Managerial Accounting: Analysis of Breville Group Limited with ABC Model and Standard Costing

This report analyzes Breville Group Limited with the implementation of ABC model and standard costing. It discusses the characteristics of ABC model, corporate mission and objectives of the company, and recommendations for effective implementation of ABC costing model. It also highlights the importance of standard costing and its benefits for the company.

Managerial Accounting

TABLE OF CONTENTS
Introduction................................................................................................................................3
Task A........................................................................................................................................3
Task B........................................................................................................................................4
Task C........................................................................................................................................5
Task D........................................................................................................................................6
Conclusion..................................................................................................................................7
References..................................................................................................................................9

INTRODUCTION
Managerial accounting is the procedure of preparing managerial accounts as well as reports
that offer precise and accurate information based on finance and statistics needed by
managers to make long and short-term decisions. The current report is about the assessment
of Breville Group Limited Consumer Discretionary, with the analysis of the ABC model and
its characteristics and implementation. The study is concerned about the corporate mission,
objectives and strategies, together with the explanation of ABC system implementation by
the company. After considering the overall findings, the study will place recommendation in
order to help the corporate in implementing ABC model effectively. Furthermore, the study
will also dictate standard costing, which is another management tool apart from ABC model
facilitating the company in reaching its ultimate objectives and mission.
TASK A
Activity-based model allots manufacturing overhead costs to products in a highly logical
way; it initially assigns costs to those activities which are held from overhead. Further, the
costs are assigned to those activities or products which are highly demanding. It is a
methodology to gain a correct assigning overhead to those activities that actually make use of
it (Cardos and Pete, 2011). This model can be implemented for the aimed diminution of
overhead costs. It refers to the costing method that identified activities in a firm and allots
costs of all activities along with resources to each product and service as per their actual
consumption. Further, this methodology allots more of indirect costs, i.e., overhead into
direct costs. It is one of the most effective tools that help the company and managers to create
strategic decisions.
Characteristics of Activity Based Costing are described as follows:
 ABC model provides quality information for designing a cost system that can assist in
making better pricing decisions.
 It offers accurate difference among cost behaviour patterns related to volume, scale,
scope, events and time.
 ABC makes a proper identification of costs drivers. Costs drivers are key
determinants of cost-related activity. Along with this, it also describes the cost
behaviour pattern in an optimal way while tracking overhead costs of a product (Chea,

2011). ABC interprets and considers the cost behaviour model to determine the
appropriate cost driver.
 The ABC method allocates the resource cost of the company with the help of the
products and the services offered to its clients. The ABC is the method usually used as
an instrument for understanding the customer cost, products and the profitability
which is based on the performing or production procedures (Szychta, 2010). Although
the ABC has been primarily used to assists, the strategic decisions like, outsourcing,
pricing, measurement of process and identification
 Activity-based costing offers more of accuracy for the products in terms of cost,
decision making or directing. It establishes an understanding of expenditures and cost
drivers while emphasizing on costly and non-valued activities in the management,
allowing managers to alleviate them from management.
 ABC also places effective challenges to operating costs in a manner that it can
investigate best suitable means for eliminating overheads (Fei and Isa, 2010).
Furthermore, it enables developed products and evaluation of customer profitability.
TASK B
The mission of the Breville Group Limited is to offer quality electronic appliances which can
be used in the kitchen. The company aims to provide small appliances which runs on
electricity and will cover a few spaces in the kitchen but will be quite helpful and useful
(Breville Group Limited (BRG), 2018). The company performs measures so as to guarantee
for Quality, Safety, Performance, Sustainability and Peace of Mind. The key feature of the
company is so successful for all these years is the fact that all the way through their survival
they keep their advanced beliefs, and simultaneously they are capable of encouraging growth
and changes in each of the things which do not comprise as a part of the beliefs (Babnik and
et al., 2014). The basic aim of the Breville Company is to offer quality products at affordable
prices along with delivering high value to stakeholders in the company.
Breville Group Limited aims to hold its position as a leading distributor of small electric
kitchen appliances on an international basis. The objective of the company is to maintain high
integrity and image while representing the best quality at the most affordable prices
(BREVILLE GROUP LIMITED, 2018). The company aims to offer highest potential service
standards to their customers, while they also seek to retain a high calibre of their workforce
by good work conditions. The company’s objective is to maintain and develop adequate

