Management Accounting System in Coca Cola

Managerial
Accounting

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
communicating financial data for accomplishing the objectives and goals of the
organization. This report includes various management accounting techniques which
are followed by Company A. This report also explains the relevance of these
management accounting systems in the Company A. it also ascertains the comparison
and contrast between Company A ad Coca-Cola in relation to their 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):-
Balance Scorecard is a model for measuring strategic performance. 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
as obstacles in attaining objectives. They take measurement by matching the
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):-
Just in time manufacturing is for avoiding the waste link with waiting,
overproduction, and excess inventory. Just in time increases production with less time
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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
ultimately result in improving financial performance of the organization(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
survive and grow in the competitive market, Company A is also associated with
changing technology and is using modern management accounting methods to
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 and services in relation to
discover the most profitable business approach. So the management accounting
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 satisfied then only the company will be able to maximize their
revenues. These systems also help in making the efficient budgets and proper
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 A helps 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
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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 A Coca-Cola Australia
1. Manageme
nt
Accountin
g System
Company A follows contemporary
management accounting systems
which includes various techniques
such as TQM, BSC and JIT to
conduct their operations. The
contemporary management
accounting techniques assist
Company A to gain efficient cost
management accounting activities
for the allocation of resources to
operations and then operations to
cost on the basis of non-volume and
volume related drivers.
2. These system provide various
benefits by eliminating distortions
from traditional accounting system
and produce accurate costing
information efficient operating
performance, strategic planning and
for better decision making.
Coca-Cola uses modern
management accounting system to
update its practices. Implication of
modern accounting system have
made it less expensive and easier
for Coca-Cola to take data-driven
decisions for improving its financial
performance(Warren Jr, Moffitt and
Byrnes, 2015). Coca-cola uses
various accounting systems which
includes standard costing, real time
inventory management, process
management and Balance score
card.
Using these systems Coca-Cola is
able to examine variance between
standard and actual costs as soon
as products are produced and raw
materials are purchased. The
modern management accounting
system adopted by Coca-Cola
combine non-financial and financial
measures to provide a holistic
snapshot of its performance. In this
system the machines are capable
to measure any unit that does not
meet the specifications and
immediately eliminate that item from
assembly line.
Finding
The finding include that the
professional accountants the BFM,
and MD of Company A specify that
that only modified accounting
system can meets the requirements
of business model of Company A as
without such modification the
system may be too unwieldy and
impractical(Boyd and Pitre, 2019).
So the contemporary management
accounting system used in
Company A is simply not flexible
The findings concluded from this
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
that process is not running
efficiently so the management can
use various modern quality
techniques to improve the
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enough for it as the divestment and
acquisition program need a
redevelopment of activity drivers so
often which would cost itself into
inappropriateness and irrelevance.
The findings also include that
instead of demonstrating the
essentials of management
accounting information the
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
the specifications(Wilson and
Marrer, 2019). But now the
machinery may measure the units
and immediately remove several
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
goods and many other market conditions. Companies can't control the uncertain
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
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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 should follow
some part of MAS in order to keep growing in today's competitive world.
Q.4 Specific Outcomes from the two articles
First Article:-
The findings or outcomes concluded from the first article includes that the
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 reporting were 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
which the systems require changes and adaptation to meet the main users. 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
management rely on information in various formats and also several external;
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
needs advanced management accounting system to meet the needs and demands of
its business model. The accountant MD has specified that only modified systems of
management accounting will satisfy the needs and requirements of Company A as the
contemporary management accounting systems are not enough flexible for the
organization(Subramaniam, 2018). And without advancement the system would
become impractical therefore, the divestment and acquisition programs need a re-
advancement of activity drivers so it would cost itself into inappropriateness or
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.
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Second Article:-
In the second article 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
require various computations by the accountants but now some of the functions can be
performed through popular software packages. So this is comparatively more
convenient, however accountants should also be more careful while using this system.
The finding of this article also concludes that using modern management
accounting systems the management of Coca-Cola will be able to find the variation
between actual and standard as cost as soon as possible
(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.
The outcomes also includes that the modern management accounting
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
modern system machinery can estimate any unit that do not meet the product
specifications and is any variation is found it can remove such product from assembly
line.
However, The accountants of Coca-cola have also 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
have also made it less expensive and easier for Coca-Cola and also for the
accountants and top management ton make data driven statements(Wilson and Marrer,
2019). The Accountants come to understand that how management accounting systems
can be updated or modified according to the modern technology and how these
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-
Cola the management accountants become experts in various areas like in
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
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enhance quality control and to improve its financial performance. This report also
highlights that the systems of management accounting are very essential and relevant
for Company A. From this study It is also furnished that modern management
accounting systems always promotes efficiency and better decision making in the
organization. However the companies must constantly make changes in their existing
systems to cope up with the modern technologies. Apart from that findings and
outcomes of Coca-Cola and Company A are also highlighted in the report to understand
the end results of the articles.
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6708b8d9526.pdf>
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