Activity-Based Costing in Managerial Accounting for Webjet Limited

Managerial Accounting Activity-Based
Costing

MANAGERIAL ACCOUNTING 1
Executive Summary
The management of every business today faces various difficulties in regards to decision
making. Management accounting utilizes data from the operations of the business to make
reports that offer details of the business performance. This report is being prepared in order to
highlight the use of management accounting and how it helps in attaining the strategies of the
business.

MANAGERIAL ACCOUNTING 2
Table of Contents
Executive Summary...................................................................................................................1
Introduction................................................................................................................................3
Activity-Based Costing..........................................................................................................3
Activity-Based Costing features............................................................................................4
Overview of Webjet Limited.................................................................................................5
The mission of Webjet limited...........................................................................................5
Objectives of Webjet Limited............................................................................................5
Corporate Strategies of Webjet Limited................................................................................6
B2B Growth Strategy.........................................................................................................6
B2B Strategy of Growth.....................................................................................................6
Achieving Strategies of Webjet Limited through Activity-Based Costing............................7
Study cost and processes....................................................................................................7
Identification of the Activities...........................................................................................8
Determining Rates of Per-Activity of Assignment............................................................8
Applying cost objects.........................................................................................................8
Recommendation for the Implementation of Activity-Based Costing...................................8
The suggestion of Managerial accounting tool......................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11

MANAGERIAL ACCOUNTING 3
Introduction
Management accounting comprised of making and offering statistical and financial
information to the managers of the business such that they can take daily managerial
decisions (Debitor, 2018). It is different from financial accounting. In financial accounting
statements are organised for the internal stakeholders of the company and in management
accounting reports are prepared for external stakeholders (Freedman, 2018). This report is
being prepared in order to explain how much the management accounting and its tools are
important for a company to survive in the market for the longer time period. Therefore,
Activity-Based Costing tool of management accounting will be used in this report to explain
its support in achieving the strategies of Webjet Limited. The report will be comprised of the
concept of Activity-Based Costing and its important features. Besides this overview of
Webjet limited, its mission, objectives and corporate strategies will be provided to identify
whether Activity-Based Costing will help in attaining the strategies or not. Further, the report
will provide the recommendations for implementing Activity-Based Costing and suggestion
of one more management accounting tool.
ABC (Activity-Based Costing)
A technique of accounting that supports in recognizing and allotting the overhead cost and
then allots those costs to the products is known as Activity-Based Costing (Accounting Tools,
2017). A system of ABC detects the relationship among overhead activities, manufactured
products, and costs, and by this relationship, it allots indirect costs to products less randomly
than out-dated approaches of costing. Some of the cost becomes hard to assign by Activity-
Based Costing (Business case, 2018). The indirect costs like salaries of office staff and
management at times becomes hard to allot to the products of the company. Therefore, this
costing method is useful in the manufacturing companies.