Managerial Accounting Analysis: ABC in Accent Group Limited

This report examines the effectiveness of Activity-Based Costing (ABC) within Accent Group Limited, an ASX-listed retail leader. It begins by defining ABC and its features, highlighting its role in addressing the deficiencies of traditional costing methods and supporting better decision-making related to competitive strategies and product mix. The report details how ABC aligns with Accent Group's strategic objectives, such as creating a transparent and competitive marketplace, offering quality products at low prices, and increasing customer satisfaction. It recommends the continued implementation of ABC to enhance performance and aid in decision-making, further suggesting the integration of budget control accounting tools for improved financial planning and strategic goal attainment. The analysis emphasizes ABC's ability to identify unnecessary costs, improve product pricing, and enhance customer segmentation, ultimately contributing to Accent Group's objective of becoming a respected international retailer.

Managerial Accounting

Executive summery
In competitive market, main objective of the business is to execute its operation in smooth
manner and offers higher quality of products in fewer prices. The environment increase
competition, ongoing rapid changes and requires for deliberate decision has to increase the
concepts of management accounting requirements. ABC management tools help the business
to gather relevant information and contribute in decision making process to increase profits in
marketplace. The report shows that, in order to sustain in market for long time and
accomplish profits organization needs to utilize ABC costing techniques in its business
process. The objective of report is to assess the effectiveness of ABC in Accent group limited
and their contribution in business activities.

Table of Contents
Executive summery...............................................................................................................................2
Introduction...........................................................................................................................................4
Explanation of ABC and its features.......................................................................................................4
How ABC aligns with organization objective..........................................................................................6
Recommendation about ABC implementation......................................................................................8
Suggest other management accounting methods.................................................................................8
References...........................................................................................................................................10

Introduction
Industries in present generation face ever-increasing completion in international and national
marketplace. Companies main motives are to offers higher quality of services, reach quickly
and less cost of products and services in this environment. Moreover, decision making
procedure helps the business to sustain in market for long time and achieve higher market
share in successful manner (Zimmerman, & Yahya-Zadeh, 2011). In order to achieve this
objective organization needs up to date accounting information system in its business process
such as ABC i.e. activity based costing methods techniques.
Therefore the present report is deals with the explanation and effectiveness of the ABC
methods in business process. The report also provides effective information regarding how it
helps the business to compete in competition market and leads their performance in useful
manner. At last the report focused on the other costing techniques apart from ABC. In order
to deals with the performance and effectiveness of the ABC methods, ASX listed
organization Accent group limited has been selected in this report. ASX is known as the
Australia Security exchange sometimes known as Sydney stock exchange. The organization
is the regional leader in retail sectors and offers footwear more than 420 stores (accentgroup,
2018).
Explanation of ABC and its features
Hansen, Mowen, & Guan, (2007), said that ABC costing methods is an innovative costing
methods mainly used to deals with the deficiencies of existing system in successful manner.
Activity based costing methods helps the management of the business in decision making
procedures regarding competition strategies and products mix. The main activities associated
with the activity based costing methods are to analyze and evaluate the activities and collect
the information associated with the costs. Moreover, these techniques would help the
management to trace the costs associated with the activities and output the measurement in
successful manner. As studies conducted by Bromwich, & Bhimani, (2005), said that
traditional costing methods allocate the indirect expenses to goods and services based on the
charactestics of single factors that mainly not causally associated to the level and type of
employment or work consumed.

Traditional cost allocation factors incorporate the number of direct work hours necessary to
produce a unit, the expenditure of that direct labour, the buy expenditure of merchandise
resold, or the quantity of days occupied . These are expansive midpoints that don't reflect
causality for the indirect expenses. The issue is that utilization of these allocation techniques
brings about allocations that fluctuate with changes in the allocation premise. ABC
frameworks perceive that individual’s goods and services or clients don't expend indirect
expenses in those extents (Macintosh, & Quattrone, 2010). Instead of this they emphasize on
around the work exercises of individuals and equipment needed to deliver every item or give
each services and their utilization of each of those activities.ABC follows indirect expenses
(ordinarily called "overhead") to services, products and clients by recognizing asset and their
costs, the utilization of these assets by exercises, also, the execution of exercises to deliver
yield. Example of the resources assets mainly includes the pay rates, working supplies,
equipment depreciation, also, and electrical power.
ABC i.e. activity costing methods is refereed as the accounting methods mainly utilized by
the management of the organization for assigning accurately the extent of the resources
utilize as well as indirect expenses incurred to obtain a services or products (Cadez, &
Guilding, 2008). The main objective of the development of the ABC methods in business
activities is that it helps the organization to enhance full costs as well as unit computation
procedures.
Features associated with the activity based costing techniques
 Total costs associated with the products or services is divided into two parts
including indirect costs as well as direct costs which is vital for management to
provide quality information regarding products and helps them to design a
suitable cost system in a business process.
 The distinction is made in ABC methods between the cost pattern behaviour as
well as cost driver shows that the cost behaviour pattern
 The behaviour of the costs pattern are diversity related, time related, events
related and volume related (Zott, & Amit, 2010).
 The most effective cost driver has to be determined for monitoring the indirect
costs to the goods and services
 This techniques helps the management of the organization to control in
products, reduction in investment and saving in time

