Management Accounting Report: Toyota Automotive Company Analysis

This report delves into the application of management accounting principles within Toyota. It begins by defining management accounting and its importance, contrasting it with financial accounting, and highlighting the various tools and techniques used, such as budgeting, ratio analysis, and variance analysis. The report then explores different costing systems, including expenditure, job costing, and process costing, and their relevance to Toyota's operations. It further examines the activities covered by management accounting reporting, like budget reporting, job costing reporting, and income statements. The core of the report focuses on a comparative analysis of absorption and marginal costing methods using financial data from Toyota, demonstrating how each method impacts profit calculation. The report also discusses the advantages and disadvantages of using budget planning tools for financial control within Toyota. Finally, it concludes by suggesting how management accounting can address Toyota's financial challenges and improve its decision-making processes.

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P.1. Explicate administration accounting and supply the necessary necessitate of various
forms of administration accounting system................................................................................1
P.2. Various activity utilised for administration accounting coverage.......................................3
TASK 2............................................................................................................................................5
P.3. Absorption and marginal cost accounting acting.................................................................5
TASK 3............................................................................................................................................8
P.4. Vantage and disfavour of exploitation preparation implement that can be utilised for fund
control in Toyota company.........................................................................................................8
TASK 4 .........................................................................................................................................10
P.5. Acceptance of administration accounting scheme to response to fiscal problem..............10
REFERENCES..............................................................................................................................13

INTRODUCTION
In this assignment, it reviews about to the different kinds of administration explanation
implement that could be utilised by Toyota corporation in order to effective management of their
operational exercises within the business effectively. Toyota business can utilise different kinds
of budgeting preparation approaches like cash budgeting, capital budgeting etc. in order to set the
desired targets and also can efficiently achieve them. We utilised some financial data of Toyota
automotive business to cost analysis of the firm in effective manner by using marginal costing
approach and absorption costing method. Furthermore, this study shows about advantages and
disadvantages of several kinds of management accounting budget planning tools in order to
sufficient budgeting control in the business in effective manner. Management accounting provide
some tools and techniques which must be effectively utilised by Toyota business in the firm in
order to accomplishment of their financial goals. Ultimately, we will discuss about to some
management accounting tools that can be helpful for Toyota automotive business in order to
better response for their financial problems and barriers in within the organisation in efficient
manner.
TASK 1
P.1. Explicate administration accounting and supply the necessary necessitate of various forms of
administration accounting system
To,
The General Manager of Toyota automotive Company, Japan. Date: 27th February 2018
Sub: Management accounting system acceptance and their importance.
Administration accounting define about the method in which business information is plumbed,
recognised and understood and assessed and connect financial issues and problem and follow
the process to accomplish organisational goals and objectives effectively. It is also concerned
about the cost accounting process in the business (Budding, Grossi and Tagesson, 2014). The
major differences between administration accounting and business accounting is that
information assessed by the administration accounting subordinate the manager of the
institution in order to make effective decision towards accomplishment of financial goals and
objectives of the business. Moreover, cost accounting refers to the information which is
provided to external party in the firm. Management accounting provides guidelines to the
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manager of Toyota automotive from to prepare report of statical and financial data which
fluctuate in the business in day to day process and according to them manage make their
decision. It is the process of preparing report to reach to requirements of the management in
effective manner. Several types of strategy can be applied on Toyota automotive business to
prepare budget reporting, ration analysis, variance analysis, marginal costing etc. all these
approaches could assist Toyota automotive business in order to efficient manage discipline of
standard in which the organisation must follow in respect to manage all aspects of the business
in effective form. Expenditure accounting scheme: Expenditure accounting scheme is used by mostly
manufacturing industry in order to determine their actual costing rate of producing
product and according to this approach, manufacturing cost could be reduced
effectively. This approach describe about to the method in which production and
service provision cost and expenses are computed and assessed on the basis of fixed
expenses, variable expenses and semi variable expenses (McManus, 2011). Above three
expenses are unique in their nature and they have also particular approach to collection
of expenses information in the business. In this approach it could be said that all
expenses are computed in management accounting books with the assistance of specific
method of accounting. Multiple numbers of advantages are presented here, Toyota
automotive corporation manager can easily find out the all expenses which has been
done in the business while production process at the workplace. Toyota manager need
to formulate cost accounting project in which organisational manager could easily find
out all kinds of expenses in automotive company and project will reduce the cost of all
expenses in the firm and also formulate specific adjustment in the process of cost
reduction strategy can be implemented on the business in effective manner. Thus, it can
be stated that several kinds of advantages of Toyota automotive business presented here
in order to reduce all costing of manufacturing products with the help of tools and
techniques of cost reduction in the firm efficiently. Job costing system: Job costing is the process which can be used most of the
manufacturing companies like Toyota automotive corporation in order to computing
proper data about to costing associated with particular product and services in the job
costing approach (Leitner, S., 2013). The job costing information could be needed in
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respect to submit a cost data to their customers into a contract where costs are give back.
