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Report on Accounting in Organizations and Society

   

Added on  2020-04-07

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Accounting in Organizations and Society 1ACCOUNTING IN ORGANIZATIONS AND SOCIETY By (Student’s Name)Professor’s NameCollege Course Date

Accounting in Organizations and Society 2ALUMINA LIMITEDINTRODUCTION The company is a leading Australian firm listed on the ASX (Australian Securities Exchange) aswell as (OTC) Over-the-Counter market in the United States. The company was created on eleventhDecember 2002 when WMC Limited’s alumina assets were demerged from the copper, nickel andfertilizer businesses (WMC Resources Limited). The demerger has allowed the investors to benefitstraight from the full value of alumina as well as aluminium business. The main strategy of Alumina Limited is the global investment in bauxite mining, aluminarefining as well as selected aluminium smelting operations via its forty percent ownership of the AWAC(Alcoa World Alumina & Chemicals), the global leading alumina business. Alcoa, Alumina Limited’spartner owns the rest of the sixty percent of AWAC and remains the manager. The Company remainsamong the top 100 Australian companies and it delivers strong returns, consistent performance alongsideongoing growth. ORGANIZATIONAL STRUCTURE Diagram: Organizational StructureAlumina Limited uses a limited liability company structure. It is one of the newest organizationalstructures for the businesses. It is considered a hybrid since limited liability companies can be formed ascorporations or partnerships as in the case of Alumina Limited that partners with Alcoa. This structureprovide the company owners, referred here as members, the protection from the liability alongsideadditional obligations identical to a corporation. It is set up in a manner that is manageable as apartnership (Burke 2017). Degree of Alumina Limited Decentralization A higher degree of decentralization is witnessed in Alumina Company. Due to its partnershipnature, there is a clear decentralization between the partners. Moreover, the company business strategythat focus on global investment in bauxite mining, alumina refining as well as selected aluminiumsmelting operations leaves the company with no option but to decentralize its operations in manycountries but the ownership remains for the company as seen in the diagram above. The higher degree of decentralization is permitted due to the existence of many more decisionrequired to be made at lower levels, and the fact that more decision connected to almost all functionalareas are required to be made at lower levels (Jaques 2017). The degree of decentralization in observed

Accounting in Organizations and Society 3in different areas including hiring of workers, employee promotion, capital equipment acquisition, rawmaterial procurement, sales order acceptance, pay/wages increase and travel expenses approval. BecauseAlumina has a great dispersion of organizational units where many units are scattered over an enormousarea, decentralization has been the panacea for better results (Tai and Chuang 2014). Types of Responsibilities Centers Alumina Limited uses the following four types of responsibility centers in its organizationalstructure: cost center, revenue center, profit center and investment center. A responsibility centerdescribes an organizational unit that a manager heads and being responsible for both results and activities.Such information on accounting, revenue and cost must be collated and reported on by these centers. Alumina Limited classifies its responsibility center by both scope of responsibility assignedalongside decision-making authority accorded to specific managers. In Alumina Limited, the cost centerdescribes a unit within an organization whereby the managers are held accountable for the incurred costbut not for revenues. The manager responsibility in the cost center is confined to cost. In AluminaLimited, the service and manufacturing departments are categorized as cost centers. In Alumina Limited, the revenue center describes a segment with a primary responsibility of salesrevenue generation. The manager has no control over cost, investment in assets, however, he/she hascontrol over certain expense of marketing department. The manager evaluates the performance of thiscenter through the comparison of actual revenue against budgeted revenue, as well as actual marketingexpense against budgeted marketing expenses. Examples of revenue centers in Alumina Limited includemarketing manager of product line and individual sales representative (Kim, Park and Ryu 2017). In Alumina Limited, the investment center describes a segment responsible for investment andprofit. The manager controls revenue, expenses as well as invested amount in this center. Manager furtherformulates credit policy with straight influence on debt collection alongside inventory policy thatdetermines investment in inventory. The manager has additional authority and responsibility accorded toeither profit or cost centers. The manager controls costs and revenues in addition to investmentresponsibility. In Alumina Limited, a profit center describes that segment whose manager has the responsibilityfor costs and revenues. The manager is accorded both authority and responsibility to make decisionaffecting both revenues and cost and hence profits for division or department. The profit center’s mainpurpose is to earn profit as managers do aim at product production and marketing. The profit centermanager evaluates the performance on the basis of whether budgeted profit is achieved. Alumina Limitedhas a division that produces and markets products that make up profit center and the divisional managerdetermines the selling price, production policies and marketing programmes. LITERATURE REVIEWEnvironmental Responsibility The literature review focus on the themes social responsibility and environmental responsibilityby examining them in terms of management accounting in Alumina Limited. The examination anddiscussion of these two themes is done based on their meanings to the industry that Alumina operates anda conclusion presented discussing how the two themes impact Alumina Limited. The companyacknowledges that genuine engagement of community and building of relationship remains significant toAWAC’s forthcoming business success. The joint venture (AWAC) receives both operational and growthlicense from local communities, associated representatives as well as broader society. It is further the source of one of AWAC’s greatest significant stakeholder-its 5,146.0 employeeswho undertake the operations globally. The safety as well as wellbeing of the workers at the workremains a fundamental human right or entitlements as is the ones to collectively bargain as well as freelyassociate. Alcoa is working to strengthen the culture which promotes safety as a matter of priorityconcern in every work activity as well as supports worker dignity alongside labor rights globally. Alumina Limited has a strong belief that the business sustainability remains reliant on theintegration into business plan of, relevant as well as meaningful sustainability objectives that, in additionto other things, culminate in sensible management of environment. The company has emphasized this bythe resource intensive business of the alumina refining as well as smelting. The resources-the AWAC’s

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