How ABC aligns with organization objective
Activity based costing is the accounting procedures that mainly helps the business to collect
relevant information regarding their operating expenses. Expenses in the business activities
are assigned to particular activities including manufacturing, planning and engineering and
then activities is related to the different services and products (Garrison, Noreen, Brewer, &
McGowan, 2010). In such manner activity based costing techniques enables a business to
make decision which services, resources and products are helps them to enhance productivity
and which contributing negative performance or to loss. After successful analysis and
evaluation of the cost of the products, management them able to provide information to make
a better budget and obtain higher profits that helps the business to run their operation in
smooth manner. Generally, ABC is the most effective methods utilized for a long time
period and helps the business to achieve better market share.
The main mission and objective of Accent group limited in given below;
The mission of the business is to provide an efficient, transparent, fair and organized
marketplace provide a safe environment for purchasing products and services.
Objective of the business
 Making a safe, attractive, comeptive, creditable and transparent digital marketplace to
customers
 Offers better quality of products and services with low price
 Increase the transparency and higher level of the customers satisfaction
 Increase financial profits up to 12% in upcoming financial years
Accent group limited strategic initiatives
The organization Accent group limited’s main strategies is to be the international most
respectful retail organization and achieve higher share in both national and international
market (accentgroup, 2018). The strategic objective of the organization is to maintain trust,
resilience as well as integrity and making diverse ecosystem of services, products and
stakeholders partnerships. In addition to this the organization main objective is to offers
innovative solutions as well as technology to customers and strengths the collaborative
culture among individuals.

ABC helps the business to trace the activities associated with the business in successful
manner and also helps them to calculate the expenses of each activity that involves the
resources. Apart from that it would helps the organization to control the business activities
and helps them to reduce time in successful manner. With the help of the implementation of
the ABC techniques, the management of the business can purchase the material and lower
process and increase profitability successful manner (Cadez, & Guilding, 2008). As per the
Accent group limited strategic objective, it is seen that the organization main objective is to
provide a safe, attractive, comeptive, creditable and transparent investment environment;
therefore this can be accomplished by the management through adoption of the ABC
techniques in business process. Implementation of the ABC techniques provides accurate
information regarding costs associated with the organization’s activities. Therefore, use of
ABC methods helps the organization to provide more accurate information of services and
product costing and leading to more accurate in pricing decision making process that helps
them to offers transparent and accurate information in front of customers in better manner.
Implementation of the ABC methods helps the business to reduce all sorts of unnecessary
expenses that helps the business to save the expenses in better manner. On the hand, with the
help of using ABC analysis techniques all sorts of bottlenecks associated with the business
activates in better manner and helps the business to perform its operation in smooth manner.
Apart from that, ABC techniques helps the organization Accent group limited to improve
relationship between the customer and organization in successful manner and this would
helps them to achieve their objective i.e. is to be the international most respectful financial
marketplace in successful manner (Horngren, 2009). . Accent group limited is based on the
retail sectors therefore the main objective of the business is to retain more customers and
increase online traffic in better manner. Therefore, utilization of ABC techniques helps the
business to analyze market scenario and cost associated with the products in successful
manner.
As studies conducted by DRURY, (2013), said that in present competitive market, business
can retain more customers if they can offers better quality of products in less price. Hansen,
Mowen, & Guan, (2007),said that the main benefits associated with the ABC techniques is
that it provide the accurate information to management regarding unnecessary costs and helps
them to reduce production costs so that they can offers quality products in less prices. This
can not only helps the business to increase customers but also helps them to execute their
operations in smoothes manners in marketplace. Thus from the evaluation and discussion it

