A Masterclass in Strategic Management Accounting

Discover how strategic management accounting uses decision facilitating and decision influencing to boost cost efficiency and value along the value chain, with activity based costing and customer and supplier profitability.

Explore the basics of activity-based costing and value engineering, examine real-world cost examples, and participate in an activity-based costing exercise to connect costing to strategy.

See how cost management ties to strategic management, examining bill of materials, supplier power, and cost-down practices in real-world contexts like iPhone manufacturing.

Assess pricing decisions using relevant costs, distinguishing fixed overhead from variable costs, via a videotape pricing exercise, and evaluate a special order’s impact on operating income.

Explore the activity-based management framework, clarify short-term versus long-term pricing, and explain functional analysis, value engineering, and continuous improvement to improve customer and supplier profitability.

Explore short-run versus long-run pricing decisions, guided by customers, competitors, and costs, then apply target costing, value analysis, and activity-based costing to achieve sustainable pricing.

Explore long-run pricing through target costing, balancing broader relevant costs with competitive pressures, then apply value engineering—design and process value analysis—to cut non-value-added activities.

Apply activity-based costing to analyze customer profitability, allocating selling, admin, and finance costs by cause and effect, benefits received, fairness, or ability to bear, to support strategic decisions.

Apply activity based costing to allocate revenues and costs by customer, revealing which customers drive profit and guiding decisions to keep, price, or drop high-cost customers.

Apply activity-based costing to customer profitability analysis by attributing costs to customers via cost drivers, revealing profitable and unprofitable customers to guide pricing, bundling, and selective customer focus.

Apply the user pay principle to service department costs, exploring four allocation reasons and methods (single/dual rate, budget vs actual, step-down), with a focus on IT services and organizational behavior.

Compare single rate and dual rate cost allocations for service departments, and explain how fixed and variable costs shape goal congruence, performance evaluation, and decision making.

Showcases how a dual-rate costing approach signals relevant costs and strengthens service control for Sand Hill Company’s central computer services, contrasting with a single-rate method.

Discover four benefits of cost allocation in strategic management accounting: controlling the service, signaling relevant costs, improving user efficiency, and controlling capacity through fixed and variable cost allocations.

Explore direct, step-down, and reciprocal service department cost allocation methods to assign costs to operating departments, using plant maintenance and information systems, to foster accountability and an improved interdepartmental culture.

Explore direct method and step-down allocation by allocating cafeteria and custodial costs to machining and assembly using employee counts and square feet, illustrating cause and effect relationships.

Identify cost leadership and product differentiation as core strategies, using customer preference maps to reveal alignment. Apply re-engineering and the balanced scorecard to link strategy to operations.

Explore the balanced scorecard framework, its four perspectives: financials, the customer, internal processes, and learning and growth, and the cause-and-effect links that drive strategy, measurement, and performance.

Explore how systems thinking ties strategy, learning and growth, internal processes, and strategy maps within the balanced scorecard to translate training and customer experience into shareholder value.

Explore the balanced scorecard as a strategy-driven framework linking today’s actions to future value through measurement and systems thinking, with differentiation and cost leadership considerations.

Create a customer preference map comparing chipset and zilog, ranking price, scalability, service, power, and customization for cost leadership, then apply the balanced scorecard for execution.

Explore systems thinking, where measurement guides decisions and execution through feedback, linking strategy to daily actions. Emphasizes learning, customer feedback, and inclusive participation to align performance with a balanced scorecard.

Define strategy as the organization’s purpose and path to success. Use systems thinking and a strategy map with a balanced scorecard to align staff and improve sales, loyalty, and efficiency.

Analyze how strategy, systems thinking, and the balanced scorecard tie to operating income using financial measures, with emphasis on growth, price, and productivity via cost of quality.

Analyze the operating income changes from growth, separating revenue and cost effects, while evaluating productivity, capacity, and price variance to inform cost leadership and strategic storytelling.

Evaluate strategy via the balanced scorecard by linking financial measures to differentiation or leadership, focusing on growth, price recovery, and productivity, and connecting non-financial drivers to future profits.

Analyze how operating income ties growth, price recovery, and productivity to strategy, comparing cost leadership and product differentiation, with a chipset example for top management buy-in.

Discover how quality shapes the balanced scorecard’s processes and learning and growth, build a cost of quality report, and analyze prevention, appraisal, internal and external failure with real-world cases.

Define design and conformance quality and explain prevention, appraisal, internal and external failure costs, then present a cause-and-effect cost of quality report to persuade management to invest in quality.

Evaluate the cost of quality by assessing prevention, appraisal, and failure costs. Compare two quality improvement proposals—inspection versus redesign—and apply Pareto, fishbone, and control charts to guide strategy execution.

Learn to present a cost of quality report in financial terms, highlighting prevention, appraisal, internal and external failure costs, to persuade senior management to fund quality initiatives.

Translate quality initiatives into financial terms by comparing options A and B using a cost of quality report, applying balanced scorecard measures, Pareto, control, and cause-and-effect analyses to justify investment.

Compete on time by integrating the balanced scorecard with time-based measures across quality, customer, and learning and growth, and analyzing demand and production uncertainty, bottlenecks, and delivery time.

Explore how supply, demand, and wait time relate in service operations, using bank waiting times to show how staffing, production, and marketing decisions drive faster service and competitive timing.

Explore strategy execution for quality control by comparing two proposals: inspection versus redesign, using cost of quality, financial and non-financial measures, and tools like Pareto and fishbone.

The lecture explains how to quantify and manage time as a competitive tool by measuring customer response time, on-time delivery, and bottlenecks, linking capacity, demand uncertainty, and constraints to performance.

Analyze how to compete on time by evaluating time drivers, bottlenecks, and capacity to reduce customer waiting time and achieve on-time delivery.

Explore the theory of constraints to identify bottlenecks and boost throughput by focusing on direct material costs, throughput contribution, investments, and operating costs, including outsourcing and capacity decisions.

Learn negotiated transfer pricing in a decentralized organization, balancing head office delegation, performance measurement, and rewards while using pricing to cut avoidable distribution costs or leverage excess capacity.

Explore transfer pricing within a decentralized management framework using a Dak Oil case to calculate minimum and maximum transfer prices from variable costs and opportunity costs.

Explore decentralization and transfer pricing in large firms, balancing knowledge transfer costs with agency costs. Learn how to measure and incentivize front-line decisions to align transfer pricing with dominant objectives.

Balance decentralization, measurement, and incentives to manage knowledge transfer costs and agency costs, and apply responsibility centers with discretionary and engineered cost methods to guide transfer pricing.

Explore transfer pricing methods and mechanics. Set maximum and minimum prices using market, cost, or negotiated bases, considering excess capacity and opportunity costs.