Management Accounting Research: A Review

This assignment covers various topics related to management accounting research, including the significance of contingent variables for adoption, construction of an actor-network, and implications for management accounting. It also explores popularized management accounting ideas, such as the balanced scorecard, and strategic management accounting practices in Croatia. The assignment includes references to relevant studies and books on project management accounting, established management accounting knowledge, sustainability accounting, leadership and control system design, and accounting information systems.

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P.1. Explain the management accounting and give he essential requirements of different kinds
of management accounting systems............................................................................................1
P.2. Different methods used for management accounting reporting...........................................4
TASK 2............................................................................................................................................6
P.3. Absorption and marginal costing approached .....................................................................6
TASK 3............................................................................................................................................8
P.4. Advantage and disadvantage of using different planning tools that could be used for
budgetary control at workplace...................................................................................................8
P.5. Adoption of management accounting systems to respond to financial problems..............10
REFERENCES..............................................................................................................................13

INTRODUCTION
This research, define about to different kind of management accounting tools and
techniques which can be used for the business in order to resolve their financial problem
effectively and there are some of other financial issues which could also be removed efficiently.
Toyota automotive business need to different management accounting system which could use
for resolve manufacturing cost of the business effectively. We will discuss about to different
process used for management accounting reporting like budget reporting, income statement, job
costing reporting and account receivable reporting that can help to identify financial issues of
Toyota automotive business and also resolve them effectively. We will discuss marginal and
absorption approaches to identify proper expenses in the business and also find out the best
techniques to resolve them effectively. We will also discuss the different kinds of tools for
planning and their advantage and disadvantages as well. Ultimately, we will discuss about
various kind of management accounting system such as key performance indicators, balanced
score card and financial governance tools helps Toyota automotive company to effective
response their financial problems within the firm effectively.
TASK 1
P.1. Explain the management accounting and give he essential requirements of different kinds of
management accounting systems
To,
The General manager of Toyota Automotive, Japan. Date: 15th February 2018.
Sub: Management accounting systems and their significance.
Management accounting in which financial data of an organisation is measured, identified,
interpreted, analysed and communicated in the context of accomplishing company's financial
goals and objectives effectively (Zimmerman, and Yahya-Zadeh, 2011). This accounting
process is also concerned with cost accounting system. The major differences between cost
accounting and management accounting is that management accounting assist the
organisational manager by providing appropriate financial analytical information while major
decision making process within the firm. In addition, financial accounting provides proper
information about outside function of a company. The methodology of formulating
management accounting project and report is that furnish proper and faithful statistics analytical
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approach and financial data which is needed for company's manager to set up to daily and short
term decisions of a firm. Toyota automotive business can utilise of management accounting
approaches to reduce its manufacturing and services cost within the business effectively.
Moreover, basically accounting is a process in which financial and economic data is recognised,
measured and communicated to make better decision and opinion to the manager of Toyota
automotive corporation in terms of making their decision towards the organisational
manufacturing and other cost reduction efficiently.
There are important requirements of different kinds of management accounting system Cost accounting system: Cost accounting system is also called costing system which is
used by most of manufacturing companies in order to formulate outline by approximate
the cost of their production for inventory assessment, profit examination and over
costing control on production and service cost of the business. In this cost accounting
approach, portion of costing is functioning on exercise based cost accounting system
and traditional approach of costing system as well (Macintosh and Quattrone, 2010).
Cost accounting is an approach in which organisational production cost is computed by
which calculating cost of each input production cost and fixed cost such as capital
equipment depreciation as well. In this costing system individual input costing is
measured by comparison of input costing and actual costing of products for assess the
actual value of financial performance and fluctuation of financial data within the
business. In the cost accounting process budgetary control, marginal costing, standard
costing and operational and inventory control is implemented in the business in terms of
cost reduction of Toyota automotive corporation effectively. Job costing system: Job costing system in the process which includes the method for
gathering the information about to the cost connected with the particular production and
service cost within the firm effectively (Baldvinsdottir, Mitchelland Nørreklit, 2010).