can be said that Accent group limited accomplished its strategic objective in successful
manner after implementation of the ABC techniques in its organization.
Recommendation about ABC implementation
According to Horngren, (2009), increasing expenses and diversity of products and services
are the major cause of adoption and implementation of the activity based costing techniques.
Implementation of the ABC techniques performed in several major steps such as reviews
organization financial information, established purpose and objective of ABC system,
identification of the main activities, trace overhead activities, calculate costs associated with
project and use of ABC analysis in management decision making process and improvement.
The first recommendation that after successfully implementation of the ABC system in
Accent group limited helps them to increase higher performance and also helps in decision
making procedures. From the findings and analysis it can be seen that the main purpose of the
business is to increase higher revenues and customers satisfaction; therefore ABC analysis
helps them to accomplish this objective in successful manner. As studies conducted by
Hansen, Mowen, & Guan, (2007),said that ABC system aids the organization to determine
unnecessary costs and also provide the price of products or services in better manner that
would helps them to analyze regarding products are profitable or not. ABC analysis
techniques also help the organization to determine customer segmentation in successful
manner. An ABC technique helps the management to provide accurate and reliable
information and using these information management effectively determine their customer
trends. Thereby it can be recommended that implementation of this techniques helps the
business to reduce issues associated with the business activities in successful manner that
helps them to eliminate practices that are wasteful and costly in successful manner.
Suggest other management accounting methods
Apart from the ABC accounting tools, it can be suggested that the organization Accent group
limited needs to implement budget control accounting tools in its business process.
Implementation of this tool helps the business to make sure that business’s actual profits and

expenditure adhere closely to their financial planning. In addition to this, it helps the business
to obtain its strategies objective in better manner (Scapens, 2006). The main benefits of this
technique are that it helps the management in coordinating the activities among different
department and increase the profitability by reducing wastage. Moreover budget control
accounting techniques helps the business to build objective and correct the variance. In some
case performance of the business is not well, and then it would helps the organization Accent
group limited in determining the issues and responsibities (Bromwich, & Bhimani, 2005). By
effectively promoting costs consciousness among the workers, budget control techniques
bring economy and efficiency. Therefore the analysis shows that implementation of the
budget control techniques helps the business to increase revenues and reduce issues in
successful manner.

References
accentgroup. (2018). Accent Group Limited Report and Financial Statements for the year
ended 31 March 2017. [online] Available at:
http://www.accentgroup.org/media/258546/report-and-accounts-2017.pdf [Accessed 23 May
2018].
Ahrens, T., & Chapman, C. S. (2007). Management accounting as practice. Accounting,
organizations and society, 32(1-2), 1-27.
Bromwich, M., & Bhimani, A. (2005). Management accounting: Pathways to progress. Cima
publishing.
Bromwich, M., & Bhimani, A. (2005). Management accounting: Pathways to progress. Cima
publishing.
Cadez, S., & Guilding, C. (2008). An exploratory investigation of an integrated contingency
model of strategic management accounting. Accounting, organizations and society, 33(7-8),
836-863.
DRURY, C. M. (2013). Management and cost accounting. Springer.
Garrison, R. H., Noreen, E. W., Brewer, P. C., & McGowan, A. (2010). Managerial
accounting. Issues in Accounting Education, 25(4), 792-793.
Hansen, D., Mowen, M., & Guan, L. (2007). Cost management: accounting and control.
Cengage Learning.
Hansen, D., Mowen, M., & Guan, L. (2007). Cost management: accounting and control.
Cengage Learning.
Horngren, C. T. (2009). Cost accounting: A managerial emphasis, 13/e. Pearson Education
India.
Macintosh, N. B., & Quattrone, P. (2010). Management accounting and control systems: An
organizational and sociological approach. John Wiley & Sons.

Scapens, R. W. (2006). Understanding management accounting practices: A personal
journey. The British Accounting Review, 38(1), 1-30.
Zimmerman, J. L., & Yahya-Zadeh, M. (2011). Accounting for decision making and
control. Issues in Accounting Education, 26(1), 258-259.
Zott, C., & Amit, R. (2010). Business model design: an activity system perspective. Long
range planning, 43(2-3), 216-226.