Managerial Accounting: Implementing ABC Model in Insurance Australia Group Limited

Managerial Accounting
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Executive Summary
This report has been prepared during being appointed as one of the board of directors of the
organization Insurance Australia Group Limited so that the company’s CEO and senior managers
can be recommended on using the ABC model. Since the current business world is becoming
more complicated day by day, it is becoming necessary for organizations to implement
managerial accounting techniques so that the rapid developments and changes taking place can
be tackled. This report contains a discussion of the features, uses, application and benefits of
using ABC model within an organizational context. It also discusses about another effective
managerial accounting tool, the balance scorecard, showing how an organization can be
benefitting from using this tool as well.
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Table of Contents
Introduction...................................................................................................................................4
(a) An explanation of the ABC model and its features...................................................................5
(b) An explanation of how the ABC model aligns with the current strategies and goals of the
company........................................................................................................................................ 6
(i) Identification of the company’s missions and objectives..........................................................6
(ii) Identification of the company’s corporate strategies...............................................................6
(iii) Explanation of how the ABC model assists in achieving the company’s strategies..................7
(c) Providing different recommendations about the implementation of ABC model for the
company based on the research findings......................................................................................8
(d) Apart from the ABC model, suggestion on one other management accounting tool suitable
for the company............................................................................................................................ 9
Conclusion................................................................................................................................... 11
Reference list............................................................................................................................... 12
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Introduction
As the complexity in the external as well as internal environment and the competition among
rivals of a business is increasing with the advancement of time, managerial accounting, also
known as management accounting, has become an important part of all businesses. The various
tools and models of managerial accounting help a business in carrying out a wide range of
operations. One of the most effective models of managerial accounting used in firms around
the globe is the ABC. The ABC model, simply called the activity based costing, is a managerial
accounting tool that helps a company in increasing its effectiveness through identifying a firm’s
activities along with assigning indirect costs to the respective activities performed in a firm.
This report comprises of the discussion of the ABC model of managerial accounting along with
discussing the advantages and uses of using this model within an organization named Insurance
Australia. The Insurance Australia Group Limited, also called the IAG, is a multinational
company providing insurance related services to people with its headquarters in Sydney
(Iag.com.au, 2018). Founded during the year 2020, the Insurance Australia Group Limited, with
more than 15,000 employees, serves the areas of Thailand, Malaysia, New Zealand and
Australia (Iag.com.au, 2018). However, for ensuring that the operations of Insurance Australia
Group Limited is conducted smoothly and the company is able to accomplish its missions as
well as objectives, the activity based costing is important to be integrated in the company. The
report is going to be evaluating the application and the benefits of application of the ABC model
in the context of Insurance Australia Group Limited, so that the company’s objectives can be
accomplished successfully.
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