1. BPC 32603 Industrial Production Costing
Topic 1: Introduction
Cost Management Concept
The objectives of cost management
Instructor:
Ahmad Kaseri Ramin C.A(M),FAIA

2. Chapter Learning Outcomes
Acknowledge the basic concept of cost management in production /operation environment
Identify the importance of cost management for decision making

3. Cost management concept
What is a cost? It is something of value given up in exchange for something else. It is price paid to acquire some goods or services.
It includes money, materials, labor and time. But the term “cost” conveys multiple meanings and there are different costs for different purposes.

4. Business functions making up the value chain
Process Management
A business process is a series of steps that are followed in order to carry out some task in a business.
Business functions making up the value chain
Product Customer
R&D Design Manufacturing Marketing Distribution Service
Part I.
A business process is a series of steps that are followed in order to carry out some task in a business.
Part II.
A value chain consists of the major business functions that add value to a company’s products and services. 

5. Productions Flow OUTPUT INPUT Planning CONVERSION TECHNOLOGY / SYSTEMS
MATERIAL + LABOR
Products
Services
Products &
Services
Controlling

6. Cost management concept
Users of accounting information can be divided into two categories: (i) External parties outside the organization (financial accounting). (ii) Internal parties within the organization (management accounting).

7. The concept of cost management

8. The Importance of Cost Management
The changing business environment
Organizations have faced dramatic changes in their business environment.
Move from protected markets to highly competitive global markets
Deregulation
Declining product life-cycles

9. The important of cost management
To compete successfully in today’s environment companies are:
Making customer satisfaction an overriding priority.
Adopting new management approaches.
Changing their manufacturing systems.

10. Managing Customer Satisfaction
Customer Focus

11. Cost Management in Perspective
Know your cost of producing your services /products
Know your cost of doing business
Know your cost of doing business
Stay competitive and relevance in business
Know your cost of serving customers

12. Topic I
End of TOPIC I