The Mineral Resource Limited (MRL) HI5017 Managerial Accounting Holmes Institute HI5017 Managerial Accounting Trimester

HI5017 Managerial Accounting
Holmes Institute
HI5017 Managerial Accounting
Trimester 1 2018
Name: Sagar Pokhrel
ID: EMV22235
May 24th, 2018

HI5017 Managerial Accounting
Executive Summary
This report was prepared based on a request by the CEO of MRL after
attending a seminar regarding the ABC system. Having undertaken an
analysis of the Mineral Resource Limited as well as the features of the ABC
model, there seems to be a positive correlation between the model’s
advantages and the aspirations of the organization. Its therefore
recommended that the firm should consider putting the system in place.
In addition, the managers should also put in place breakeven analysis tool
to assist determine the break-even point of the firm’s products.

HI5017 Managerial Accounting
Table of Contents
Executive Summary....................................................................................2
Table of Contents........................................................................................3
Introduction.................................................................................................4
Defination and features of Activity Based Costing......................................4
Analysis of the ABC model........................................................................5
Defination of activities..............................................................................5
Features of ABC system...........................................................................5
How the ABC model alighns with the current objectives and strategies of
the Mineral Resource Limited......................................................................6
Company missions and objectives...........................................................6
MRL corporate strategies.........................................................................6
Suitability of ABC syetm to the Mineral Resource Limited........................7
Recommendations.......................................................................................8
Other management accounting tool useful to MRL.....................................9
Conclusion...................................................................................................9
References................................................................................................10

HI5017 Managerial Accounting
Introduction
In my capacity as a professional cost accountant I was approached by the
CEO of the Mineral Resource Company to assist them understand the ABC
model and its suitability to the firm. In this regard I have prepared this
report to assist the top management of the company understand the idea
of the ABC model and ways through which the company can utilize it to
optimize its profitability. In this report the structure of The Mineral
Resource company, its goals, strategies and objectives will be analysed.
Afterwards will evaluate the ABC model and give a recommendation on its
suitability in promoting the strategies of the firm.
Mineral Resource Limited is a top mining service and processing company
which is based in Australia. The MRL and its subsidiaries undertake a wide
range of general mining services. This includes but not limited to
infrastructure provision, base minerals recovery and contract crushing.
The company has found its market niche on innovation which have seen
the firm minimise the costs while at the same time widening the breadth
of its operations. The firm provides long term contract services to the
mining companies located in Australia. From the time the firm was listed
with the ASX, MRL has applied strategic business development,
acquisition and consolidation to optimise its profits every year (Mineral
Resources Limited, 2018).
Definition and features of Activity Based Costing
The ABC is a model that can be applied in cost accounting to highlight the
activities performed by an organization and then use the identified
activities in allocating overhead costs to the manufactured products. The
model considers the correlation between the activities, products and the
costs. By applying this association, the ABC model is able to assign
overhead costs to products in a less arbitrary manner than in the vase of
the traditional costing models (Douglas, 2002). There are some forms of
indirect expenses that are difficult to assign to a given product; examples
being the salary of the office staff and the managers. Because of such