Toyota automotive business acquire several kinds of specific customised products at the
workplace. Due to various type of customised products, there is needed to specify each
product and services cost in the firm. This approach is also assisted the business to find
out accuracy level of business in order to achieve its estimate targets within the
business. Toyota automotive required to categorised their each customised product at
the workplace according to different product lines and fix each product costing within
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the firm in terms of helping manager to better assessment of job costing which help to
proper decision making process within the firm effectively. Process Costing: Process costing is an approach in which each product line is identified
effectively in order to recognised all additional cost of the firm which being cause of
raising cost of production within the firm (Hilton and Platt, 2013). In the job costing
process, costing of each product is associated and additional expenses and cost also
added to determine the overall production costing in the manufacturing process and
manager comes to know about over costing rate of each product and make their decision
towards reducing cost f Toyota automotive business effectively. Toyota automotive
company's manager must use this approach at their workplace in terms of better
manager their over costing within the business efficiently. Because of different kinds of
product and services are providing by Toyota automotive company like luxury and
commercial vehicle and other customised product which is needed to be provided
particular product range and costing to easily identify their product range by which
business can identify their product costing range in which they can measure their
expenses and costing range as well in order to identify their profitability and
productivity in the business(Ward, 2012).
 Throughput accounting system: This is called as modern accounting system and under
this approach the main centring the cost control can accomplishing through improving
business operational level effectively within the business. This is the accounting system
which is developed by Israeli business man and now it has become popular system of
management accounting nowadays. Many of the firms are using these approaches in
order to reducing their costing within the firm and also resolving their financial issues
and problems within the firm effectively (Renz and Herman, eds., 2016). This approach
identifies the factors which is most needed for fluctuate in better manner within the
business and it focuses on the areas in which business manager need to be more focus in
order to develop their areas more effectively towards the financial growth of the
business.
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P.2. Different methods used for management accounting reporting
Management accounting major focus on internal data analysis which is gathered by
various financial accounting tools and techniques within the business effectively (Scapens and
Bromwich, 2010). Management accounting helps the manager of Toyota automotive business in
terms of effective managing, controlling and decision making process towards financial growth
of the business in industry. Management accounting totally depend on analytical approaches in
which financial data such as balance sheet, income statement and cash flow statements compared
to each other to assessment of financial details in deep to find out the best solution of over
costing rate within the business. Moreover, these are also used for preparing different kinds of
management accounting reporting by examining several financial information.
There are some method of management accounting reporting which is as following: Cost reports: Management accounting computes the various cost within the business
while they are manufacturing a product. There are several kinds of cost of different input
such as overhead, costs, labour and others cost considered in terms of preparing cost
reporting at the workplace. Job costing provide about each expenses cost while
manufacturing a product within the business (Christ and Burritt, 2013). There are several
kinds of automotive products producing by Toyota automotive business and all cost are
calculated by its management financial officer in terms of preparing a proper costing
reporting knowing about to each product line costing and other additional costing of
product and services within the fir. So manager of Toyota automotive business can make
their effective decision in context of reducing cost of every products within the business.
