Process Costing: The Most Important Subject in the Management Accountant's Curriculum

摘要

Current process costing instruction focuses on inventory valuation, which is not a management accounting objective. The majority of businesses are process-based. Accordingly, the management accountant should be well equipped to provide credible end-to-end process cost differentiated by service, channel, and potential complexity factor. Quality financial data depends on quality operational data. The management accountant should have the skills to ensure quality operational data provides the drivers for cost data. Replacing large overhead cost pools by assigning those costs to processes and work centers that drive those costs will make a step function improvement in cost data quality and provide department managers with driver-based cost data. Credible horizontal process operational and financial data enables horizontal management. This is important because the patient's, customer, client experience is determined by the end-to-end process. Financial accounting-based inventory valuation, financial statement analysis, cash flow statements, and overhead-based costing textbook material should be deleted from the management accounting text books and included in financial accounting text books. This would free up management accounting text book space and classroom time to focus on important management accounting material such as process costing and an operational planning process that drives the financial planning process. If the academic leaders believe the management accountant should receive financial accounting instruction, they can add those financial accounting classes to the management accounting curriculum. Personally, I believe management accountants should get a CPA or at a minimum the education required to become a CPA. This education would put them on a better footing when working with their financial accounting co-workers. It would also help them understand why financial accounting is critical for external reporting and the financial analysts' profession but not very useful for internal strategic decisions about customer segments, product lines, E2E processes, and work centers where capacity is managed.