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