Managerial Accounting - PDF

MANAGERI
AL
ACCOUNTI
NG

EXECUTIVE SUMMARY
It helps in encompassing each field of accounting whose objective is to
inform metrics of management's business operations. The present study
would discuss about activity based costing which helps in assigning and
determination of overhead activities cost according to actual consumption. It
would be choosing two scholarly articles based on ABC. In the same series, it
will be explaining ABC in detailed aspect with its procedure, significance and
implementation in business entity. It could be reflected by stating that
accounting ratio are very important for gaining financial performance and
wealth of business entity. Further, it could be summed up by giving huge
importance for implementing activity based costing which is beneficial for
each business entity.

TABLE OF CONTENTS
INTRODUCTION................................................................................................1
A. Activity Based Costing.............................................................................1
B. Purpose of both the studies with their research questions......................3
C. Discussion about similarities and differences in context of findings of
both the studies...........................................................................................4
D. Stating outcomes and lessons learnt with both the studies with
reference to management accountants.......................................................7
CONCLUSION....................................................................................................9
REFERENCES..................................................................................................10

INTRODUCTION
Management accounting is referred as the process of analysing,
measuring, identifying and communicating information to its managers for
accomplishing goals and objectives of business entity. It helps in
encompassing each field of accounting whose objective is to inform metrics
of management's business operations. Present study would discuss about
activity based costing which helps in assigning and determination of
overhead activities cost according to the actual consumption. It would be
choosing two scholarly articles based on ABC. In the same series, it will be
explaining ABC in detailed aspect with its procedure, significance and
implementation in business entity. It will also articulate similarities and
variations from the findings of both studies. Study 1 of this report is “The
impact of Activity Based Costing technique on firm’s performance” and study
2 is “The Activity based cost Hierarchy, Production Policies and Firm’s
Profitability”. Further, it would also specify outcomes and lessons from its
research findings which are useful for various management accountants in
context of Australian companies.
A. Activity Based Costing
It is the method in which overhead costs are assigned to processes or
products that generate or consume value. In other words, it is a way to
allocate indirect overhead costs to products or departments that generate
these values in the production process (Activity based costing, 2018).
It's Objectives:
 With the use of activity based costing method, any company can easily
estimate the cost elements of all products.
 Eliminates products and services which are less profitable.
 This methodology assigns an organization's resource cost through
activities such as products and services which are provided to its
customers.
 Support strategic decisions such as pricing, outsourcing, measurement
and identification of process improvement initiatives.
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