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Information on Cost and Value

We cannot achieve results until we have information on cost and value.

Basic structural information is focused upon the value that is created for customers and the resources used to do so. The concepts and tools of accounting are now in the throes of its most fundamental change. The new accounting tools are not just different views of recording transactions but represent different concepts of what business is and what results are. So even the executive far removed from any work in accounting, such as a research manager in a development laboratory, needs to understand the basic theory and concepts represented by these changes in accounting. These new concepts and tools include: activity-based costing, price-led costing, economic-chain costing, economic value added, and benchmarking.

Activity-based costing reports all the costs of a product or service until the customer actually buys the product, and provides the foundation for integrating cost and value into one analysis.

ACTION POINT: Pick up a book on Activity-Based Costing and become proficient with the strategic, conceptual, and procedural issues of this accounting concept.

Management Challenges for the 21st Century
From Data to Information Literacy (Corpedia Online Program)

* Source: The Daily Drucker by Peter F. Drucker

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