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Paper Topic:

Compare and Contrast Cost Management Systems

German accounting was developed for the objective of supporting management decision making regarding what to produce , how much to price and how to plan and control operations . A new cost accounting called Grenzplankostenrechnung (GPK in English , which may be turned into Flexible Analytic Cost Planning and Accounting , also referred to as flexible standard costing . This was developed in Germany 40 years ago GPK integrated the management system into an accounting system . GPK provides meaningful information to manage the business and conducts flexible budgeting of the capacity costs . GPK focuses on operational

costs and resource consumption

The Controlling 'department is separate from the Financial Accounting department in German organizations . The major characteristics of GPK are that cost centers resource consumption rates are either fixed or proportional relative to outputs and cost centers rates are calculated and charged to the departments at the budgeted rates

An activity based costing (ABC ) is a powerful tool for managing performance that is used for identifying , describing , assigning and reporting on agency operations . Activity based costing is used to identify opportunities to improve the process effectiveness and efficiency by identifying the exact cost of the product . Activity based costing defines processes , identifies cost drivers and determine the cost per unit . The major advantage of using activity based costing is that it reduces the distortions in product costing and allocation of indirect costs . ABC generates how the money is spent . Activity based costing is a management tool that provides better allocation of resources , is useful for forecasting financial baselines , aligns costs to output (Cokins , G . 2001

Theory of constraint (TOC ) is used to accelerate process improvement in project and manufacturing operations . Theory of constraints helps companies to increase their performance far higher and quicker than any other approach . The factors needed to increase the performance of the companies include the need to develop innovative and new products quickly in the market . The companied have realized that they have to achieve more with the less . Theory of constraint helps organizations to increase their performance of manufacturing to a great extent without increasing the labor and capital investments

Balanced scorecard (BSC ) is the most widely used performance management system today . Balanced scorecard can measure performance across different perspectives like customer perspective , financial perspective etc . The use of different perspectives shows a balanced view of the company 's performance . The major indicators can include customer satisfaction , new product development , etc . Balance scorecard is accepted globally because this approach enables the organizations to align their staff with the single strategy . The benefits that organizations can achieve by implementing balanced scorecard includes translating the strategy into operational plans and goals , aligning organizations around a single , coherent strategy , making strategy everyone 's everyday job from top of the layer to the bottom and making the strategic improvement a continuous and throughout process (Johnson C .C . 2000

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The Activity based costing (ABC ) is very different from the other approaches because it helps the organizations to identify the most profitable and the least...

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