Project Report: Management Accounting - Value Chain and Cost Analysis

This project report delves into management accounting, focusing on value chain analysis and cost estimation. Part 1 presents calculations of work in process and finished goods, along with manufacturing cost calculations. Part 2 introduces the value chain concept, defining its segments (inbound logistics, operations, outbound logistics, marketing, services) and purpose. The report emphasizes how value chain analysis helps companies reduce costs by identifying and managing the value of products and services. It explores the significance of primary and secondary activities, cost drivers, and opportunities for cost reduction within the value chain. The report references key academic sources to support its analysis and conclusions.

Running Head: Management accounting
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Project Report: Management Accounting

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Contents
Part 1.................................................................................................................................3
Part 2.................................................................................................................................4
Introduction...................................................................................................................4
Value chain...................................................................................................................4
Segment of value chain.................................................................................................6
Purpose of value chain..................................................................................................8
Conclusion....................................................................................................................8
References.........................................................................................................................9

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Part 1:
calculation of the work in process
Balance c/d 35000
Finished goods (Transfer from finished goods
ledger)
30500
0
Direct material used 80000 Balance c/d (Bal fig)
13000
0
Direct Labour
16000
0
Manufacturing OH
16000
0
43500
0
43500
0
calculation of the finished goods
Balance c/d 55000 COGS
30000
0
WIP (Bal fig)
30500
0 Balance c/d 60000
36000
0
36000
0
Working note:
Calculation of manufacturing
cost (80000+60000)*0.4/0.6
Cost of goods sold 420000-(420000*0.4/1.4)

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Part 2:
Introduction:
This report depicts the user about the concept of value chain which could be analyzed
through investigating over various concepts of the value chain. Basically, in this report, a
statement of value chain has been analyzed and through that various factors of value chain
has also been evaluated. In this report, concept of value chain, cost estimation in the
company, segment of value chain and the value chain’s main purpose has been investigated.
Value chain:
It is a universal concept that defame over diverse activities and the operations of a
company which is basically used by the companies to maintain, deliver and manufacture the
products and services (Miller and Mork, 2013). This helps the company to maintain a good
competitive level. Value chain assists a company in reducing the cost level through
identifying and managing the value of product and services of the company. In the concept of
value chain analysis, it is crucial for a company to evaluate the market, production
identification and provision analysis for a better outcome of value chain. Research of value
chain is mainly developed by the organizations to investigate the position and performance of
organization and it also manages a good companionship among diverse financial and non
financial aspects of a company (Fayard et al, 2012).
Usually, it is examined that the concept of value chain study is a framework. Value
chain is a management style which mainly focuses over the business and real worth of it.
Value chain prompts the employee and the team to accomplish their allocated task accurately
and it also shows its concern over the environment and organization’s culture.
This analysis is relatively more useful for every organization to manage and maintain
the whole wherewithal of the business and put them in such a way that appropriate operation
of least resources could also be done (Funk et al, 2010). According to this study, it has been
analyzed that value chain is very important in an organization as it manages all the related
factor of the company.
Value chain is a management style which mainly focuses over the business and real worth
of it. Value chain prompts the employee and the team to accomplish their allocated task
accurately and it also concern over the environment and organization’s culture (Monczka et

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al, 2015). According to this study, it has been analyzed that the concept and principles of
value chain could approximate the cost of which is associated with a business by using the
below process:
a. Investigate over the primary activities and secondary activities of the
organization:
The analysis of value chain evaluates the diverse figures and the information of the
organization. The information of the company is analyzed through primary and
secondary both the ways to investigate the enhanced result of the organization (Miller
and Jones, 2010). Value chain managers are requisite to make a better choice about
the various activities after carrying the finest work and the greatest process should be
used to distribute the work.
b. Ascertain the significance and cost of every action of the firm:
The total cost of every product and services is different form each other and thus it is
required by the managers to analyze the cost of each activity. Value chain analysis
helps the management to identify the changes and difference in the cost. The cost
which occurred most of the time must be looked firstly by the management team of
the company.
c. Analyze the cost drivers for each activity:
It is requisite for the administration to investigate the cost driver of entire activities
and the cost to evaluate the improved result about the organization. For instance, the
labour cost should be allocated on the basis of the labour hour in order to make it
simple for the administrator to categorize the unit per cost and total cost perfectly.
d. Recognize and look the links among all the activities:
Further, company must analyze and make a better decision about the relationship
between diverse costs in order to maintain the way of cost reduction (Gereffin and
Sturgeon, 2013). The recognition between the performance and the price would assist
the organization to appreciate the development which could be done to diminish the
cost level of the company.
e. Analyze the opportunities to reduce the level of the cost:

