1 MANAGERIAL ACCOUNTING Reflective Writing The assignment that I have done is based on the purpose and use of the management accounting system, and the usefulness of it through which it will help the managers in taking any business decisions. The articles that which I have talked about are the standard costing and target costing. The organizations upon which the article are based are Active Sports Life (ASL) and IIT Automotive. In the Active Sports Life (ASL), the approach of standard costing has been applied and in the IIT Automotive the target costing approach has been applied. On discussing about the article, I have gained much more knowledge about the standard costing and target costing and how it helps in the operations of an organization. In an organization, I have observed that the standard costing has been used as a tool through which the manager or the higher management does use at the time of budgeting. In the standard costing, the cost that are used in the process are materials, staffs and there are also other costs which is needed at the time of establishments, they are labor and material. All the accounting standards are determined previously at the time of budgeting and before the production process begins. I have calculated variance with the help of standard costing and actual costs, it can be calculated by comparing the actual costs and standard costs. At the end of the financial period, the direct costs are being calculated, though the actual amount and direct labor has been calculated set much earlier. With the help of the features of standard costing, I have seen that the organizations are getting benefitted. With the help of standard costing, the management team does get major help at fixing the prices at the time of pre- production. In implementing the standard costing process, there were certain formations that has been done which I have seen it helps in the cost control and it also meet the requirements of several stages. The organization that I have selected is Active Sports Life (ASL), which does
2 MANAGERIAL ACCOUNTING helps in operational management and a better cost control. The current technique which I have seen in the article is with the Total Quality Management, it does help in focusing the relationship with the consumers and also see the complaints of production process. There were major improvements that has been done, so that it helps in meeting the needs of consumers. On reading the statement of Operations Manager of ASL, it has been seen that there were certain cost cutting which has been done so that it helps in achieving the customer services. Certain challenges that I have observed in reading this article on the Active Sports Life is that, there were uses of differentiation strategy through which the organization gets successful, but it does not help in the reduction of costs. There should be a need of continuous monitoring which will help in the operational process. There are also training given to the employees of the organization that make the work so easier and they become more efficient in performing their activities. Another article which I have talked about is with the target costing and organization which I have selected is IIT Inc. There are certain stages of the production that includes product planning, designing and also production. With the help of target costing, it does help in the various stages of production as the cost has been targeted before. At the time of budgeting, there are several divisions which includes finance, engineering, designing of product, production and cost accounting. There is major support of the higher management authority so that it does helps in the making the allocation of resources. In calculating the target costing, the equation which I have used is[Target Price – Target Profit = Target Cost]. In considering the factors there has been various management policies that are being set so that it helps in fixing the profit margin and also set the prices at which the goods have been sold. I have also seen that if the target cost is much higher than the targeted costs, then there has been various implementation of value engineering in the IIT Inc. It does helps in the
3 MANAGERIAL ACCOUNTING stages of production and the quality is also being taken care of so that the consumers are getting quality products. In an organization, there are various ways through which the costing methods has been implemented, that helps both in production and operation. Two of the methods of costing that I will recommend to both of the organizations are the process costing and job costing. In the system of process costing, it helps in the determination of the costing process and there are three types of this costing which includes weighted average costs, standards costs and first-in and first-out costing (FIFO). I personally believe that it will be much better for the organizations which will have to change the process in the various systems. Another system that I want to recommend is the job costing, which does helps in managing and tracking the process with a better processing in management. There is also inclusive of materials, labor, equipment’s which does help in the categorization of products. I have observed that at the time of implementation, there has been three P’s which includes Plan, Practice and Probe. In concluding the article, which I have discussed above with the standard costing and target costing and their implications in Active Sports Life and IIT Inc., it has been seen that it does helps in the cost cutting and also in earning more revenue. With the help of the two system that is recommended which are job and standard costing will be beneficial for the organization in decision making process and also in the production.
