Effective Tools for Management Accounting: Activity Based Costing, Balanced Score Card, and Benchmarking

This presentation discusses the importance of financial management in organizations and the issues faced in adapting management strategies to external changes. It then highlights modern tools for accounting management including Activity Based Costing, Balanced Score Card, and Benchmarking. A case study on the application of these tools in Accor Hotel is also presented.

Management
Accounting
Effective Tools for Management

Management Accounting
• Financial management refers to the vital activity that is done by the
organization.
• The process includes to plan, organize, control, and supervision of the
various resources of the organization and achieve the ultimate
organizational goal (Langfield-Smith et al. 2017).
• However the originations have to face a lot of issues at the time of
adapting the various management strategies models and practices for
responding to the external changes of the organizational environment.

Tools in Management
Accounting
• In the discussion the highlighted modern tools for accounting
management includes:
• Activity based Costing(ABC)
• Balanced Score Card (BSC)
• Benchmarking

Activity Based Costing
• The activity based costing refers to a beneficial tool that results in the
greater accuracy costing of product.
• In Activity-based costing (ABC) the process identifies the various
overhead costs activities and then assigns the same to its products.
• This tool of management system identifies the relation of the
overhead activities and manufactured items.

Balanced Score Card
• Balanced Score Card tool of management helps in identifying and
improving the various business internal functions and their outcomes.
• The system is used for measurement and organizations feedback.
• The collection of data is vital to give the quantitative outcomes and
are gathered and interpreted by the executives and managers for
making better business decisions.

Benchmarking
• The Benchmarking is anther process of measurement of the performance the company.
• It measures the products, services and the processes of the business. The
benchmarking helps to identify the various improvement internal opportunities
(Vladychyn 2017).
• In this process there is the comparison of the current company with the other company
that has a superior performance.
• Bench marking also helps in implementing the various changes that can result in
substantial improvements in the organization.

Case study on the
application of the
management tools:
Accor Hotel

Accor Hotel
• Accor Hotel which is a French multinational company for hospitality
that manages, owns and franchises several resorts, hotels and
properties for vacation.
• Accor at present is the largest group of hotel worldwide abroad the
United States.
• The primary objective of the business organization is to maximize the
operational revenues as well as the customer satisfaction

Management tool in Accor Hotel
• The primary objective of the business organization is to maximize the
operational revenues as well as the customer satisfaction.
• These objectives are followed by the sound financial planning and
management that includes to plan, organize, control, and supervision of the
various resources and achieve the ultimate organizational goal(Hemmer and
Labro 2016)
• However the management tools helps in overcoming the issues faced at the
time of adapting the various management strategies responding to the
external changes of the environment.

ABC costing in Accor hotel
• In order to maintain a sustainable business operation, the management
tools are highly effective, It has been found that the company of Accor
Hotel has adapted the management tool of ABC costing.
• In the chosen company of Accor Hotel the ABC helps in a better scrutiny
of the various activities in the value chain, better decisions of
management and better overhead cost control.
• The ABC costing is used for the measurement of the cost of the product
and profitability of the customer(Cooper, Ezzamel and Qu 2017).

Reference
• Cooper, D.J., Ezzamel, M. and Qu, S.Q., 2017. Popularizing a management accounting idea:
The case of the balanced scorecard. Contemporary Accounting Research, 34(2), pp.991-1025.
• Hemmer, T. and Labro, E., 2016. Productions and Operations Management & Management
Accounting.
• Jansen, E.P., 2018. Bridging the gap between theory and practice in management accounting:
Reviewing the literature to shape interventions. Accounting, Auditing & Accountability
Journal.
• Langfield-Smith, K., Smith, D., Andon, P., Hilton, R. and Thorne, H., 2017. Management
accounting: Information for creating and managing value. McGraw-Hill Education Australia.
• Vladychyn, M., 2017. Using Managerial Accounting Tools for Analysis, Control and Operative
Regulation of the Foreign Trade Activities of Trading Enterprises. Accounting and Finance, (4),
pp.20-27.

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