Management Accounting Assignment in PDF

Management
accounting
BHP Billiton
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Management accounting 1
Executive summary
The report is prepared with the purpose to determine that the companies in the dynamic
environment should accept activity-based costing technique or not. The analysis has been on
BHP Billiton that is Anglo-Australian multinational mining, metals, as well as petroleum dual-
listed public company. The findings of the report show the concept of the activity-based costing
method for the businesses. The features of ABC are determined which shows the nature of the
method. It has been determined that there are differences in the traditional costing and activity-
based costing method. The findings show that implement of ABC allows the company to reduce
cost, attain objectives and improve the decision making which means it can facilitate planning
and control activities of BHP. In the end, it has been found that the implementation of ABC is
effective for BHP Billiton.

Management accounting 2
Contents
Introduction......................................................................................................................................3
Description of chosen company.......................................................................................................3
Description of Activity based costing and its features....................................................................5
Features of Activity based costing method..................................................................................7
Difference between ABC and traditional costing method...............................................................8
Ways that ABC can facilitate planning and control activities in BHP 600...................................10
Contribute in reducing the Cost.................................................................................................10
Contribute in attaining the objective..........................................................................................11
Improves decision making of company.....................................................................................11
Suitability of the ABC for BHP Billiton........................................................................................12
Conclusion and recommendations.................................................................................................14
References......................................................................................................................................15

Management accounting 3
Introduction
In the current business environment, there is a significant rise in the domestic as well as foreign
competition, automation and changing the structure of cost which is compelling manufacturers to
have a look upon the improved understanding of the accounting system and also the requirement
of the real-time information system. Businesses generally deal with the issue of the high
complexity in the structure as they found high non-value added costs. This is the reason due to
which they embrace activity-based costing method which allows companies to determine and to
reduce the non-value-added costs. There are numerous reasons due to which the company adopt
the activity-based costing method as structure of cost for their business. Being recently employed
as a management trainee in the manufacturing company, the director of the company provided a
task to explore the possibility of implementing an Activity-based Budgeting system within the
company. The purpose of report is to comment on suitability of the activity-based budgeting for
BHP group limited company.
The report initiates with the overview of the company then it provides the description of the
Activity-based costing (ABC) and its related features. Furthermore, the differences between the
Activities based costing method and traditional costing method has been done. There are
different ways that ABC can facilitate planning and control activities in BHP Company which is
discussed. In the end, an implementation of the ABC method is appropriate for company or not is
discussed.