This data assessment also necessary for Toyota automotive business in order to
ascertaining the quality of firm's assuming system which should be in given criteria and
that give the business effective profitability in the industry effectively. There are several
kinds of customised products are being acquired by Toyota automotive business at the
workplace and they all need give a specific cost to each particular customised product
and services in the business in effective manner (Qu, Cooper and Ezzamel, 2010).
Manager of Toyota Company can maintain a job costing accounting book in which they
can gather each custom product line costing and other several expenses as well in order
to classification of costing of each product line and with the help of tools they can
reduce costing of each product at the workplace.
 Process costing: This is the process which can be used majorly by manufacturing
companies in the country like Toyota Company. Process costing is being used where
there are large volumes of manufacturing process being done on a particular
homogeneous product and services. It is helpful where each product volume could not
make differentiate from each other in mass production. Cost of each product
manufacturing must be same assumed as other products are being produced in the
company. In this approach cost of each product can be amassed during a given time
period. This approach can be used by Toyota Automotive company in order to prepare a
proper process costing methodology in the business in order to give a proper costing to
each customised product line in the enterprise effectively.
P.2. Various activity utilised for administration accounting coverage
Administration accounting reporting can be useful in order to operate each financial
function in the business in effective manner (B Douglas Clinton CMA, 2012). Toyota
Automotive Company required to implementation of various kinds of management accounting
reporting system at management level at the workplace in order to appropriate reporting can be
prepared by management accounting offices of Toyota business. With the assistance of these
approaches Toyota Automotive corporation can improve the financial performances of the firm
and easily can meet to their desired goals and objective in the business efficiently.
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 Budget reporting: This is the financial status in the company. There are several kinds of
incomes and expenses are being generated in the business on regular basis. Appropriate
financial information in collected and documented in the financial accounting book
effectively and then prepare a budget according to the gathered data. Budget reporting is
often referred to the financial report of the company as well. Toyota Automotive
business's budget reporting have various parts which grounded on the financial
requirements and also data availability in the corporation as well. In the budget reporting
generate section covers the general income involved which is being done in the firm
while manufacturing process. Moreover, fixed and variable expenses are necessary to be
involved in the budget reporting process in order to run Toyota Automotive firm in
properly with its full potential in the business as well. It also provides proper information
to company's owner about major financial changes in the firm which can furnish
appropriate benefits to the company (Harris and Mongiello, 2012). Apart from this
budget reporting provides the value of the future prediction about Toyota Automotive
corporation's profit gain as well. Usually, This is prepared by financial experts of the
company on yearly basis. But large manufacturing company like Toyota Automotive
firm need to prepare it on quarterly basis in order to make it easy to formulate for the
company in order to effective cost reduction can be made in the business with the help of
budget reporting tools and mechanism. Job costing reporting: Job cost reporting can furnish critical data about the recent
position of job and could assist to estimation how you would complete every job form in
order to effective profitability generation in the business. If you are operating several
activities in the business then it is difficult to effectively manage them in the business.
