Management Accounting

This assignment focuses on the preparation of the cost sheet and income statement of Toy Truck in the financial year 2018. It also includes a strategic management report of Kiewa Milk and a strategic marketing analysis. The assignment discusses manufacturing cost flow, cost behavior, comprehensive manufacturing budget, and strategic market analysis.

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the student:
Name of the university:
Author Note:

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Table of Contents
Introduction:...............................................................................................................................2
Discussion:.................................................................................................................................3
Answer to Question 1.............................................................................................................3
Answer to Question 2.............................................................................................................4
Answer to Question 3.............................................................................................................5
Answer to Question 4.............................................................................................................6
Answer to Question 5.............................................................................................................8
Conclusion................................................................................................................................11

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Introduction:
The aim of the assignment deals with the preparation of the cost sheet and the income
statement of the Toy Truck in the financial year 2018. The comprehensive manufacturing
budget of the company have been prepared for the five year and the forecast is based on the
assumption based on the strategy of the company. The strategic management report of Kiewa
Milk has been prepared as per the evaluation of the five years budget. Improvisation of the
tools and techniques of the organization will take the company to the next level in terms of
the productivity and the overall profitability position of the company.
The details regarding the strategic marketing analysis have been conducted in the
detailed manner. The strategies which are needed to be adopted by the business of the
company have been taken into granted in this conducted research. Application of the guanxi
in the business system of the company is effective and efficient and further details regarding
the whole is depicted in the conducted study accordingly.

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Discussion:
Answer to Question 1
Manufacturing Cost Flow

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Answer to Question 2
Cost Behavior
Every business tries to increase the current production which will automatically
increase the capacity of the business in that case. Effectiveness in the manufacturing process
will improve the overall business growth of the company. The environment of the industry
must be good so that the company must be able to increase the production of the products
(Schaltegger and Zvezdov 2015).
There are certain steps needed to be adopted by the industry in order to increase the
productivity on the manufacturing floor. It is required by the management to analyze the
current or the existing workflow in the company. Upgrading the tools and machines of the
industry is needed to improve the production process of the company. Adopting certain
strategies and techniques to ascertain the budget required to increase the production process
of the company (Alamri 2019).
Continuous investment in new tools and technologies in the industry will improve the
manufacturing process of the company. Improvisation of new technology and adopting

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certain advanced skills required by the labors of the industry will automatically take the
potential growth of the industry to the next level.
It is significant to analyze the demand of the clients and then the organization must
the goals of the business accordingly. Further to boost the work force of the company, it is
required to produce the high quality output and enhance work efficiency by providing reward
or bonus to the workers. Adoption of new available technologies or advanced equipment’s in
the market which bring positive long term effect on the business. At the end effective
maintenance and constant boost in productivity is required for improving the business
efficiency (Chenhall and Moers 2015).
Answer to Question 3
Comprehensive Manufacturing Budget
(A) and (B)
(C)
Strategic Management Report
From the above forecasted budget it can be interpreted that upgrade and increasing the
productivity of the Kiewa Milk factory will make the purchase of the business will further

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strengthen as per the forecast of the company. In the initial stage of production, the company
is incurring loss but from the financial year 2020, the profitability position of the company is
increasing. The issues in the production process in that the company needs to reconsider the
cost of the business. There are certain issues in the production process which must be taken in
to notice by the top level management of the company (Adler 2018).
Strategic Management plays significant role in planning, monitoring, analysis and
assessment regarding the necessary requirement of an organization to meet its goal and
objective in that case (Henri, Boiral and Roy 2016). The strategy regarding increasing the
production capacity of the organization must be defined as the company needs to adopt
certain policies to further boost the production process. In the above estimation of the budget,
strategic financial planning is involved where the financial discrepancies and issues are
identified and steps are implemented accordingly in order to achieve the overall objective the
organization. The three key elements playing a considerable role is that the development of
the budget, cost system and the management reports. The tax planning is such kind of budget
also plays significant role in that case. Effective financial planning of the company will
automatically create a positive impact on the preparation of the budget. Extra productive of
the company in the future will further boost the production process by eliminating the
production constraints an important factor which is needed to be considered by the
management. Increase in the production capacity will improve the profitability and take the
business in the next level.
Answer to Question 4
(1)
Part of Davis Nicks objectives during his trip to China is to assess the veracity of the
budget sales estimates for baby infant formula provided by South of China on which Neptune

