Product to Channel Expansion and Customer Profitability Analysis 2022

Running head: MANAGEMENT ACCOUNTING
MANAGEMENT ACCOUNTING
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MANAGEMENT ACCOUNTING1
Table of Contents
Management Accounting Issue..................................................................................................2
First reply...................................................................................................................................2
Second reply...............................................................................................................................3
References..................................................................................................................................5

MANAGEMENT ACCOUNTING2
Management Accounting Issue
Product to Channel Expansion and Customer Profitability Analysis
The reporting of accurate product and cost of standard service-line as well as
information of profitability using ABC method helps in tracing expenses into cost with the
activity drivers and resources and helps in providing much visibility of cost, which is
traditionally hidden. There are various companies that continue to use single indirect and the
shared expense pool, which allocates expenses of resources into the costs based on single cost
factor that violates causality principle of cost accounting. The resultant service and product
line are under and over costing simultaneously because allocations have always zero sum
error. It is mysterious that how this deficient practice will be accepted by accountant, when
ABC technique is better alternative. In today’s situation, customers views offerings of the
supplies in most of the industries as commodities. Hence, the objectives for sales and
marketing functions should not be solely regarding growing sales and increasing market
share, but to grow profitable sales. For this, company should know best customer types for
retaining, growing and acquiring those who are already and those who are not (IndustryWeek
2016).
First reply
In the present competitive global market, each organization must have a healthy
management system that can make an efficient decision-making process by which the
company can attain profitability. In every organization, management accounting is one of the
significant pillars that contribute towards its profitability and success. It is evident that if the
management system is reliable and sufficient to make profitable strategies, then definitely,
the organization will be able to expand and grow in the future (Nielsen 2015). One of the
specific trends that the organization are trying to implement in their management accounting