Toyota automotive firm could recognise each product line costing effectively with the
help of cost reporting and effective reduce them as well. Budgets reporting: Budget reporting is the process of management in which comparison
of estimate value from actual vale of financial data is done in a given period within the
business effectively (Pipan and Czarniawska, 2010). Usually, budget reporting is
formulated by manager in order to achieve actual performance of financial data of the
firm from their estimation value during accounting time period of the business. These
process is done in yearly basis in which manager of Toyota automotive take assessment
of their financial performance within the business from their past year financial
fluctuation and their estimation targets of financial achievement to know about to
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efficiencies of the business. Budget reporting must be formulated in accurate form
through which manager of company will be able to examine actual fluctuation of
financial data and know about to the profitability and over cost of manufacturing process
(Banerjee, 2012). With the help of these reporting manager of Toyota automotive can
make decision towards the business in terms of improve their financial performances in
the firm. Income statement: Detailed information of financial statements are assessed in this
approach, with the help of income statement manager of Toyota automotive business can
analyse the actual value of their all expenses in the manufacturing process (Herbert and
Seal, 2012). Income statements are made with the help of management accounting officer
at the workplace on quarterly basis in order to compare their financial statements from
past income statements to know about to overall outcomes of the business. It helps to
know about the section which gives strong performance in the business and which section
of business can weak performance in the company. According to this reporting
management accounting officer of Toyota automotive make their decision to improve
financial performance of the business effectively. The main limitation of this approach is
that this do not show the separation of marketing expenses in the firm and it can not be
recognised by looking at income statements of marketing disbursals in the business
effectively.
 Account receivable reporting: Account receivable reporting in another kind of reporting
of management accounting in which account receivable are computed in the books of the
accounts (Bouten and Hoozée, 2013). And with the assistance of this techniques Toyota
automotive business manager get to know about to how much receivable are being goes
for bed debt into the account and how much receivable is occurring in the business for
short duration of the firm effectively. Cash management strategy is made in better
manner on the cash accounting reporting approach. Thus, there is highly significance of
accounting receivable reporting in the business. Toyota automotive company need to
update time to time account receivable reporting preparation in better manner. Because of
most of the time debtors rate increase in the business in very rapid manner and there are
huge need of this reporting effectively in the firm in order to decrease the rate of debtors
and increase the profitability of the business efficiently.
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TASK 2
P.3. Absorption and marginal costing approached
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Above table describe about to financial fluctuation of Toyota automotive in which two
kind of financial data analytical approaches has implemented. Absorption and marginal costing
method has been applied for know actual fluctuation of financial performances of Toyota
automotive business. In condition of absorption approach, it shoes the net profitability which is
292000 and marginal costing approach show the new profit values is 314846. And both values
are different from each other in this assessment. In both tables are showing their different-
different values of profitability within the business effectively. We can see that profitability is
higher in context of marginal costing approach (Cooper, Ezzamel and Qu, 2017). Both
approaches marginal costing approach and absorption costing approach is different from each
other. In the situation of marginal costing method, there are several variable disbursal is taken
into account in the table of marginal approach in order to calculating overall costing of each
product and services line of Toyota automotive corporation efficiently. In other side, absorption
approach is totally different from marginal costing method. In the absorption costing method
foxed and variable expenses of each product and service line of Toyota automotive business is
taken into accounting book to evaluation of profitability and overall costing of the firm as well.
With the assistance of this costing approach it could be said that corporation revenue and
profitability could be calculated efficiently and with the help of both income statements Toyota
automotive company's manager get to know about to overall costing of production and also get
some ideas about implementing some effective cost reduction approach into the account so cost
of manufacturing can be reduced effectively within the business (Ramljak and Rogošić, 2012).
Manger of Toyota automotive can make more efficient decision in terms of cost reduction and
also modify the financial growth of the business as well. In these methodologies, there are some
negative and positive account is associated with these approaches. Toyota automotive manager
should observe the financial increment of the business through both techniques of costing within
the firm so effective decision can be made with the help of assessment of financial data within
the business. Basically, there are variable expenses in the firm occurred by large amount of
expenses on production and when computing cost in the business manager comes to know about
major issues which is, which costing approach they should utilise for effective calculation of
costing within the business. There is better option of marginal costing within the business
because of involvement of fixed expenses in the firm is not making any sense. Furthermore, in
context of marginal costing in the business, fixed expenses are not computing directly in order to
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production process and fixed expenses if incurred in the firm and business have to manage their
cost over the cash flows of the business (France, 2010). Hence, it could be said both costing
approaches must be used by Toyota automotive business effectively in order to examination of
costing. The benefits of using these techniques because of if marginal costing is used by manager
of Toyota automotive business then they can easily find out that how much profit earned by the
business if large expenses are taken into accounting which is making heavy contribution in the
production procedure of the firm. Hence, it could be said that both techniques can be used for
better evaluation of costing and expenses over the business production process and better
decision could be made by managers with the help of both approaches and operational activities
of Toyota automotive corporation could be governed effectively.