You can easily recognise omissions and job troubled before it is getting late and with the
assistance of its tools and techniques (Abdel-Kader, ed., 2011). The management
accounting officer of Toyota Automotive Company can easily address them efficiently in
the firm. There might be several jobs in progress so that there is still strong possibility to
cost assigned by accounting officer in the firm which is incorrect. Job costing reporting
furnish detailed information about every job in the firm so that accounting officer of
Toyota Automotive business can easily apportion each product line cost in the firm
directly to the job. Job cost reporting could assist Toyota Automotive firm to ascertain
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every job costing product line in each manufacture product and efficiently control them
as well in order to control the over range of product line in the business effectively.
 Income statement: This is a financial statement which furnish the information about to
financial performance of the company in a specific time period. With the help of
financial statements Toyota Automotive firm can properly assessed of their financial
performance in the given time period like they can assess revenue generation of the
business in effective manner also examined the information about to expenses on
operation and non-operational exercises in the firm effectively. Financial statements also
review about new profit and losses of Toyota Automotive company effectively in a
particular financial duration of the corporation (Zainun Tuanmat and Smith, 2011).
There is no necessity of standard templates for showing the financial information of the
company. Income statements involves some elements like revenue, tax expenses, profit
and loss account, total comprehensive income etc. Toyota Automotive Company can
prepare a proper income statement with the help of its tools in context of easily identify
the financial gain and losses and according to them effectively profitable decision could
be made.
TASK 2
P.3. Absorption and marginal cost accounting acting
Table.1. Marginal costing process in Toyota Automotive Company
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Table: 2. Absorption costing method in Toyota Automotive Company
In above given table we have analyses about Toyota automotive company's financial
data. In this company cost of operational activities can be analysed with the help of absorption
and marginal both costing method in the company. The new profit showing in the marginal
costing is 292000 and this value is less than absorption costing method. In the absorption costing
method the net profit value showing which is 314846 which more than marginal new profit
values. So from the above give value of new profit, it could be stated that marginal costing is
making less revenue than absorption costing method. Marginal costing can be useful where the
total costa of manufacturing in the company for making one more additional portion of a product
in order to examination of marginal costing in the business effectively (France, 2010). It is
assessed where the company has been reached to the break even point in the company efficiently.
The fixed cost is already added in the account for specific manufactured products in the firm.
They only need to add variable cost into the account for find out proper marginal costing analysis
in Toyota automotive corporation. Marginal costing is an assessment of additional advantages if
an action in the business as compare to the additional cost occurred by the same exercises in the
firm. Marginal costing analysis proper decision making tool and technique which can assist
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Toyota automotive firm in terms of raise profitability of the business sufficiently. Marginal
costing is reviewing more net profitability than absorption costing method because of some of
fixed variable cost is added into the account of marginal costing method. Moreover, absorption
costing process is a managerial accounting costing approach which all expensing costs in
included which made in the business while producing a product in the business effectively.
Several direct costs are taken into account which is wages and salaries of employees, raw
material cost in manufacturing a product and some other overhead costing in the business like
utility cost utilising in producing a product. Absorption costing method includes all those cost
which is directly associated with manufacturing a good at the workplace. Toyota automotive
firm each product involves some fixed and variable costs into account and these costs are not
considered as expenses when company pays for them (Modell, 2014.).
They are considered as remain inventory in the business and they been taken into account
when inventory is sold in the market. Various positive and negative portions are associated with
both kind of costing analysis approach. With the assistance of both methods' administration
accounting official of Toyota automotive enterprise could easy figure out the growth of the
enterprise properly and then appropriate decision can be made by them in order to improvement
of financial performances of the firm efficiently. In the proceeding of marginal cost accounting,
one action could be recognised which is fixed disbursal is not taking into account immediately
while manufacturing process of Toyota firm. Fixed cost may occur in each production firm and
Toyota automotive Company need to cover these costing in the enterprise efficiently. It can be
stated that same costing system is appropriate for Toyota corporation in order to better financial
management in the enterprise. While expenses are added into account then that make wide level
contribution into the production process of the business. With the assistance of both techniques
business can easily find out the profitability and loss of Toyota automotive firm efficiently
(Macintosh and Quattrone 2010). It can be concluded that Toyota firm must implement these
strategies on their business in respect of determination of their disbursal and revenue within the
firm and terminated disbursal sections could be find out easy and with the assistance of
management accounting instrument and method, administration accounting official of Toyota
automotive enterprise could reduce the cost of production at the workplace. They can better
address the financial issues of this diem effectively with the assistance of these mechanisms
efficiently.
