University Report: Management Accounting and Decision-Making Process

This report focuses on management accounting principles and their application in decision-making processes within a business context. The report begins by emphasizing the importance of defining a clear goal, which is to increase net profit, return on investment, and cash flow through effective decision-making. It discusses the significance of throughput as a key metric, which is the rate at which the system generates money through sales, and contrasts it with traditional cost-saving approaches. The report details how the principles of "The Goal" can be applied to inventory management and operational expenditure to optimize these areas. Furthermore, it emphasizes the importance of identifying and addressing bottlenecks in the manufacturing process and the role of pre-quality control checks to prevent rework. The report also highlights the crucial role of management accounting in performing relevant cost assessments and providing suggestions for future activities, including the analysis of sales channels, products, services, and marketing activities to determine the most profitable business model. Finally, the report stresses the importance of aligning budgeting decisions with sales history and marketing data, underscoring the role of management accountants in assessing past activities and defining investments for future actions, the report will be distributed via email and the results shall be shared among the employee newsletter.

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student
Name of the University
Authors Note
Course ID

1MANAGEMENT ACCOUNTING
Table of Contents
Memorandum.............................................................................................................................2
References:.................................................................................................................................4

2MANAGEMENT ACCOUNTING
Memorandum
Date:
To: CEO of Pitchers Partners Ltd
Subject: The Goal in decision making process
Defining of goal is considered as the important element. Productivity is regarded as
the work which helps in bringing the organization closer to its goal. It is worth mentioning
that each and every action that fails to bring the company closer to its goal cannot be termed
as productive. The present objective in this memorandum is to implement the principles given
in the book “The Goal” for decision making process. The first and foremost objective of this
memorandum is to increase the net profit of the company through effective decision making
while simultaneously increasing the return on investment and also the cash flow of the
company. The measures for improving the profit is “throughput” which is regarded as the rate
the system with the help of which the system produces money through sales and not with the
help of production.
The principles given in “The Goal” can be implied in decision making through
inventory which represents the total amount of money that is invested in purchasing the
things which is intended to sell. Decisions must also be taken towards the operational
expenditure which represents the money that is spent to turn the inventory in the throughput.
All the three measures can be optimised simultaneously. Saving of cost at each stage does not
lends any support to the goal. Instead, it is important to focus on the throughput rather than
focussing on the cost. To increase the bottleneck throughput it is important to keep the
machine always manned. It is important to perform a pre-quality control check of the
machine as this will help in preventing the rework on items.

3MANAGEMENT ACCOUNTING
The memorandum is aimed at understanding the role of constrains in the company’s
manufacturing procedure and identifying them helps in making it possible to lower their
impact and also yields as the useful tool in measuring as well as controlling the flow of
materials. The most important part of management accounting is to perform the relevant cost
assessment to ascertain the current expenditure and provide suggestions regarding the future
activities. Prior to taking any kind of actions, it is important to explore all the possibilities and
determining the best tactic to increase the profit. This implies that the management of
Pitchers Partners Ltd must assess the different channels of sales, products, service and
marketing activities so that it can take decisions regarding the most profitable business
model. Once the team of management accounting has completed relevant cost analysis, they
can make a better as well as evidence based decision.
Apart from defining the production “goal” also plays an important role in defining the
budgets. The decisions relating to budget should also adhere with the sales history and
marketing database of the company. This is where the management accountants can step
forward and use the goals to assess the previous activities and define the investment for the
future actions.
Conclusively, the memorandum will be distributed through email and the results shall
be shared among the employee newsletter.
Thanks for participation,
Your Executive

4MANAGEMENT ACCOUNTING
References:
Goldratt, E. M., & Cox, J. (2016). The goal: a process of ongoing improvement. Routledge.
Greco, L. M., & Kraimer, M. L. (2019). Goal-setting in the career management process: An
identity theory perspective. Journal of Applied Psychology.