New Framework to Integrate Strategy: The Five Steps of Strategic Decision Making

The first edition of Cost Management introduced a five-step framework for decision making with a strategic emphasis. The framework shows that each decision starts and ends with a consideration of the organization’s strategy. To extend and integrate the strategic emphasis, the fifth edition has included the five-step framework throughout the text. In all but a few chapters there is a short section that uses the five-step framework to show how a consideration of the organization’s strategy plays a key role in making the decision that will address the business-related problems presented in that chapter.

The Current Economic Recession Increases the Importance of Reviewing and Executing Strategy

The current economic recession is addressed in the text, both in the chapters and in the end-of-chapter exercises and problems. The recession requires firms to place an even greater emphasis on executing their strategy. Moreover, the economic difficulties may require a firm to review and modify its strategy to more effectively compete in the changed economic conditions.

Online Supplement for Assignments, Exams, and More. . .

A new learning supplement, Practice4Performance (P4P), is available for use with the fifth edition. P4P was developed by Professor Paul Goldwater at the University of Central Florida. P4P is the 2008 winner of the American Accounting Association’s Jim Bulloch Award for Innovations in Management Accounting Education. P4P does the following for the instructor:

• Provides a library of over 3,000 questions that are updated with new data each time the system is accessed by the student (iteration); detailed solutions are included for each question.
• Simulates scenarios– P4P has the ability to create randomized, multistep analytical problems that vary significantly with each iteration, saving instructors valuable time in creating their own materials.
• Provides partial credit on multiple-choice questions as a built-in option that decreases the points awarded per question as the number of attempts increases.
• Has live tracking of all statistics related to student practice sessions, homework, quizzes, and exams.
• Provides flexibility in how to structure and schedule quizzes and exams—the number of questions, difficulty level of questions, types of questions (e.g., qualitative or calculation-based), and learning objectives addressed are all within your control.
• Administers assignments, grading, and interaction through P4P-integrated communication features such as online document posting, class/individual announcements, and message boards.

Excel Tutorials

Free to adopters of the fifth edition is a set of Excel tutorials, one for each chapter. This new resource provides a context based means for students to hone their Excel skills. In many cases, the Excel tutorial is linked to the demonstration problem included at the end of the chapter. The tutorials cover a wide variety of Excel topics, from elementary to the intermediate level, and some at the advanced level. The tutorials are self-contained in that there is little need for instructor intervention other than to provide student access to the files.

New Chapter Organization and Parts Introductions

The new edition has reorganized the parts and sequence of chapters to follow the sequence used by our adopters. Thus, the process costing and cost allocation chapters were moved up, and capital budgeting is now included as a chapter in the section on planning and decision making. These two changes permit a more streamlined presentation. There are now four major parts to the text: Part one, introduction to strategy, cost management and cost systems; Part two, planning and decision making; Part three, operational-level control; and Part four, management-level control. A new feature of the text is the inclusion of an introduction to each of the four parts to explain the learning objectives of the chapters in that part. Briefly, the objective of Part one is to introduce foundational concepts, including strategy, strategy implementation, and product-cost systems. The coverage of cost systems begins with job costing and is followed by ABC, process costing, and joint product costing/cost allocation. Part two, planning and decision making, begins with cost estimation, since planning and decision making are guided by knowledge of cost drivers and cost behavior. Covered in part two is profit-planning (CVP), budgeting, decision making, capital budgeting, target costing, the theory of constraints, and pricing. Parts three and four study performance measurement: Part three looks at this issue from the perspective of those who manage operations on a day-to-day basis, while Part four examines performance evaluation at a higher level: business-unit mangers who have responsibility for divisions, product lines, manufacturing plants, and whose units are evaluated as cost centers, profit centers, or investment centers.

Integration of Important Topics throughout the Text

Key topic areas for the course are integrated across the chapters. As noted above, strategy is integrated throughout the text. In addition, accounting for “lean” is included in four chapters as it relates to the subject matter of that chapter. Similarly, time-driven activity-based costing (TDABC) is covered in the ABC chapter and also in the chapter on budgeting. ABC appears in most of the chapters in Part two, as it has a key role in planning and decision making. Nonfinancial performance measures and the balanced scorecard (BSC) are introduced in Part one and then covered as part of operational and management control chapters included in Parts three and four. Resource consumption accounting (RCA) is covered both in Chapter 5 and again in Chapter 15. The topic of capacity resource planning is covered in Chapters 10 and 15. These are just examples of the efforts the authors have made to integrate key topics throughout the text.