HI5017 - Managerial Accounting: ABC Model Analysis for CSR Limited

This report provides a comprehensive analysis of the Activity-Based Costing (ABC) model and its applicability to CSR Limited, an Australian company involved in construction and building products. The report details the features of the ABC model and explains how it aligns with CSR Limited's current goals and strategies, including its mission, objectives, and corporate strategies. It identifies the company's mission to reduce risks for employees and enhance financial sustainability, while its objectives focus on safe working environments and competitive returns. The report also explores how the ABC model assists in achieving these strategies by improving cost accuracy and resource allocation. Furthermore, the report recommends the implementation of variance analysis as an additional management accounting tool to control costs and enhance efficiency. The analysis covers different types of variances, such as physical cost variance, manageable variance, and unmanageable variance, to provide a holistic view of cost management within the company. The report concludes by emphasizing the importance of adopting modern costing methods to improve performance and decision-making within CSR Limited. Desklib provides access to similar solved assignments and study tools for students.

HI5017 Managerial accounting
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Contents
Executive Summary...............................................................................................................................3
Introduction:..........................................................................................................................................4
a) An explanation of ABC model and its features:.............................................................................5
b) An explanation of how ABC model aligns with the current goals and strategies of the company.
...........................................................................................................................................................6
i) An identification of the company’s mission and objectives............................................................6
ii) An identification of the company’s corporate strategies...............................................................7
iii) An explanation of how ABC model assist in achieving the company’s strategies.........................8
c) Recommendations.....................................................................................................................9
d) Apart from ABC model suggest one other management accounting tool suitable for your
company and justify it.....................................................................................................................10
Conclusion...........................................................................................................................................12
Refences..............................................................................................................................................14
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Executive Summary:
CSR Limited is an Australian company which offer products which are used in construction
and building. It is listed on the Australian Stock Exchange. The company also has 25% stake
in the Tomago Aluminium Smelter. It is headquartered in Newcastle, New South Wales. The
company also makes regular plans to increase its productivity and profitability. The
company also is planning to set up plants at different locations in Australia.
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Introduction:
This task has examined in regard to the usage of ABC show in the working of the CSR
Limited. The significance and the significance of ABC display has been examined in this
task. This model has numerous highlights which will help the organization in its
development and advancement. The points, goals and the mission of the organization has
been clarified over the long haul. The techniques and the methodologies with the objectives
of the organization are refined has been expressed. The organization has been prescribed
further systems to upgrade its development and improvement. It is imperative for CSR
Limited embraces another administration bookkeeping instrument in its functioning.
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a) An explanation of ABC model and its features:
According to the ABC model the valuing is given to each part of the rendering the CSR
Limited gives. According to the real prerequisite the cost is given to each administration or
the result of the organization. The ABC display helps in change of the optional cost to the
essential cost. It is a procedure of valuing and furthermore helps in controlling the
assignments of usage of the assets and the last cost of the result is made. The ABC model is
usable wherever in the association. Through the guide of valuing of the items, the capacities
also, the organizations which are not productive can be seen and perceived effortlessly. The
assets are additionally appropriated which give higher profitability to the association. It
moreover helps to a great extent in dealing with the generation unit. It helps in evacuating
the non-required expenses which is being looked by the association while doing exercises.
Cost is likewise utilized on the premise of the convenience in the generation of the
organization. The kind of costing which is to a great extent utilized in assembling based
associations is the ABC show. It likewise enhances the fact of the data in lieu of the cost
(Collier, 2015).
Highlights of ABC Model
 The ABC show helps in executing the undertakings in a productive way. It is likewise
the essential identifier of the authoritative administration.
 With the guide of the ABC display the costs can be made effectively with no hindrance.
To it.
 It additionally gives the expanded profitability of the association. It likewise helps in
confronting the rivalry in the present market situation. The workforce additionally is
given a few advantages for their work towards the cost. It gives the workforce to end up
more profitable.
 The evaluating helps in expanding the costing deviation which helps in the target
accomplishing and covering the overhead charges. It likewise helps in cutting the kind of
varied costs.
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b) An explanation of how ABC model aligns with the current goals and strategies of the
company.
i) An identification of the company’s mission and objectives
The undertaking and the target of the organization is to work excitedly to reduce the hazard
what's more, the risk that can be caused to its representatives. This will help in keep up the
wellbeing and the wellbeing of the workers. The need of the organization is the individuals.
The customers and the nearby groups dwelling close it. The point of the organization is to
give safe working environments to its representatives. Its goal is to enhance monetary
maintainability of its specialists. The mission of the organization is to find and lift the life of
the general population by helping them to be fiscally secure with the assistance of offering
them such items and administrations. The point of the organization is to create focused
returns and advance financial extension. The organization objective is to diminish the
working expense to build the benefit edge of the organization. The objective is to make a
protected and feasible future for the general population. The principle object is to shield
from the money related misfortunes (Croce, 2014).
