Planning Tools and KPI in Management Accounting at Toshiba

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
ASSESSMENT TWO......................................................................................................................3
Planning tools used in management accounting..........................................................................3
Using different planning tools.....................................................................................................6
Use of Key Performance indicator in internal process................................................................7
Patisserie Valerie scandal............................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES................................................................................................................................1

INTRODUCTION
Management accounting is the internal accounting tool which provides manager with the
different information about the position of the company in the market. Manager used to take this
accounting as the basic to take decision in the organization (Quattrone, 2016). Toshiba is the
Japanese multination company headquartered in Tokyo, Japan. Toshiba was founded in the year
1939 by the founder Tokyo Shibaura Denki K.K. through the merger of Shibaura Seisaku-sho
and Tokyo Denki. This report highlights the purpose of budgetary control and different form of
budgetary control which include advantage and disadvantage of different budgetary control tool
in the organization. After that the report highlights ways in which management accountants use
different planning tools and then the report goes on to explain the way management accountant
used to keep the KPI in company internal process with the help of different advantage and
disadvantage of KPI system. In the end the report highlights analyses role of management
accounting profession with reference to Patisserie Valerie scandal.
MAIN BODY
ASSESSMENT TWO
Planning tools used in management accounting
There are a variety of planning tools that can be used by the managers of the company in
order to ensure that the business i.e. the entire organization runs smoothly and is able to allocate
funds in an appropriate manner. One such planning tool is budget. Budgetary Control can be
defined as the formulation of a financial statement where the managers of the company identify
the sources of fund and its allocation to different expenditures of the company where the exact
amount is specified (Yermack, 2017). Further, tools like budget also helps in regularly evaluating
the financial performance of the company and therefore, it gets easier for managerial accountants
to track the performance of the organization and compare it with their past performance or the
competitor’s performance. At Toshiba, some major types of budgets that assist in financial
planning of an organization are:
Cash Flow Budget: Cash Flow Budget can be defined as that budget that is used to prepare to
ascertain all those sources through which there is inflow of cash and determine the expenditure
modes i.e. the venue at which there is expenditure of funds in the form of cash. They identify all
those sources and then allocate and estimate the funds which can be generated and the probable
amount of expenditure that can be incurred. There are various advantages as well as

disadvantages of the preparation of cash budget and therefore the mangers should take this into
account before implementing it (Zietlow and et.al., 2018).
Advantages Disadvantages
When the funds are allocated in an
appropriate manner, it gets easier to ascertain
the financial position and therefore control
any unnecessary expenditure that might be
incurred otherwise. It also helps in
determining the liquidity of the company and
therefore ascertains the financial position of
the company easily ensuring that company
does not go into debts.
However the disadvantages of the preparation
of cash budgets can be categorized that
preparation of these such budgets is an
extremely lengthy and complicated process
and therefore, it might get difficult for the
managers to identify every single source and
then included in the preparation of budget is
an extremely tedious process.
Capital Budget: Capital Budget is another type of budget categorised as the one which accounts
for these assets that are usually long term in nature and cannot be reversed. It needs to be taken
for long term and therefore, the managers of the company need to formulate this type of budget
extremely carefully because it is not easy to incorporate changes in the budget if necessary,
easily (Kaplan and Atkinson, 2015). Although, it is of extreme assistance to the managers
intending to implement a long term project, yet there are various disadvantages as well
associated to it.
Advantages Disadvantages
Capital budget involves selection of the
various avenues through which funds can be
raised and therefore it helps in correct
estimation of the cost required an arranging
funds accordingly so that costs can be
predetermined and therefore it gets easier to
arrange funds beforehand so that
underutilisation or overutilization can be
avoided and the entire project can be
completed on time.
Once this budget has be formulated, it is not
easy to deviate from this budget and therefore,
the entire process needs to be repeated which
is an extremely tedious task. In order to
complete this process of budget formulation,
an extensive study needs to be taken and
therefore, this is an extremely time consuming
process.