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4 MANAGERIAL ACCOUNTING Bibliography Ahn, H., Clermont, M. and Schwetschke, S., 2018. Research on target costing: past, present and future.Management Review Quarterly,68(3), pp.321-354. Ahrens,T.,2018.Managementcontrolsthatanchorotherorganizational practices.Contemporary Accounting Research,35(1), pp.58-86. Al-Qady,M.andEl-Helbawy,S.,2016.IntegratingTargetCostingandResource Consumption Accounting.Journal of Applied Management Accounting Research,14(1). Anghelache, C., Căpușneanu, S., Topor, D.I. and Marin-Pantelescu, A., 2019. Target Costing andItsImpactonBusinessStrategy:ComputerProgramforCostAccountingand Administration. InNetwork Security and Its Impact on Business Strategy(pp. 20-43). IGI Global. Bargerstock, A. and Shi, Y., 2016. Leaning away from standard costing.Инновации в менеджменте, (2), pp.4-11. Bargerstock, A. and Shi, Y., 2016. Leaning away from standard costing: Lean companies need value stream costing and new performance metrics.Strategic Finance,97(12), pp.38-46. Clifton, M.B., Townsend, W.P., Bird, H.M. and Albano, R.E., 2019.Target costing: market driven product design. CRC Press. Clifton, M.B., Townsend, W.P., Bird, H.M. and Albano, R.E., 2019.Target costing: market driven product design. CRC Press. Dugdale, D., 2017. Management control systems: Theory and lessons from practice. InThe Routledge Companion to Performance Management and Control(pp. 11-38). Routledge.
5 MANAGERIAL ACCOUNTING Eisenberg,Paul.(2016).IMPLICATIONSOFSTANDARDCOSTINGSYSTEMIN MANUFACTURING: A CASE STUDY. Journal of Applied Management and Investments. 5. 162-165. Gc, V.S., Suhrcke, M., Hardeman, W., Sutton, S. and Wilson, E.C., 2018. Cost-effectiveness and value of information analysis of brief interventions to promote physical activity in primary care.Value in Health,21(1), pp.18-26. Hamid, F.A.H. and Mansour, F.E.H., 2016. The Impact of Target Costing System on Enhancing Company’s Performance. Hunter, R.F., Brennan, S.F., Tang, J., Smith, O.J., Murray, J., Tully, M.A., Patterson, C., Longo, A., Hutchinson, G., Prior, L. and French, D.P., 2016. Effectiveness and cost- effectiveness of a physical activity loyalty scheme for behaviour change maintenance: a cluster randomised controlled trial.BMC public health,16(1), p.618. Jayaraman, R., 2016. Project cost control: a new method to plan and control costs in large projects.Business Process Management Journal,22(6), pp.1247-1268. Lowe, E.A., 2019. On the idea of a management control system: integrating accounting and management control.Management Control Theory, p.63. Maskell, B.H., Baggaley, B. and Grasso, L., 2017.Practical lean accounting: a proven system for measuring and managing the lean enterprise. Productivity Press. Melo, R.S.S.D. and Granja, A.D., 2017. Guidelines for target costing adoption in the development of products for the residential real estate market.Ambiente Construído,17(3), pp.153-165.
6 MANAGERIAL ACCOUNTING Nowak,E.,2016.Deviationanalysisasaninstrumentofcostcontrolinan organization.Prace Naukowe Uniwersytetu Ekonomicznego we Wrocławiu, (434), pp.140- 147. Pollard,W.B.,2018.AnActiveLearningApproachtoTeachingJob-Order Costing.Management Accounting Quarterly,19(4), pp.10-10. Sargento, A., Querido, A.I.F., Carvalho, H., Santos, I., Reis, C., Maximiano, M., Frederico, M., Bernardes De Oliveira, S.M. and Leal, S., 2018. Defining clinical conditions in long-term healthcare as a first step to implement Time-Driven Activity Based Costing (TDABC).BMC Health Services Research, (18 (2)), pp.75-76. Shi,Y.,2016.LEANINGAWAYFROMSTANDARDCOSTING.Strategic Finance,97(12), p.38. Üç, M. and Elitaş, C., 2016. Life cycle costing for sustainability. InHandbook of research on waste management techniques for sustainability(pp. 96-107). IGI Global. Vijay, G.C., Wilson, E.C., Suhrcke, M., Hardeman, W. and Sutton, S., 2016. Are brief interventions to increase physical activity cost-effective? A systematic review.Br J Sports Med,50(7), pp.408-417. Zhang, H., 2018. Development of cost management and aided decision system for casting enterprises based on ERP. InITM Web of Conferences(Vol. 17, p. 03010). EDP Sciences. The articles from where the literature review is being done are stated here: Active Sports Life (ASL) Eisenberg, P., 2016. Implications of Standard Costing System in Manufacturing: A Case Study.Journal of Applied Management and Investments,5(3), pp.162-165.
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