Management And Accounting Web

Relevance Lost Short Set of Questions
Answers to Question 57

Provided by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida

Relavance Lost Short Questions | Relevance Lost Main Page

57. The global competitive environment had changed significantly by the 1980's. How have the following relationships, characteristics or techniques changed and what are the effects of these changes according to Johnson and Kaplan?

Relationship, Characteristic
or Technique
Change and Effect of Change?
Labor cost relative to total cost Labor cost is a much lower percentage
Profit margins and product cost requirements Profit margins are lower because of competition, causes a need for more accurate product costs
Product life cycles Shorter
Pricing Less inflation and more competition makes it more difficult to raise prices
Quality Higher quality needed because of competition
Standard cost measures of efficiency Provide the wrong signals and confuses management
Organization structure Becoming Lean and flat
The old management accounting model Of little use. Need new model
GAAP influence on the management accounting model Conflicting. Requires expensing investments in the future such as software development, R&D, Employee training, etc