Advanced Management Accounting: Concepts, Cost Management, Performance Measures, Balanced Scorecard and Competitor Analysis

Running head: ADVANCED MANAGEMENT ACCOUNTING 1
Advanced Management Accounting
Your Name
Name of Institution

ADVANCED MANAGEMENT ACCOUNTING 2
Task 1. Concepts of Management Accounting
Vision
A Vision statement should explain where the business targets to be in future and where
the business wants to go in future.
New Vision for Fletcher building Limited
Modelling the future of New Zealand and Australia by discovering and providing
differentiated construction products suitable for every construction in the upcoming diversified
economic structure.
Mission
It is the statement which reflects the reason and purpose for business existence
New Mission for Fletcher Building Limited
To create building solutions by offering differentiated types of construction materials so
as to promote customer satisfaction by giving them best compelling experience in building
products.
Strategy
It explains how the business intends to fulfill its goals, vision and compete its competitors
New Strategy for Fletcher building Limited.
To act effectively and efficiently in managing our business by providing quality building
materials at low prices through focusing on the primary objectives and purpose of the business,

ADVANCED MANAGEMENT ACCOUNTING 3
strengthening our relationship with customers through brand loyalty and simplifying the business
to both the customers and employees
The Type of Strategy a Company Should Use
A company should use a type of strategy which enables it achieve its set objectives,
perform well financially and be able to compete favorably with its competitors. According to
William (2002), the strategy of a company should majorly arise from its objectives and should
therefore formulate mechanisms which will help the company in achieving those objectives. The
strategy of a company should clearly elaborate the steps that will be used in differentiating
products, achieving goals and how it generates income.
A company should formulate a strategy that clearly reveals its strengths, its material resources,
the market it operates and the available opportunities which a company can venture in while
striving to achieve its objectives. According to Harrison (1999) strategy to be used by a company
should contain the pricing strategy of the company, company’s financial strategy and its
operational strategy. The strategy should also have an action plan. The strategic framework of a
company should have precise goals of different strategies and the relationship between strategies
in a company should be mapped together.
Task 2. Strategic Cost Management
Fletcher building limited uses the conventional costing method. There are nine divisions
in this company which comprise of; building products, distribution, construction, steel, concrete,
Australia, residential development and Formica and roof tile group. In the different division the
manufacturing overhead costs are allocated to goods which are produced in each department.
The indirect costs of different divisions are allocated based on the volume of products

ADVANCED MANAGEMENT ACCOUNTING 4
manufactured and produced in each department. Every division reports its estimated expenses
used in the whole production process without assigning those costs to specific items for example
the building products division reported an expenditure of $ 19 million
(https://fletcherbuilding.com). The divisions also allocate machine hours to the production
overhead products. The company does not report the exact cost used in manufacturing of specific
products as the divisions report all the expenses used in production as cost incurred in
production.
The best costing system to be used by Fletcher building limited is the activity based
costing method. Every division in the company should assign its cost to specific overhead
activities and then be able to assign the resulting costs to specific products (Kaplan & Cooper
1998). This will enable the company to identify the specific costs which are involved in the
production of specific goods. If this company uses the activity based costing it will improve the
cost information reliability and by so doing it will produce exact costs of goods produced and the
divisions will classify the cost of production during the manufacturing process. By using the
activity based costing, Fletcher building limited will be able to analyze their profits, target their
costs in different divisions and service their pricing methods (Jaya, Pathirage& Sutrisna,2010). If
Fletcher traps their manufacturing costs very well, they will be able come up with good strategies
and focus well in their business.
I think it is good for Fletcher building limited to move to JIT system. Since the company
has many divisions it should purchase products that will make it meet the customer needs. The
company can purchase goods frequently as needed and the managers in different divisions
should check the goods that they need in production but are out of stock. This method will also
help the company in managing products that are stored. JIT costing system will help the