategies. DISCUSSION: Give example of products and/or companies that are evidences of these competitive strategies. Cost Leadership Product Differentiation

IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 18 CASE: Cappuccino Express Discussion Topics What factor(s) can be expected to have a major impact of the success of The Cappuccino Express? What are the major costs of operating The Cappuccino Express? Vincent would like to monitor the performance of each site manager. What measure(s) of performance should he use?