After studying this chapter you should be able to: First, describe the way managers use accounting information to create value in organizations. Second, distinguish between the uses and users of cost accounting and financial accounting information. Third, explain how cost accounting information is used for decision making and performance evaluation in organizations. | Cost Accounting: Information for Decision Making Chapter 1 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin We start the study of the Fundamentals of Cost Accounting with a review and overview of information necessary for decision making. Value Chain – Value added activities – Non value added activities The Value Chain describes a set of activities that transforms raw materials and resources into the goods and services end users purchase and consume. . 1 Describe the way managers use accounting information to create value in organizations. 1 - The value chain describes the set of activities that increase the value of an organization’s products or services. Value-added activities are activities that customers perceive as valuable because the activity adds utility to the goods or services they purchase. In other words, customers define value. The Value Chain Components Production LO1 1 - All products start with research and development. Is research and development (creating and developing ideas related to a new product) value-added or nonvalue-added? Once we have the idea for a new product, the product must be developed and engineered. Does this add value? The purchasing department is responsible for acquiring all of the necessary components and supplies in order to produce the product. Does this add value? We must produce the product or deliver the service in order for the product or service to have value to a customer. We need to inform potential customers about the attributes of our product or service. Delivering the product or service to the customer adds value. If the customer does not have the product or service, it has no value. Finally, chances are you have experienced the value of customer service. Have you ever called the technical support line for a software application you installed on your computer? If so, I hope the support added value to your product. Accounting Systems Financial . | Cost Accounting: Information for Decision Making Chapter 1 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin We start the study of the Fundamentals of Cost Accounting with a review and overview of information necessary for decision making. Value Chain – Value added activities – Non value added activities The Value Chain describes a set of activities that transforms raw materials and resources into the goods and services end users purchase and consume. . 1 Describe the way managers use accounting information to create value in organizations. 1 - The value chain describes the set of activities that increase the value of an organization’s products or services. Value-added activities are activities that customers perceive as valuable because the activity adds utility to the goods or services they purchase. In other words, customers define value. The Value Chain Components Production LO1 1 - All products start with research and .