TASK 3
P.4. Advantage and disadvantage of using different planning tools that could be used for
budgetary control at workplace
Some management planning tools and techniques are utilised by the corporations and all
the planning tool have several advantages and disadvantages. Numbers of tools that are presented
here for business corporations. Some of them are budget and capital budgeting methodologies. In
terms of budget categorised could be completed (Callahan, Stetz and Brooks, 2011). Cash budget: This is the most essential kind of budget process which is formulated by all
kind of corporations. In this cash budgeting process estimation can be made upon inflow
and outflow of the firm which can be recognised on the ground of net availability of
balance in the business. In the cash budgeting planning id formulated on the basis of
expenditures made in the business in a year (Shields, 2015). Moreover, it could be said
that planning is made upon determination of limits of expenses in the business and
according to this process effective plan in made within the business. It could be said that
cash budgeting is one of the most tools for the business and there are various advantage
and disadvantage of the cash budgeting which is as following:
Advantage:
 With the help of cash budgeting some expenses within the business can be effectively
managed in appropriate form. This will raise the profitability of the corporation.
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 Another advantage is that cash budget is easy to formulate at the workplace and for this it
is not necessary to higher skilled accounting professionals to set up this budget (Suomala
and Lyly-Yrjänäinen, 2012).
Disadvantage: The main disadvantage of cash budgeting is that it is totally depended on the future
estimation and several times estimation goes wrong. There are huge chances of wrong
decision made according to wrong information about budgeting process.
 Fixed budget: Fixed budget is another kind of budgeting process which is available for
several kinds of manufacturing business. This in totally inverse on the cash budgeting and
in this system factors of budget in made in changeless form. It never changes in specific
situation.
There are some advantage and disadvantages of fixed budgeting as below:
Advantage:
 Fixed budgeting value always remain same and it never gets changed in particular
situation of the business. Thus, Business manager must appropriate attention when they
are making fixed budgeting in the corporation. The major advantage of fixed budgeting is that this budget is beneficial for the business
or not even conspirational circumstances are changing continuously.
Disadvantage: The major disadvantage of fixed budgeting is that it is difficult to implementation in the
business, because of organisational circumstances are changing rapidly and there changes
of not proper formulation of fixed budgeting in the business effectively (Bebbington,
Unerman and O'Dwyer, eds., 2014). If this budgeting process is implemented in the
business then wrong decision can be made by firm's manager. Zero cash budgeting: This is totally different method of preparing budget in which no
portion of budget is made under the departmental professional till then manager do not
present own departmental budget for the front of senior manager within the business.
There are several advantages and disadvantages of zero cash budgeting are as following:
Advantage:
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 The main advantage of this budgeting process is that respective method is used by
manager of the company in order to formulation of zero cash budget. This is most
appropriate budget for the business which is necessary to prepared within the firm.
 Disadvantage: The most of disadvantage of zero cash budgeting is that it is highly time taking process
and length as well in terms of preparation of it.
 Capital budgeting process: In the process of capital budgeting process assessment is
completed on the ground of different kind of methodologies such as internal rate of return
and net present value approach as well.
Several advantages and disadvantage of capital budgeting is as following:
Advantage: Capital budgeting process has advantage like it is made upon all expenses that is made in
the business effectively (Abernethy, Bouwens and Van Lent, 2010). Thus, there are
several kinds of stages made under this formulation of this project.