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International Limited proposed regarding the purchase of Kiewa Milk (Schaltegger and
Burritt 2017). There are some of the risks associated with such of acquisition made by the
Neptune International Limited. As both the industries is involved in the same line of business,
there can be a risks in the compatibility in the culture which is need to be adopted by the
company in China. In that case the company needs to adopt certain strategies to eliminate
such kind of risk in the process. This can definitely put a negative impact on the milk
processing business in Australia (Morden 2016).
In case of insufficient communication process of the company will automatically
decrease the transparency in the production process or rather put a negative impact on the
overall production. As the business will be situated in China, hence impeccable knowledge
regarding the behavior of the consumers is necessary in that case. According the business of
the company needs to adopt certain strategies (Ambrosini, Jenkins and Mowbray 2015.). It is
a significant factor to keep the customers of the company always happy.
Miscalculation of the valuation of assets during such kind of acquisition of the
company is also a risk which must be ascertained by the company as early as possible. There
are also certain legal risks associated in the business process. This kind of issues may put
negative impact on the overall profitability position of the company.
(2)
From the current and past in-depth research analysis it is found that guanxi applied in
the business will help to determine the correct profit in the business of the company. The
incorporation confirms that guanxi based business strategy of the company are effective and
efficient (Renz 2016). This is considered in the Chinese culture practice implemented in the
business of the organizations. Applying this concept in the business strategies balances both
the Chinese’s and the Western perspectives.

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The term power distance of the company means that the intrinsic power of the
company is distributed equally. Power distance makes the vision, mission and strategies of
the company much more accurate and the company hence starts to believe in that ideology. In
order to strengthen the business of the Chinese and the Western, the application of the guanxi
in the business system will strengthen the business perspective as the business of the
company will be accustomed with the rules, ethics and regulation associated by the guanxi
based business strategies in China (Malina 2018).
The accounting staffs of the company is bounded to follow the rules and regulation
associated with guanxi trading system in China. It will be much easier for the Chinese based
trained staff perform their duties inclined with the main objectives of the business (Otley
2016). The strategies associated with this concept is effective and efficient as the business
strategies are sound. The guanxi system contains both the structural and the cultural elements
as it provides detailed analysis of the structure of its sociologic elements. The integration of
this kind of system is based on the work related on the competitive environment. This a
competitive advantage as if the business adopts this strategy then it will definitely lower the
risks associate and will further enhance the productivity of the company adopting this
strategy.Adopting this technique will enhance the work culture of both the Chinese and
Western (Shields 2015).
Answer to Question 5
Strategic Market Analysis
(1)

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(2)
In case of the strategic management analysis of the company and the strategic
committee of an organization provides leadership and further sets the strategic direction. The
main responsibility apart from this is monitoring the activities of the firm (Carlsson-Wall,
Kraus and Lind 2015).
(A)
Certain changes in the cost structure of Neptune Confectionery which directly or
indirectly impact the profit of the company. As profit measures the profitability of the
company after considering the cost and other expenses associated with the production
process. These changes must be noticed by the management system of the company by
considering the changes in the variable and the fixed costs associated with the business
(Klychova et al. 2015).
In order to increase the profitability position of the company, it is required to analyze
the current fixed and variable cost incurred by the company. The strategy which is needed to

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be adopted by the company is to lower the variable cost in order to increase the profitability
of the company as per the findings. Lowering the costs of the product may further lower the
quality of the product along with it. While increasing the production of the company, it is also
significant at the same time to maintain the quality of the product. Hence some of the strong
strategies are needed to be adopted in that case to increase the productivity along with the
performance of the company (Lapsley and Rekers 2017).
(B)
The changes have been noticed in the evaluation of the revenues and costs of N and
N’s. Due to the increase in the assets along with the production capacity of the company, the
revenue or the profit margin of the company has also increased. This situation has given
tough competition to the competitors of the company (Schmidt, Götze and Sygulla 2015).
The positive impact on the company due to such kind of change in the cost structure is that
the prime cost of the company has decreased.
(C)
As per the decision making strategy of the committee, there are some other
improvements or rather developments which the company have to undertake. The forecast
must be transparent and must not contain any kind of loopholes in the production process.
Empowering the work force of the organization will further boost the productivity along with
the performance of the company in that case. Constant manipulation of the cost associated
with the production of the company is needed along with maintain the quality of the products
at the same time is significant for the company on the basis of long run perspective.

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Conclusion
From the above discussion it can be concluded that strategic management accounting
plays significant role in the development of the overall business growth of the company.
Effective financial management system of the company will help the business of the
company to grow in a rapid way. The strategic management committee must adopt strategic
management policies to enhance the efficiency in the production of the business in the long
term basis.
Gradually increasing the production process of the company with also increase the
productivity of the company along with the profitability. Applying the guanxi system in the
business will also improve the trading system of the business associated in China. This has
been discussed in the above explanation about guanxi and hence it has been concluded that
the application of such system will definitely put positive impact in the overall business of
the company in that case.

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References
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