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Modern Management Accounting System

   

Added on  2021-02-19

11 Pages3695 Words49 Views
Management Accounting

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................11. Identifying the three different methods of the management accounting that are been usedwithin the case..............................................................................................................................12.1 Relevance of Management accounting systems in contemporary organization withexamples......................................................................................................................................22.2 The comparison of the findings of 2 different articles...........................................................33. Relevance of management accounting system in competitive and uncertain businessenvironment.................................................................................................................................64. Learning from the case studies................................................................................................6CONCLUSION................................................................................................................................8REFERENCES................................................................................................................................9

INTRODUCTIONManagement accounting is the method of providing financial and non financialinformation to the internal and external stakeholders for the effective decision making process. Itcan be done by gather, analyse, interpret, monitor and control the information (Otley, D., 2016).The aim of management accounting system is to improve the performance of the company byproviding effective tools and techniques such as Just in time, total quality management, ABC,value chain analysis etc. The report is based on the case study of modern or contemporarymanagement accounting system. It highlights the different types of management accountingmethod such as JIT, TQM, ABC, balance scorecard method with the different examples. Itexplains the relevance of management accounting system with reference to the contemporaryorganisation and the comparison and contrast of the findings of two different cases. It alsoexplains the MAS relevance in competitive and uncertain business environment. The report alsohighlights the learning and outcomes of the two different cases to help the Australian companieslearn from the MAS and focus on their performance. 1. Identifying the three different methods of the management accounting that are been usedwithin the case.In accordance with the case three main techniques that are been used by the company areTotal quality management, Activity based costing and Just in time method. These methods areadopted for the purpose of making strategic decisions and in achieving success for the long term.Total quality management is the method that described as the management approach that is beenused by an organization for attaining the objectives in the long run with growing success andstability through satisfying the customers (Appelbaum and et.al., 2017). Under this method, allthe members within an entity participate in making improvement in the process, services, cultureand the product within which they work. It is the most suitable technique for implementing andin making an effective planning towards constant improvement by focusing on understanding theexpectations of the customers, in determining the problems, promoting decision-making and indeveloping commitment among the team. For instance- Company A has implemented thisTQM technique for generalizing its processes and in utilizing the key aspects of every systemwithin the company. It means that they make use of few activity drivers in order to allocate theoverheads, some scorecards, in doing occasional benchmarking externally and internally, using1

some supplies and the deliveries and has developed their iteration of the Total Qualitymanagement. Activity based costing refers to the method that determines and assigns the cost towards to theoverhead activities and then assigning that cost to the objects as per an actual consumption. Thismethod provides more accurate management and the evaluation of the cost in order to leadtowards more reliable decisions relating to the price (Nguyen and et.al., 2017). It helps inenhancing the understanding of the cost and the overhead drivers and also in making non-valueactivities more and more visible. It enables the managers in reducing the unnecessary cost and ineliminating the costlier activities from the business operations. For example- Company A, amanufacturer of the simple procedures having fewer raw materials and the very few steps arebeen involved in the process of manufacturing. They perceived ABC method in a standard formfor assigning an appropriate cost for meeting their needs.Just in time approach referred as the strategy that aligns the orders of raw material directly fromthe suppliers within the production schedules (Nitzl and Chin, 2017). An enterprise make use ofthis strategy for increasing the efficiency and in decreasing the wastage by receiving the goods asper the requirement in the production process which in turn reduces the inventory cost. It helps inforecasting the demand accurately. It assists the firm in adding up the value by increasing theefficiency. For example- As per the case, company A has used just in time approach forreducing the wastage and in making optimum use of its fewer resources.2.1 Relevance of Management accounting systems in contemporary organization with examplesManagement accounting system plays an essential role in a modern world and incontemporary organization as in the case, Each departmental level of Company make use of theMA system in different ways for the purpose of performing the managerial tasks (Subramaniam,2018). Lower or supervisory level managers requires systems of MA for making effectiveoperational decisions. Ma systems helps the middle level managers in making tactical andstrategic decisions. Top management utilizes system for developing policies, procedures and thestrategies in accordance to which the task will be performed for reaching to the ultimate goal.Such different utilization of the systems reflects the degree of the relevance but more focus of itis on the tactical and the operational level of the decision-making. For example- Company Aexecuted the management accounting systems for encompassing a range of the businessfunctions such as it has adopted balanced scorecard, Just in time, benchmarking, Total quality2

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