Disadvantage:
 Capital budgeting process is difficult to prepared in the business, because it raises the
cost and expenses for the business and it takes quality of times for the business.
P.5. Adoption of management accounting systems to respond to financial problems
There are several kinds of financial issues and problems are facing by most of the top
business in the country. Management accounting is the process in which is majorly used for most
of the businesses in order to resolve their financial issues effectively within the corporation.
There are some management accounting system which could be utilised for respond the financial
problems within the business is as below: Key performance indicators: Key performance indicators in most important tool which
could be useful for effective resolution of financial problems within the corporation.
Toyota automotive firm is facing financial issues such fewer availability of capital in the
business and other financial problems as well (Belfo and Trigo, 2013). KPI tool can be
used for comparison of standard value to their actual performance value in order to
recognise their financial performances and fluctuation effectively. With the assistance of
this tool financial issues of Toyota automotive business can be easily find out and
effective decision can be made by manager of the business. This technique assists the
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firm to efficient response of their financial issues within the corporation and profitability
of the business can be raised effectively. Balanced score card: Balanced score card is most essential tool for effective response of
financial issues for each business effectively. There are some of major financial issues
occurred in Toyota automotive business which is needed to be resolve by its manager by
using several kinds of management accounting tools and techniques within the business.
There are major four parameters of balanced score card which is essential to utilise for
Toyota automotive business manager to appropriate response of financial issues of
Toyota company (Harris and Mongiello, 2012). These four parameters are financial,
customer, stakeholder and internal process and organisational capacity. According to this
method various financial targets are to be set up by management accounting officer of the
business and evaluate how many targets can be accomplished by the business. With the
assistance of this method financial performer of the corporation can be evaluated by its
managers in order to identify those fields in which management accounting officer of
Toyota automotive needed to be more focused in the industry. It determines the section in
which business require to more focus in terms of raising their profitability and
productivity in the business effectively.
 Financial governance: This is also another tools of management accounting which could
be useful for the business to effective response to financial issues of Toyota automotive
firm. In these terms rules and responsibility of financial professional is predetermined
and according to set up of their financial goals and obligations under financial
governance each financial professionals would act according to given task within the
business effectively(Otley and Emmanuel, 2013). In this term if a person in the business
making some mistaking while performing their financial task in the business then
particular those individual person would be responsible for all financial issues which
arisen in the business. These types of activities must need to be completed carefully
within the business because financial issues are major problems in the business and they
are needed to be carefully resolve at the workplace. A proper analysis of financial issues
are done by its professionals in the business and before implementation of each financial
projection, its professionals need to be ensured that each task has been done carefully in
the business or not.
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CONCLUSION
In this research, this is concluded that management accounting provides most vital tools
and techniques for the business in order to accomplish business financial goals and objectives
effectively. Apart from this, management accounting provides some tools and techniques which
could be useful for Toyota automotive corporation in order to resolve their business financial
issues and problems effectively. We concluded that management accounting provides the
essential requirements which is necessary for the business to implementation of different kinds
of management accounting system, which is cost accounting system, job costing system etc.
Moreover, we learned about to different used for management accounting reporting in which
reporting would help Toyota automotive business to easily identify their issues and problems
within the business and also effective approaches which can increase their financial growth of
the business effectively. It is also concluded that absorption and marginal costing process can
identify the weak section of the business effectively and different types of budget reporting can
be used for planning and their advantage and disadvantage at the workplace. Ultimately, we
analysed that different kind of management accounting system which could easily response to
the financial problems of Toyota automotive business efficiently.
REFERENCES
Books and Journals
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Zimmerman, J. L. and Yahya-Zadeh, M., 2011. Accounting for decision making and control.
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Hilton, R. W. and Platt, D. E., 2013. Managerial accounting: creating value in a dynamic
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Callahan, K. R., Stetz, G. S. and Brooks, L. M., 2011. Project Management Accounting, with
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