Integrated Management Accounting and the Analysis of Cost Reduction

Abstract

This chapter considers several issues which management accounting needs to address and makes a proposal for integrated management costing which metamorphoses activity-based costing and cost design in combination with contribution margin statement. At the same time, a method for cost reduction analysis is discussed. To begin with, however, we examine the advantages and disadvantages of activity-based costing (ABC) and cost design (target costing), which are popularly discussed today. This chapter also considers the evolutionary process of management accounting to clarify how it has developed from its traditional roots. Furthermore, the chapter explains in detail an integrated cost accounting system, in which cost design and ABC are connected with contribution margin, as well as the implication and accounts procedure of cost reduction analysis, which contributes to the recognition and control of strategy in organizations.