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CMA Final · Strategic Cost Management · Introduction to Strategic Cost Management

Which of the following best distinguishes strategic cost management (SCM) from traditional cost management?

Strategic cost management differs from traditional cost management because it uses cost data to support strategic positioning, looking at the whole value chain and competitors' costs, whereas traditional methods focus on internal product costing and cost control of existing operations.

  1. ASCM focuses only on reducing the unit cost of existing products on the shop floor
  2. BSCM uses cost information to support the firm's strategic positioning, looking beyond internal operations to the value chain and competitorsCorrect
  3. CSCM replaces financial accounting with non-monetary measures only
  4. DSCM is concerned only with computing historical product costs for statutory reporting

Explanation

Strategic cost management applies cost information and analysis to the firm's strategic goals, covering the external value chain, competitor costs and positioning. Traditional cost management looks inward at product costing and cost control. Option A describes the traditional approach, so it is wrong.

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