Table of Contents ABSTRACT.....................................................................................................................................1 MAIN BODY...................................................................................................................................1 Q.1 Different Types of management accounting systems.....................................................1 Q.2 Importance of Management Accounting Systems in Contemporary Organisation.........2 Q.3 Relevance of MAS in today's competitive world............................................................4 Q.4 Specific Outcomes from the two articles.........................................................................5 CONCLUSION................................................................................................................................6 REFERENCES..............................................................................................................................8
ABSTRACT Managerial accounting is the process of analyzing, measuring, interpreting and communicatingfinancialdataforaccomplishingtheobjectivesandgoalsofthe organization. This report includes various management accounting techniques which arefollowedbyCompanyA.Thisreportalsoexplainstherelevanceofthese management accounting systems in the Company A. it also ascertains the comparison andcontrastbetweenCompanyA adCoca-Colainrelationtotheir findings and techniques of management accounting. Apart from that this study also includes the conclusions about the importance of MAS in uncertain business environment an well as in the competitive market. This study explains the findings and outcomes of both the companies i.e Company A and Coca-Cola and it also includes the key points that the accountants have learned from the implications of these accounting systems. MAIN BODY Q.1 Different Types of management accounting systems Total Quality Management (TQM):- Total quality management can be defined as approach by management for getting long term success. TQM is a process of improving quality of products, service, culture and process of work. Customer is loyal to company when they are satisfied with product quality and services provided by company(Kaplan and Atkinson, 2015). TQM increase image of company in market by attracting customer and it becomes there USP. A is a company of manufacturing is applying TQM in very effective manner they are having a quality team which take care of all products quality according to the quality standards set by ISO and they are also having customer care team which take care of all the customer's problem and provide their customer best service. TQM plays vital role to fight with competitors. They also check involvement of each employee towards his work. They do their work keeping customer focused. Company A which clear all the stages to become ISO marked. Balance Scorecard (BSC):- BalanceScorecardisamodelformeasuringstrategicperformance.The objective behind balance scorecard is to translate vision and mission of organization into actual actions(Brewer, Garrison and Noreen, 2015). It can also be explained by an example that if any student who has to get good marks in exam then he must have knowledge and here knowledge work as data. Output can only be produce when we have something to input.And to get good quantitative results, data collection is crucial. Balance scorecard consist four legs learning and growth, business processes, customer perspectives and financial data. BSC is used for measuring performance and providing feedback to organization. Company A uses balance scorecard to identify the factors which are hindering performance of business, and they are also measuring all the things which are coming asobstaclesinattainingobjectives.Theytakemeasurementbymatchingthe performance of employee, by checking customer feedback and by checking quality of work, product and services(Appelbaum and et.al., 2017). They keep record of all the data which help company to meet with their objectives. Just In Time (JIT):- Justintimemanufacturingisforavoidingthewastelinkwithwaiting, overproduction, and excess inventory. Just in time increases production with less time 1
and also reduce processing time and under work of employees. JIT concept give clarification to the amount of materials and other resources needed in work. To reduce overproduction Company A follows JIT concept in which they focused on the employees and the things which are creating reason for wastes. They keep eyes that no employee is extra on particular process and they use only sufficient material so that they can reduce wastage and this all things result to their profit maximization. They provide their employees full motivation so that they can do their work with great energy and they can do work by doing minimum wastage. Q.2 Importance of Management Accounting Systems in Contemporary Organisation Management Accounting systems are relevant for the contemporary organization as they help to enhance quality control and decrease the cost of its products which ultimatelyresultinimprovingfinancialperformanceoftheorganization(Weygandt, Kimmel and Kieso, 2015). In case of competitive environment emerging in the market, the constant advancement of organization and the use of cost management are the essential success factors as it helps the contemporary organization to to make the appropriate decisions regarding the efficiency of operations and production. In order to surviveandgrowinthecompetitivemarket,CompanyAisalsoassociatedwith changingtechnologyandisusingmodernmanagementaccountingmethodsto enhance its financial performance. Evidences from the Company A Company A is a manufacturing company which follows simple procedures with lesser raw materials and few steps involved in the production process. Since company A has utilized the main aspects of the systems and has generalized their process which means they apply various activity drivers to allocate costs and overheads, run various scorecards and internally they also do system bench-marking and externally consume some deliveries and supplies just in time and have also applied TQM which ensure safety. The management accounting systems adopted by Company A help to ascertain the current expenses and also provide suggestions for the future activities. Under these systems the accountants explore various possibilities and best tactics to maximize the profits(Butler and Ghosh, 2015). Through these systems the accountants also analyze various products, sales channels,marketing activities andservices inrelation to discoverthemostprofitablebusinessapproach.Sothemanagementaccounting systems help to conduct relevant cost analysis which ultimately result in better decision making. The management accounting systems are relevant for Company A because these systems focus on paying the attention to the consumers of Company A as if the consumer will be satisfiedthenonly thecompany willbe abletomaximizetheir revenues.Thesesystemsalsohelpinmakingtheefficientbudgetsandproper presentation of financial statements so that the financial performance of the company A can be improved. The management accounting systems like TQM helps in improving the quality of the products so that Company A can achieve customer loyalty. Apart from that the system like BSC adopted by Company Ahelps to efficiently implement the strategic goals and missions of the organization so that the Company A can grow in the market(Weygandt, Kimmel and Kieso, 2018). The another management accounting system used by Company A i.e Just in time(JIT) aims at decreasing times in production system and delivery or response times or duration from suppliers to consumers. So that 2