profitability level (Belghitar, Clark and Kassimatis, 2016). The strategic objective of the
company is operating on a global basis while delivering service excellence to their customer
thereby achieving goals of shareholders, investors, clients and the company itself. The
company targets to formulate an optimal retail structure for kitchenware and display the wide
variety of offered brands and products.
The corporate strategy of Breville Group Limited is to provide high accessibility of their
products in all over the world. Their sales and distribution networks work on the same to
available their products globally through broad distributions and supplier network. Breville
Group Limited educate its customers on an ongoing basis regarding their products and their
advantages to have Breville product. The strategy of the company is to build value at
economical rates and all their products targets at being affordable, and the company strives
and struggle to ensure that they are leading the market (Rugman and Verbeke, 2017). The
corporate strategy is based on making their product as effective as possible so that they can
dominate the entire market.
ABC model will help Breville Group Limited by providing accurate data at both strategic and
operational level. Further, correct product costing will help the company in comparing their
profits that different customers, brand, locations and product line produced and to make a
decision on reducing unprofitable products and lines. Further, the information held by ABC
system could also motivate management to do re-designing of products for making
improvement in product quality (Ayvaz and Pehlivanl, 2011). When the ABC is integrated
with the crucial management, then it can deliver the company as a strong tool for ongoing re-
thinking and remarkably develops products, services, strategies and procedures as a whole.
Thus, it enables Breville Group Limited to offer the baseline settings and aspects meant for
the price.
TASK C
For the effective implementation of ABC costing model, some of the recommendations are
provided as below:
 Initially, the company is required to identify how much of consumption is done by
activities in terms of resources, which thereby helps in supporting the overall
production of expected costs outputs. Further, the company must distribute the costs

related to resources in the similar ratio that they have consumers to identify the
activity costs and thus attribution of the costs must be done to the costs objects.
 Moreover, Breville Group Limited must better change management process in place
before the application of ABC model. The aim of this procedure is to ensure there
these if the appropriate flow of support for the overall system at all organizational
level. The company must also focus on communication low at each level, of the need
for change. The implementation of ABC model is required to be justified on the basis
of cost-benefit or any other related system; further, this will enable the company to
make improvement in manufacturing decisions.
 With the implementation of ABC, company cam develops its manufacturing process
by making tactical and statistical decisions; it will ensure the long-term success of the
company. This enables the organization to provide behavioural incentives for
improving the contemporary performance. Hence this implementation facilitates the
overall actions and workings of pricing and costs.
 The company is recommended to identify and consider the needs of ABC and then
identify the reliability of the same method in the organization. Along with this, they
must also assess training required from senior to junior managers. It is also essential
that company defined the overall scope of the project, with analyzing mission and
goals of the project.
 The company is suggested to determine activities as well as drivers while formulating
costs and operational activities related to products and services. Further, they are
required to collect data and analyzing a model with proper validation. This interprets
accurate management reports and combines reporting and data collection.
TASK D
Standard costing is engaged in substituting predictable costs for the fair costs in the
accounting records, and then recording factors in a period manner which shows the variance
between the predictable and fair costs(Öker and Adıgüzel, 2016). It is said to be an
accounting tool that some producer implement to determine the variances among actual costs
of production and the costs that must have incurred for those products. This tool is meant for
planning management and budgets, directing costs and analysing costs management
performance.

Moreover, this system is engaged with the estimation of needed costs of a production process.
It involves the formulation of estimated costs for activities in a company. The main rationale
for the implementation of strategies is that there is the presence of several applications which
demand high time consumptions to reach to actual costs, so this system is implemented to get
a close estimation of actual costs.
IMPORTANCE OF STANDARD COSTING
It will help the company in determining the estimated cost of production which can be very
useful for planning and budgeting. Along with this, it will assist in determining the variances
between the actual cost of the production and the estimated cost of production. It also helps
the managers in the detailed analysis of the variances which in turn aids them in taking
important decisions regarding the production of goods in a cost-effective manner (Hoozée
and Bruggeman, 2010). It leads to optimum savings of each department while helping in
producing goods efficiently. Moreover, it promotes the efficiency of labour for cost-effective
production whilst it also creates cost awareness both in the minds of labour and upper-level
management of the company alongside.
Apart from the ABC model, standard costing is also considered as a better accounting
management tool that can be used by the Breville Group Limited. This is the tool of
management in which the budget of the organisation needs to be prepared for planning and
controlling the fund. All the budgets are made with the historical data and expectations from
the future. After this, a budgeted data is compared with the actual accounting data, and the
performance is calculated on the basis of the variation between the actual and the expected
performance (Dale and Plunkett, 2017). The budgets are also useful in giving an in-depth
understanding of where the money is being spent. It also helps to reduce the troubles of the
debt. If the debts are already to the control, it will become easier to implement the budget.
Therefore, a budget is like a blueprint of the organisation’s revenue and the expenditure. This
eventually helps in examining the total funds available for the company to expense on the
investments (Klychova, Faskhutdinova and Sadrieva, 2014). It shall be used by the Breville
Group Limited since its business is engaged in dealing with electric appliances for the global
industry. Therefore a budgetary control will help in determining the utilisation of funds.

CONCLUSION
The present study shows that ABC model results highly beneficial for the companies when it
comes to making pricing and cost decisions, while it also supports strategies to ensure
optimum use of resources. On the other hand, standard costing is also a management
accounting option that can be implemented by Breville Group Limited for the better
formulation of budgets and cost management in order to conduct operations and activities.

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