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TASK 3
P.4. Vantage and disfavour of exploitation preparation implement that can be utilised for fund
control in Toyota company
There are several kinds of management accounting tools and techniques available which
can be used in terms of effective management and control on budget at the workplace. Various
types of planning tools could be implemented on Toyota automotive business in order to
resolution of their financial issues in more effective manner (Bennett, Schaltegger and
Zvezdov,2013). These all planning tools have some advantage and disadvantages. Variety of
planning tools are available here in respect of formulation of efficient budgeting control at
Toyota automotive company's workplace.
Cash budgeting: Cash budgeting is a process in which approximation of cash inflow and
outflow is taken into the account in a business during a given financial time period. This
approach can be used by Toyota automotive firm to determination of how much volume of cash
available here for effective run the business in the industry. Toyota automotive companies can
utilisation of sales and forecasting strategy in order to formulate cash budgeting and apart from
this they can assume the expenses and account receivable in the business as well while preparing
cash budgeting in the firm. There are some vantage and disfavour of currency budgeting is as
below:
Advantages:
 Cash budgeting planning helps the management of the firm to take their focus on
significant matters which must be taken in appropriate form to resolve financial issues
efficiently. It assists the manager of the firm to think forwards in order to effective management of
financial resources at the workplace effectively (.Hilton and Platt, 2013).
Disadvantages:
 Major disfavour of currency program is that it is wholly based on the approximation of
cash flow in the business while preparing it so several times approximate value difficult
to meet in the business. Another main disadvantage is that it might take long time to accomplishment of their
desired target.
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Fixed budget: Fixed budget is a management accounting planning tools which remains
unchanged whether sales and other exercises in the business raised and decreased. This is also
called a statical budgeting planning tool (Ramljak and Rogošić, 2012). As mentioned above in
never get changed so that disbursal in the business also never change while revenue of the
business fluctuate frequently. This is used when company in monopoly situation in which their
customer have no other option to chose other substitute of it.
Advantages:
 The major advantages of fixed budgeting is that it is easy to implement on the business
because of static budget no need for frequent update in this budget planning tool. Fixed budgeting furnish strong value insight the company about cost and profitability
while variance analysis is being done in the business effectively.
Disadvantages:
 The greatest disadvantage of fixed budgeting is that it's value always remain same and
never get changed (Burritt and Schaltegger, 2010.). This factor negative effect the
company profitability in the business. Fixed budgeting is depended on last few years values so that new business can
constituted in more challenging manner.
Zero based budgeting: In zero based budgeting process all disbursals should be justified
for every new financial period of the business. This is the budgeting process which start from
zero base in the firm and every utility in the corporation must be examined with the help of
requirements and costs needs in the firm. Toyota company can apply it on their business in order
to effective budgeting planning.
Advantages:
 In zero based budgeting make each and every department in the business cost is
calculated on every operational activities of the firm. This budgeting process assist proper allotment of financial resources as departmental
wise so that it does not need historical data it is based in the actual data in the firm.
Disadvantages:
 Zero base budgeting is a very lengthy process for each form so that it takes times to
formulation in the business so that it consumes quality of times of the company.
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 It needs large numbers of highly efficient employees in order to preparation of zero based
budgeting and many companies does not have time to prepare it properly within the firm.
Capital budgeting method: Capital budgeting is the process in which a company
ascertain and examine potential disbursal or some investment which is large in the business.
These disbursals and investments included some projects of the business such as building a new
plant and investment in long terms business in several markets (DRURY, 2013). Toyota business
can apply capital budgeting process on their business to resolve financial problems effectively.
