The value chain and cost analysis, Managerial Accounting

Assignment Help:

The Value Chain and Cost Analysis

The behavior of a firm's costs and its relative cost position stem from the value activities the firm performs in competing in an industry. A meaningful cost analysis, thus, examines costs within these activities and not the costs of the firm as an entire. Each value activity has its own cost structure and the behavior of its cost may be affected by linkages and interrelationships with other activities both within and outside the firm. Cost advantage results if the firm achieves a lower cumulative cost of performing value activities than its competitors.

The starting point for cost analysis is to define a firm's value chain and to assign operating costs and assets to value activities. Each activity in the value chain involves both operating costs and assets in the form of fixed and working capital. Purchased inputs make up part of the cost of every value activity, and can contribute to both operating costs (purchased operating inputs) and assets (purchased assets). The need to assign assets to value activities reflects the fact that the amount of assets in an activity and the efficiency of asset utilization are frequently important to the activity's cost.


Related Discussions:- The value chain and cost analysis

Explain kaizen and management, Kaizen and management Management has two...

Kaizen and management Management has two major components: 1) Maintenance 2) Improvement. The aim of  the maintenance function is to maintain current technological man

What are the features of performance budgeting, What are the features of pe...

What are the features of performance budgeting The main features of performance budgeting are:  a)  Classification into functions activities or programmers.  b)  Specifyi

Transportation problem-solution, Transportation Problem-Solution Soluti...

Transportation Problem-Solution Solution of the Transportation Problem: The fundamental steps of the transportation method are: Step 1:       Determine a preliminary b

Decision making process, Decision Making Process Decision making is the...

Decision Making Process Decision making is the process of choosing among alternatives. There are 7 steps that should be followed as shown in figure below:   Figure:

Service time-probability distribution curve, Service time-probability distr...

Service time-probability distribution curve A common example is that service times follow an exponential probability distribution i.e. y=e -x Service channels - t

Explain decision unit - zero base budgeting, Explain decision unit - zero b...

Explain decision unit - zero base budgeting Decision units: an organization is divided among decision units. The manager of the decision unit justifies the relative budget

Explain direct labor cost standard, Explain Direct labor cost standard ...

Explain Direct labor cost standard The setting up of standard labor cost for each product would require: a) The determination of budgeted fixed overhead for a period b) B

Managerial accounting, Managerial Accounting Before going to Managerial...

Managerial Accounting Before going to Managerial Accounting let us discuss a bit about Financial Accounting. Financial accounting is concerned with reporting to the external pa

Mgt acc., companyXYZusesthe job oder costing system.

companyXYZusesthe job oder costing system.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd