The Cost Information Chain Research On Management Accounting

Since 1980', people started researching management accounting systematically. At the same time many accounting academicians paid attention to the practice. Professor Yu xuying wrote the first book of management accounting in China, which was recognized as the milestone of management accounting research. Then there are many articles published in core accounting magazines introducing cases and experiences of management accounting in Chinese companies.According to investigations,people commonly believed that we made some achievements in teaching, theoretical research and practice of management accounting. But because of the short developing period and people pay much more attention on methods but theory system in western, there are no complete theory system, which made the management accounting hardly to be a scientific subject. For the same reason we can't see a clear path to develop management accounting, which indicates that we need to find some way to integrate the whole contents to make it foreseeable.There are 5 sections in this paper discussing the question in detail and we put forward the method by using cost information chain as the main thread to integrate contents of management accounting. Here are the details: Section 1: background and present situationNow we are faced with several problems including lack of regulation, no main thread for research,no system model and bad research environment and phenomenon in management accounting.To solve the above questions,we put forward the innovation concept of cost information chain, which would enrich the contents, level up the status of management accounting and make the direction of practice more meaningful.We analyzed concepts of process, value chain and cost by their similarities and differences. After considering their effects on management accounting we reach the entire new concepts of cost information chain, by which we could resort the system of management accounting. Then we listed out the advantages of the new system.Section 2: detail analysis on cost, process and value chain. Firstly we analyzed the definition of cost (we enlarge the contents of cost thinking that all price paid or gong to be paid to get resources should be defined as companies'cost), cost categories(we listed 6 methods to category cost including habit, economical use, timing, adherence to products, controllable or uncontrollable and relationship with investment decision), cost status and new concepts of cost management (including strategic cost management,tech-driven cost management , people oriented cost management , systematic cost management , macro sense of cost and benefits, budget objective cost management). At the end of this section we come to the whole historical development of value chain (including three main stages: the early stage of value chain concepts in Porter's strategic competition, further research of service value chain concepts, specific value chain research such as human resources value chain) and predicate the development trend (break down and integration of value chain, Hypothesize of value chain, moving toward supply chain).Section 3: effects of cost concepts, process concepts and value chain concepts on management accountingFirst, cost category is the condition of cost status analysis which is the condition of variable cost calculation, and they together provided convenience for cost- volume-benefits analysis and formed as the base for a company to make correct operating decisions.Second, there are many effects of process concepts on cost management. It nearly has effects on the whole system of management accounting to some degree.The last one, value chain concepts also have many effects on management accounting: firstly value chain combined economical activities and resources allocation, resources usage and value created together by analyzing driven factors; second, as a specific method of management accounting, it tells the relationships among all kinds of activities, and related them to value transmission and value addition, which made the value chain of a company as a whole one and specified cost, revenue and profit; third, as a management accounting method, its core is value chain, which contained suppliers, distributors and customers too and related a company's cost, revenue and profit to far more wide framework of industry, so the ownership of a company could be stretched to outside by strategic union and longitudinal integration. Seeking for the competition advantages, it would make the whole value system of a company to be the direct object of management accounting.As the objectives of management accounting, value chain could enhance present management accounting system from 5 aspects including combination of management accounting and financial accounting , analyze and enhance companies'core ability, understanding of competitive advantage in value chain framework, integrate value chain through optimizing organizational behavior, value chain as the base of IT system.In the whole, switching from the theory of money movement as accounting objective to the theory of value chain as accounting objective, it would form a new base for accounting information system and accounting management system, which would be better for accounting to reflect and control activities.Section 4: cost information chain conceptFirst of all, there is an introduction of the basic concept of cost information chain, then we made an analysis on the detail contents of cost information chain which include internal and external cost information chains. We find that the substance of internal cost information chain is the integration of the internal cost contents in management accounting, so is the external cost information chain. We believe the sorting method isn't absolute.Section 5: analyzing the large meaning of the cost information chainAt first,we analyzed the advantages of the cost information itself; And then,different views consisting present management accounting system, based on which we defined the management accounting system as three main parts: traditional management accounting system , developed one and strategic management accounting system. Then we rebuilt these three systems by using cost information chain and discussed the relationships and differences,advantages and disadvantages of the rebuilding.Main contributions:A. We made necessary analysis on concepts of process, value chain and cost and put forward the new concepts of cost information chain which has rich implications.B. Based on the cost information chain, we resorted and re-categorized management accounting system, which made the management accounting system no longer a stable and sealed system but a containable one.C. We creatively put forward that strategic management accounting is the bridge to conjunct internal and external cost information chain. Based on internal cost information and using external information, it would help company management from all aspects, which would further be good for strategic management practice.