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ii) An identification of the company’s corporate strategies
These methodologies have been examined further. Publicizing is the best system for
advancing an item. The organization is doing mostly two sorts of promoting to be specific
item and institutional promoting. The motivation behind institutional promoting is to hold
the generosity of the organization. The organization utilizes the system of reputation which
is an unpaid type of correspondence. Informal impacts the outline of the individuals. This
methodology is additionally alluded to as concealed deals for the organization. Referral
arranges is one of the productive procedures utilized by the organization. The organization is
had some expertise in certain protection. In this way, these organization allude to each other
whosoever is had practical experience in a specific protection. The organization put
accentuation on the objective markets (Gantchev, 2013). Valuing procedure is exceptionally
helpful as it furnishes client with the administrations equivalent to great esteem. Technique
if business has helped the organization to keep up straightforwardness and the nature of
administrations is additionally made strides. The organization plans the item according to
the requirements of the clients. That implies customization in the approaches should be
possible. Arrangements can be worked according to the necessities of the customers
(Simkin, et. al., 2014).
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iii) An explanation of how ABC model assist in achieving the company’s strategies.
The ABC model of an organization helps in completing the plans of the company and it
helps at a huge level to determine the cost of the product. It also shows all the tasks of the
organization that use the pricing and the resources to make the offering of the goods and the
services as per the requirement. The price is used in a way that the ABC model gives output
according to the cost of the activity (Ubel, et. al., 2013). The ABC model assists to make a
good in a way that the return is excellent and is above the cost incurred to make the goods
and the services. The main motive is to make a product that is liked by the society and the
customers and the cost incurred in the production is also less so that the company is also
benefitted. The making of new types of products is very easy for the company as the ABC
model gives the accurate picture that what will be the cost incurred in the production of the
goods and the services by the CSR Limited. Hence, for a company like CSR limited it is the
best way to make new products and services by the use of ABC model (Gertler, and Karadi,
2015).
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c) Recommendations:
Helps companies to recognize cost and revenue improvement opportunities
The companies follow the policy of repricing of lossmaking relationships of the customers.
This method has replaced the traditional costing method with the modern method of costing.
With the help of this system of costing it has made easy for the company to make
enhancement in the existing system (Warren, and Jones, 2018). Managers and the top-level
management get accurate and reliable information relating to the performance of the
company. The model works for the growth and the development of the company. The CSR
limited company is working to enforce this ABC model in the company (Gertler, and
Karadi, 2015).
It helps in reporting and analysing of costs
This model of ABC helps the manager’s ongoing basis in order to report the cost. This helps
the business to know the costs of the business activities as well as the time spent spend to
calculate the cost of the business activities can be calculated. In customer relationship
department the strategy used of costing is been exhibited. This technique helps to derive the
cost driver rates of the company. This will help in discussing with the clients regarding the
pricing strategies that need to be followed in regards for the new business (Oshima et. al.,
2013).
Estimating cost per time and unit time of the activities
In this practical capacity is estimated instead of theoretical capacity. Managers do not look
for how the time is spending. For estimating the practical capacity there can be various ways
prescribed for this activity. Managers should conduct review for the past activities and that
should be recognised which has a large number of order accomplished without any delay or
has poor quality of employees in the company. If any error has been committed in the
practical theory the technique of ABC will identify the error in time without any delay
(Nguyen, and Aiello, 2013). ABC method recognises the activities in terms of units not in
terms of time. Managers of the company are able to find out the time taken to complete one
unit of activity. This can be obtained through interviews of direct observation. There is no
need to carry out surveys in relation to this in the company. It is helpful in assigning cost to
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the individual clients. This model can be easily updated in case any changes need to be made
in the operations of the business. Continuous use of improvement methods and updated
technology the activity needs less to be performed also with less availability of the resources
(Gertler, and Karadi, 2015).
d) Apart from ABC model suggest one other management accounting tool suitable for
your company and justify it.
Another management tool that can be used by the CSR ltd to enhance the growth and
development of the company is the use of variance analysis in the working of the company
(Nelson, 2015).
It is method used by the company in order to control and at the same time to reduce the cost
of the activities carried in the company. It is a system of general costing which is managed
by the principle which is been laid down. These variance that are been prescribed are
directly or indirectly related to how the is working manner of the company. Efficiency is
based on the variance. High variance indicates higher efficiency and lower efficiency
indicates lower variance. So, the people are rewarded in the company based on the
efficiency they produce in the working of the company (Litman, 2017).
At the time of analysis of performance of the variance, employees of the company are
discussed the queries and the root reason of the problem is made out. The motive finding out
the reasons is that to derive the solution to these problems in the company. There are many
types of variances available with the company these have been stated and discussed in detail
below:
Physical cost variance
This variance can be defined as the actual cost of all the goods and the services used in the
working of the company in order to render various goods and services in the company.
Manageable variance
The variance which is owned and managed by some other person is referred to as
manageable variance.
Unmanageable variance
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The outside factors that affect the working of the company are the unmanageable variances.
The top and the middle level managers have no control over these variances.
By using this management accounting tool, the company will be able to get the actual details
in reference to the working of the company. It will help the company in identifying the costs
that are incurred during rendering services to the customers of the company. This method
helps company to identify its clear view (Martínez, and del Bosque, 2013).
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Conclusion
The CSR Limited is the best building material company in Australia. From the above report
it can be concluded that the ABC model is the best way to determine the prices of the goods
and the services which the CSR Limited offers to the customers. The plans and the decisions
are easy to make as the ABC model gives out the correct picture of the costs which are to be
incurred in the production. The ABC model has been a good tool for the success of the
company. To use this tool the goals and the future plans are made accordingly which
increase and enhance the productivity for the company like the CSR Limited which is
engaged in cost effective products for the customers and is working in a perfect competition
too.
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