Introduction to Managerial Accounting : Assignment

Added on - 15 May 2020

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Running head: MANAGERIAL ACCOUNTINGManagerial AccountingName of the studentName of the UniversityAuthor note
1MANAGERIAL ACCOUNTINGTable of ContentsIntroduction:....................................................................................................................................2Description of the client’s firm:.......................................................................................................2Description regarding TDABC and its features:.............................................................................3Difference among traditional costing mechanism, TDABC and ABC:..........................................6Suitability check of TDABC for firm’s clients:..............................................................................7Conclusion:......................................................................................................................................8Reference:........................................................................................................................................9
2MANAGERIAL ACCOUNTINGIntroduction:With rise in competition among the firms, it has been highly essential for the managers tounderstand the importance of cost for their firms irrespective of its size. Whether it is a bigmultinational organisation or a small firm, it is important to understand the costing method(Hemmer and Labro 2016). Main goal of understanding the costing is to provide properinformation regarding the internal decision-making and provide much needed outlook for thecontrol and planning purpose of the firm (Cooper 2017). Besides this, knowledge regardingcosting aids the mangers to assess the alteration in the market scenario and trace out changes intrade. This report considers the TDABC method of costing and highlights its variousimportances. Besides this, an overview regarding different methods of costing that include ABCand traditional method of costing will be given in this analysis. Along with this, the report willtry to draw difference between TDABC, traditional costing system and ABC method of costing.Moving further, the report will highlight the suitability of TDABC in the ADCO constructionand provide details regarding implementation of TDABC in the firm.Description of the client’s firm:The ADCO Construction is one of the leading construction companies of Australia thathas been serving national project since 1972 (Adcoconstruct.com.au, 2018). According to thewords of ADCO Construction, until 2017, the company has served almost 3,500 completedprojects and it is valued at $10 billion. With its annual revenue figure of $1 billion and almost600 employees, ADCO is one of the top 50 private organisations of Australia. Main service ofthe brand lies in the construction industry and its high level of resources enable the firm toremain aligned with the latest techniques of construction. Besides this, the firm is well known forits practical utilisation of materials and products that provides the firm efficiency, which is at par
3MANAGERIAL ACCOUNTINGwith the commercial manner. Continued success of the ADCO Construction has enabled the firmto find its customer from blue chip base of client that comprise state, federal and localgovernment agencies (Adcoconstruct.com.au, 2018). Besides this, the firm has served variousinstitutional and private corporate with their service of construction, making the firm a marketleader in the construction industry. The firm has wide base of 580 to 600 direct employees and40% of them are engaged in operation with the firm for more than 7 years(Adcoconstruct.com.au, 2018). With their efficient allocation of human capital and resourceallocation, turnover rate is lower than its competitors that have lead the firm to a better goodwill.ADCO Construction guarantees delivery to their clients, according to the manager of the firm,which has been gained through combination of unique techniques, skilled labour and idea ofcosting.Description regarding TDABC and its features:Until 1984, firms used to prefer traditional method for costing, however scenario changedwhen Activity Based Costing (ABC) came into action. Traditional mechanism of costing wasintroduced during 1920, and it used to consider only three costing parameters, which arematerials, labour and overhead (Weygandt, Kimmel. and Kieso 2015). However, with change inmarket scenario and economy of business, traditional costing mechanism started to becomecomplex and traditional accounting failed to calculate the overheads. By the time of 1984, firmsstarted to utilize distorted information regarding orders, customers, products and profitability thathas crippled the standard method of accounting. Thus, during 1984, a new mechanism of costingwas introduced, which was known as the ABC (Plank 2018).Activity Based Costing mechanism was presented as the completed method of costingthat not only addresses the pitfalls of the traditional methods moreover enable the mangers to
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