Advantages:
 Capital budgeting assist the business to easily identify the investment alternative in which
the company can gain more effective yield from the market. It is also helpful tools for the business in order to formulate long terms investment
planning for the business in efficient form.
Disadvantages:
 The major disadvantage of capital budgeting process is that it is long terms investment
process and it is totally irreversible investment in nature (Lukka and Modell, 2010).
 This mechanism it totally based on the approximation and estimation so that its future
return always remain uncertain within the firm efficiently.
TASK 4
P.5. Acceptance of administration accounting scheme to response to fiscal problem
Most of the businesses faces several financial issues in the business cycle and
management accounting is the system which furnish several tools and techniques by which each
corporation can address their financial problems in effective form (Ward, 2012). Toyota
automotive company also can implement some management accounting tools in the business in
order to better response of each financial problem within the business efficiently. Key performance indicator: KPI is a tool which can be used for measuring financial
values and it is also demonstrated how effective business are running in the industry in
terms of accomplishment of their desired goals and key objectives (Bebbington and
Thomson, 2013). Toyota company utilise KPI tools at several stages in the firm in order
to evaluation of their achieving targets at top level. High level of KPI tools assist the
organisation to identify the overall executions of the organisation and low level of KPI
tool evaluate the departmental performances such as sales and marketing and call centre
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etc. with the help of marketing group which will help of marketing activities in the firm
in order to raise their sales and total revenue with effectiveness. Human resource
management would look at employees communication process, employee turnover and
time to time fill required post give appropriate performance in the industry. Toyota
automotive are currently facing lack of capital in the business so that they need to
utilisation of KPI tool by which they can improve their sales exercises and promotional
activities. So their sales will raise and increase revenue generation within the industry
more efficiently. Balanced score card: This is totally management approach which is searching for a
strategic big picture to an organisational goals and key objectives. It also helpful to select
the right approach to examine of their strategic goals in the business effectively (Van der
Stede, 2011). Balanced score card furnish more detailed information to manager of
Toyota automotive company through financial assessment techniques and using some
metrics to determine the performance fields in which customer feel more satisfaction
towards product and services provided by Toyota firm. According to this method, an
efficient strategic goals can be set up and also assess the performance of the company
within past few years in order to know about how many targets and goals has been
achieved by Toyota corporation. With the help of these tools Toyota firm can have
analysis of customers in order to identify customer satisfaction level and also their
retention level in the market by company's product and services according to the
information accounting officer of Toyota business can set effective targets within the firm
and also make effort to improvement in their performances to resolve each financial
issues within the firm effectively (Renz and Herman, eds., 2016).
 Financial governance: Financial governance is a process which provides some rules and
regulation by regulators of the company to make sure about all financial activities and
process are governed well and properly in the firm. A big section of financial governance
is that business's reporting ability which involves each thing in under the control of
regulator, to method of workflows and financial control as well (Soin and Collier, 2013).
Usually, everything which play a company's ability to be amenable with restrictive
counselling. Moreover, if a particular person make any mistake in the firm which being
cause of large financial falling within the firm so that those particular person is
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responsible for the all financial losses within the firm and also for poor financial
performances in the business. Before any projection implementation in the business,
management accounting professional of Toyota automotive business must evaluate its
positive and negative part in the corporation and then take proper action to
implementation of projection in the business in successful way. These activities within
the firm decrease arisen of financial issues within the firm effectively and better response
for those financial issues at the workplace as well in efficient manner.
CONCLUSION
In this investigation, it is concluded that management accounting is most essential tool
for Toyota automotive business in order to better management of finance in the business in
effective manner. Moreover, it is also concluded that there are various ways by which Toyota
automotive corporation can identify their each financial performance at regular basis and
according to tools and mechanism of management accounting, accounting officer of the firm can
take relevant action in order to prepare a proper budgeting within the business. This report
concludes about to various advantage and disadvantages of different planning tools of
management accounting to effective budgeting control within the corporation. Ultimately, this is
also concluded that there are some management accounting systems like KPI method. Financial
governance which can be used in the firm in order to better response for financial issues within
the firm effectively.
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