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the products can be quickly delivered in the market or to the consumers(Australasian Accounting, Business and Finance Journal,2014). Comparison with other Company Company ACoca-Cola Australia 1.Manageme nt Accountin g System CompanyAfollowscontemporary managementaccountingsystems whichincludesvarious techniques suchasTQM,BSCandJITto conducttheiroperations.The contemporarymanagement accountingtechniquesassist CompanyAtogainefficientcost managementaccountingactivities fortheallocationofresourcesto operations and then operations to cost on the basis of non-volume and volume related drivers. 2.Thesesystemprovidevarious benefitsbyeliminatingdistortions from traditional accounting system andproduceaccuratecosting informationefficientoperating performance, strategic planning and for better decision making. Coca-Colausesmodern management accounting system to update its practices. Implication of modernaccountingsystemhave made it less expensive and easier forCoca-Colatotakedata-driven decisions for improving its financial performance(Warren Jr, Moffitt and Byrnes,2015).Coca-colauses various accountingsystems which includes standard costing, real time inventorymanagement,process managementandBalancescore card. Using these systems Coca-Cola is able to examine variance between standard and actual costs as soon as products are produced and raw materialsarepurchased.The modernmanagementaccounting systemadoptedbyCoca-Cola combine non-financial and financial measurestoprovideaholistic snapshot ofits performance. In this system the machinesare capable to measure any unit that does not meetthespecificationsand immediately eliminate that item from assembly line. Finding Thefindingincludethatthe professional accountants the BFM, and MD of Company A specify that thatonlymodifiedaccounting system can meets the requirements of business model of Company A as withoutsuchmodificationthe system may be too unwieldy and impractical(BoydandPitre,2019). So the contemporary management accountingsystemusedin Company A is simply notflexible Thefindingsconcludedfromthis case that the techniques of modern management accounting also need changes in various aspects like in process management. The process of only concentrating management attention on processes when there is sufficient reason or point to trust thatprocessisnotrunning efficiently so the management can usevariousmodernquality techniquestoimprovethe 3
enough for it as the divestment and acquisitionprogramneeda redevelopment of activity drivers so oftenwhichwouldcostitselfinto inappropriatenessandirrelevance. Thefindingsalsoincludethat insteadofdemonstratingthe essentialsofmanagement accountinginformationthe Company A has deactivated some components of the system that were seemed irrelevant for conducting its operations. processes. For instance in the past the management was assessing the quality of finished products to make sure that the product or goods met thespecifications(Wilsonand Marrer,2019).Butnowthe machinery may measure the units andimmediatelyremoveseveral units if it is noticed that such units do not met specifications. Q.3 Relevance of MAS in today's competitive world MAS is very much relevant in today's competitive world as MAS consists all the factors which are needed for understanding uncertain business environment. MAS provides knowledge which can be used by company to fight with dynamic market situation. These days It is getting difficult to deal with current market situation because market is growing rapidly and it creates a great competition which include aspects like new technology, goods at cheaper price, customers taste and preference, substitute goodsandmanyothermarketconditions.Companiescan'tcontroltheuncertain business environment but with the help of MAS knowledge some measurement can be taken like backup plans(Huynh and et.al., 2017). For example Since nowadays a lot of competition is emerging in the market so Company A can gain the knowledge which is acquired from MAS like it can go with the latest technology or it can use different style of marketing or it can use different techniques of MAS to generate higher revenues and to enhance its performance. The system like Total quality management in which the focus is on customer and TQM controls all the quality related factor whether it is related to product quality, customer service, or any other quality related factor. To fight with competitive market one company must have a better thing than its competitor. The another technique Balance scorecard in which organization collects all the data which is essential to attain objectives of organization. BSC is a way to translate mission and vision of organizational to actual actions. This technique also manages feedback and monitor and measure progress of strategic targets which also balances performance and financial measures. BSC creates activeness in mind of employees because they know that each and everything they do is recorded by their supervisors and they will get reward if they do work with quality. MAS techniques TQM and BSC are widely in use, 50% of industry uses this both techniques. The third technique is Just in time (JIT) which is a method for removing wastage and to do work with less time(Kholeif, 2018). It is easy to understand just in time with an example like being a manufacturing organization, Company A would need material and human power and just in time method create effective and efficient use of material and workers and which will be beneficial for both company as well customer as by making product at lower price company profit increases and customer get product at lower 4
