Provides information for management to make decisions

- applies to all types of business

(manufacturing, merchandising, and service)

• Planning: looking ahead, creating objectives that add value to the business
• Directing: making things run smoothly
• Controlling: keeping all on track, working towards goals, performance evaluations

Organizational Structure:

Centralized

Organizational Structure:

Decentralized

Horizontal authority and responsibility

• Line positions- directly involved in the company's primary revenue generating activities
• Staff positions- involved in activities that support the efforts of the line employees
• Organizational charts- pictures of the line and staff relationships

Organizational Structure:

Types of positions

• Board of directors- Formulate the operating policies for the company
• Chief Executive Officer- Responsible for managing the company
• Chief Financial Officer- Responsible for all of the accounting and finance issues of the company

Should be a corporate culture of integrity and honesty. All in the business should act ethically 

(Enron)

Converting raw materials into finished goods.

Includes direct (raw) materials, direct labor, manufacturing overhead

Materials costs that can be physically and directly traced to the end unit of product.

(Traceable/measurable)

Labor costs of person who physically touches through a machine the unit of product while it is being produced

(Product line workers)

Tracks other costs that are required to make a unit of product, but usually are too costly or are not conventiently traced into the end unit of product.

Includes: Indirect materials, indirect labor, supervisor's salaries, maintenance/security, deprectiation, insurance, real estate taxes, license and permits, rent, utilities

Costs of making a unit of product. Usually includes materials, labor, and overhead. Occurs in the factory. 

Product Costs= DM used + DL + MOH

The basic costs of a unit of product. 

Direct materials used + direct labor

The costs of transforming a raw material into a finished unit of product. 

Direct Labor + Manufacturing Overhead

Refers to all activities associated with providing a product or service.

-business value added activity costs are government regulated and should be kept to a minimum

-customer thinks it adds value

-keep non value adding activities to a minimum

1. Enterprise Resource Planning (ERP)- software system that manage the value chain. It connects many smaller software packages.
2. Computer Integrated Manufacturing (CIM)- means to manufacture products that are untouched by human hands. Reduces labor costs

Goods are manufactured or purchased just in time for use. 

"Pull Process"

ex: Dell computers

The goal is to achieve zero defects

A specific approach used to identify and manage constraints in order to achieve company goals through the avoidance of "bottlenecks"

(Make the most money possible)