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Lastly, administers and the organization which manages the value management,
analyzes over the various opportunities and assist the company to choose the best
opportunity and apply that in the company to make a good conclusion. It would assist
the organization to diminish the cost level and through it, the profitability level of the
company would enhance.
According to this procedure, it has been found that the manger of value chain
department should be updated and should be of inventiveness nature in order to manage the
opportunities which could be gripped at the perfect timing by him or her.
Segment of value chain:
Value chain assists a company into reducing the cost level through identifying and
managing the value of product and services of the company. According to the study of value
chain segment, it has been found that chiefly the analysis of value chain has been separated
by the organizations according to the various primary and secondary activities. The activities
and the segment of the value chain have been given below:
(Hollensen, 2015)
According to the above chart, it has been found that through using the above segment,
the process of value chain is done in a business. The details and explanation of the above
segments has been given below to understand it briefly:

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Inbound logistics:
Inbound logistic is the primary activities which manages the entire activities of the
company in a perfect manner. Inbound logistic look over the process of managing the entire
activities of purchasing raw material and keep it into the warehouses.
Operations:
Operation is the primary activities which manages the entire activities of
manufacturing of the company in a perfect manner. Operations look over the process of
managing and manufacturing the products (Johnson and Templar, 2011).
Outbound logistics:
Outbound logistic is the primary activities which manages the entire activities of the
company in a perfect manner. Outbound logistic looks over the process of distributing the
finished goods in the market.
Marketing and sales:
Marketing and sales is the primary activities which manages the entire activities of the
company of promoting the products and services in a perfect manner.
Services:
Services are the primary activities which manages the entire activities of the company
in a perfect manner. It assists the company to offer the best of the services.
Firm infrastructure:
Inbound logistic is the secondary activities which manages the infrastructure of the
company in a perfect manner (Johnson, 2014).
Technology:
Technology is the secondary activities which manages the new technology of the
company in a perfect manner.
Procurement:
Procurement is the secondary activities which manages the infrastructure of the
company in a perfect manner.
Human resource management:

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Human resource management is the secondary activities which manages the process
and the functions of the human resource management of the company in a perfect manner
(Gereffi and Frederick, 2010).
Purpose of value chain:
Value chain analysis over Hawker Siddeley has been analyzed to analyze the main
activity and the purpose of value chain in the company. Through the investigation over the
company, it has been analyzed that the organization has used the investigation of the value
chain to administer and control over the position and the performance of the organization.
The annual report of the organization depict that it has been analyzed that it is very
easy for the organizations to sustain the figures on the basis of the value chain analysis in
order to analyze that how much impact it puts over the performance and the activities of the
company (Centi, Quadrelli and Perathoner, 2013). The annual report of the company depict
that the operations and the activities of the company has been improved a lot after the
implementation of value chain analysis. More, it has been found that the various new
decisions have been taken by the company after this analysis which is helping the company to
manage and administer the new opportunities as well as it is also helping the company to
reduce the level of the cost (Baldwin and Venables, 2010). Through the value chain analysis,
it becomes easy for the company to achieve the competitive advantages.
Through the study, it has been found that the value chain department of the comapny
looks over all the activities and manages the process of the company in a perfect manner. The
process of the company has also been improved.
Conclusion:
According to this study, to conclude, value chain management process helps the
company to mange and administers the process and the entire activities of the company in a
proper manner. This depict that the value chain must be implemented by every company to
manage the activities of the company.

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References:
Baldwin, R. and Venables, A.J., 2010. Relocating the value chain: off-shoring and
agglomeration in the global economy.
Centi, G., Quadrelli, E.A. and Perathoner, S., 2013. Catalysis for CO 2 conversion: a key
technology for rapid introduction of renewable energy in the value chain of chemical
industries. Energy & Environmental Science, 6(6), pp.1711-1731.
Fayard, D., Lee, L.S., Leitch, R.A. and Kettinger, W.J., 2012. Effect of internal cost
management, information systems integration, and absorptive capacity on inter-
organizational cost management in supply chains. Accounting, Organizations and Society,
37(3), pp.168-187.
Funk, C.A., Arthurs, J.D., Treviño, L.J. and Joireman, J., 2010. Consumer animosity in the
global value chain: The effect of international production shifts on willingness to purchase
hybrid products. Journal of International Business Studies, 41(4), pp.639-651.
Gereffi, G. and Frederick, S., 2010. The global apparel value chain, trade and the crisis:
challenges and opportunities for developing countries.
Gereffi, G. and Sturgeon, T., 2013. Global value chain-oriented industrial policy: the role of
emerging economies. Global value chains in a changing world.
Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.
Johnson, M. and Templar, S., 2011. The relationships between supply chain and firm
performance: the development and testing of a unified proxy. International Journal of
Physical Distribution & Logistics Management, 41(2), pp.88-103.
Johnson, P.F., 2014. Purchasing and supply management. McGraw-Hill Higher Education.
Miller, C. and Jones, L., 2010. Agricultural value chain finance: Tools and lessons. Food and
Agriculture Organization of the United Nations and Practical Action Pub..
Miller, H.G. and Mork, P., 2013. From data to decisions: a value chain for big data. IT
Professional, 15(1), pp.57-59.
Monczka, R.M., Handfield, R.B., Giunipero, L.C. and Patterson, J.L., 2015. Purchasing and
supply chain management. Cengage Learning.