price. These are some technique of MAS which companies use to run their business better than their competitors. Each technique has a separate role in company. It can be said that using MAS information at right time can make a company's environment dynamic in which they can understand situation of market. All company shouldfollow some part of MAS in order to keep growing in today's competitive world. Q.4 Specific Outcomes from the two articles First Article:- Thefindings or outcomesconcludedfromthefirst articleincludesthatthe Company A has experienced a series of various management accounting and financial reporting systems subject to a strategic way of divestment and acquisition. The desire to offer a platform to consolidate all the business divisions into a single system was treated as paramount(Baldenius and Michaeli, 2019). The globally acceptable management accounting information and the specific financial reportingwere considered as key benefits and therefore become an influential encouragement for change. The relevance of outcomes of these management accounting systems adopted by Company A is tested in two parts:-(i) by examining the relevance of the information furnished to managers for taking efficient decisions at all the levels and (ii) the extent to whichthesystemsrequirechangesandadaptationtomeetthemainusers.In determining the utilization accounting information it is witnessed that each level of management use the systems in different ways and to different degrees in relation to conduct their managerial functions and tasks efficiently.Like it was found that middle managementrelyoninformationinvariousformatsandalsoseveralexternal; information to take critical decisions. The lower level management are greatly involved with the management accounting systems and applying much of its functionality to take operational decisions. However the top management uses the system to rely on specific figures of external data in relation to take strategic decisions. However, the accountants i.e MD and BFM of Company A found that Company A needsadvanced management accounting system to meet the needs and demands of its business model. The accountant MD has specified that only modified systems of managementaccounting will satisfy the needs and requirements of Company A as the contemporarymanagementaccountingsystemsarenotenoughflexibleforthe organization(Subramaniam,2018).Andwithoutadvancementthesystemwould become impractical therefore, the divestment and acquisition programs need a re- advancementofactivitydriverssoitwouldcostitselfintoinappropriatenessor irrelevance. While the qualified accountant BFM states that the ideas behind various management accounting techniques are good and even various academic ideas are also good but BFM needs a practical application of these techniques. However the accounts have also learned various key points from these systems like with the help of TQM the accountant can improve the quality of their products(Guinea, 2016). From BSC system of management accounting the accountants came to know about the proper presentation of financial reports and statements which helps in improving the financial performance of Company A. The accountants in first article also learned the uses and implication of various management accounting systems that provide various benefits to the Company A(Kim and Matsumura, 2017). They also come to know about the problems and issues in the systems which require changes in the current systems of management accounting. 5
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Second Article:- In the secondarticle it is specified that Coca-Cola uses modern management accounting systems in its organization to conduct all the operations and functions effectively and efficiently. The outcome or finding of the second article in which modern management accounting system is used includes that modern management accounting systems are essential for Coca-Cola to improve its performance in the competitive market. It is founded that in the past various management accounting techniques requirevarious computations by the accountants but now some of the functions can be performedthroughpopularsoftwarepackages.Sothisiscomparativelymore convenient, however accountants should also be more careful while using this system. Thefindingofthisarticlealsoconcludesthatusingmodernmanagement accounting systems the management of Coca-Cola will be able to find the variation betweenactualandstandardascostassoonaspossible (Weygandt, Kimmel and Kieso, 2018). So that quality of products can also be improved quickly and products can be reached to the customers.In this system the accountants of Coca-Cola also introduce technology related to radio-frequency identification(RFID) which provides efficient inventory management. The Coca-Cola attaches RFID tags to its products so that the accounting information can be fetched and updated on the fly when the products are mover or transferred. Theoutcomesalsoincludesthatthemodernmanagementaccounting techniques have also made various changes in the process management so Coca-Cola can improve its performance by applying various quality tracking techniques(Boyd and Pitre, 2019). Like in the past the managerial accountants have to assess the quality of goods to verify that the particular unit met all the product specifications but now in the modernsystemmachinerycanestimateanyunitthatdonotmeettheproduct specifications and is any variation is found it can remove such product from assembly line. However, The accountants of Coca-cola havealso learned various points from these system. They come to know about the various uses and implications of these systems. The incorporation of technological improvements into accounting department havealsomadeitlessexpensiveandeasierforCoca-Colaandalsoforthe accountants and top management ton make data driven statements(Wilson and Marrer, 2019). The Accountants come to understand that how management accounting systems canbeupdatedormodifiedaccordingtothemoderntechnology andhowthese changes and advancements can be implemented in the organization. Apart from that the modern management accounting systems also provides a network for various career opportunities, decisions support and skill enhancement to the accountants of Coca-Cola(Huynh and et.al., 2017). By applying these system in Coca- Colathemanagementaccountantsbecomeexpertsinvariousareaslikein manufacturing environment they learn to demonstrate abilities under lean manufacturing and to imply advance system of management accounting in the organization to progress quickly. CONCLUSION From the above study it is concluded that Management accounting systems play an imperative role in the organization to improve its operations and performance. It also concluded that management accounting techniques adopted by Company A helps it to 6
enhance quality control and to improve its financial performance. This report also highlights that the systems of management accounting are very essential and relevant forCompanyA.FromthisstudyItisalsofurnishedthatmodernmanagement accounting systems always promotes efficiency and better decision making in the organization. However the companies must constantly make changes in their existing systemstocopeupwiththemoderntechnologies.Apartfromthatfindingsand outcomes of Coca-Cola and Company A are also highlighted in the report to understand the end results of the articles. 7
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