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Management Accounting Tool PDF

   

Added on  2020-10-04

11 Pages2642 Words176 Views
Caltex Australia pvt Ltd
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Executive SummaryThe management accounting tools are important in organisation. ABC model is discussedin the report in relation to Caltex Australia Pvt Ltd so that it may extract benefits out of the same.Features and importance are discussed of this model in accordance to the goals and strategies offirm.
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TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1A) Explaining ABC model and its features............................................................................1B) Explaining how ABC model aligns with current goals and strategies of Caltex AustraliaPvt Ltd....................................................................................................................................3C) Providing recommendations about implementation of ABC model.................................5D) Management accounting tool suitable for company apart from ABC model...................6CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................8
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INTRODUCTIONManagement accounting tools are beneficial in assisting management to take well-structured decisions and strengthening internal operations of business. Present report deals withimportance of ABC model in Caltex Australia Pvt Ltd which is engaged in business of transportfuel supplier. The features of ABC model is outlined in the report. Moreover, company'scorporate strategies and current goals are highlighted. Recommendations are imparted toimplement ABC system in firm for attaining benefits. Furthermore, another managementaccounting tool such as budgetary control is explained which is also beneficial for business toachieve objectives with much ease. A) Explaining ABC model and its featuresABC (Activity Based Costing) model is effective technique which is helpful incontrolling costs of production in the best possible manner. ABC is a useful costing systemhelping company in achieving desired manufacturing by allocating cost of each activity so thatoverall expenses can be reduced up to a high extent. In simpler words, expenses are assigned toeach activity on the basis of actual consumption by them in effectual way. ABC model assignscosts by identifying the same to various overheads and then allocates those expenditures to theproduct. Hence, it is helpful as cost is recognised between overheads and manufactured itemsand as such, it allocates indirect expenses to products in effective way (Introduction to ActivityBased Costing. 2018). This model is quite effective and better than traditional method as it donot allocate costs in the manner which ABC model does. It is useful for Caltex Australia Pvt Ltdto effectively assign costs and achieve production in the best possible manner.ABC model is quite helpful in manufacturing sector as costs can be ascertained andreliable figures are obtained with much ease. It classifies expenditures in a better way duringactual consumption and as a result, company can easily ascertain actual costs incurred duringmanufacturing process of items in effective way (Plank, 2018). It helps to develop bettercorporate strategies because expenses of production are grasped by this model with much ease.Under ABC model, activity can be considered as a cost driver. It is termed as driver of activitywhich effectively drives cost which is incurred in manufacturing a particular product in a betterway. ABC model enhances cost pools that could be utilised for assembling costs of overheads ineffectual manner. Moreover, ABC accumulates several indirect expenditures and as such, it is1
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