Skip to content

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

Which statement best distinguishes strategic cost management (SCM) from traditional cost management?

Strategic cost management uses cost information to support the firm's competitive strategy and takes an external, value-chain view, whereas traditional cost management is mainly internal and focused on product costs. Hence the second option is correct; the others reverse or misstate the roles.

  1. ASCM focuses only on reducing the cost of production inside the factory, while traditional cost management considers the whole industry
  2. BSCM uses cost information to support the firm's competitive strategy and looks at the external value chain, while traditional cost management is mainly internally and product-cost focusedCorrect
  3. CSCM ignores non-financial information, while traditional cost management relies mainly on it
  4. DSCM is concerned only with statutory cost records, while traditional cost management is concerned with decision making

Explanation

SCM links cost analysis to strategic positioning and uses an external, value-chain, long-term view along with non-financial data. Traditional cost management is mostly internal and product-costing oriented. The first option reverses the two approaches.

Did you get it right without looking?

One question tells you little. A timed set on Introduction to Strategic Cost Management shows your real accuracy, how long you take and where you lose marks.

Practise Introduction to Strategic Cost ManagementFree diagnostic mock

More Introduction to Strategic Cost Management questions