A Report on Cost Efficiency in Managerial Accounting Practices

This report delves into the critical concept of cost efficiency within managerial accounting. It highlights the importance of minimizing costs to maximize profitability and maintain a competitive edge. The report explores various strategies to achieve cost efficiency, including employee training programs, performance monitoring, outsourcing activities, and establishing manufacturing units in cost-effective locations. Several real-world examples, such as Infosys, Hewlett-Packard, Apple, and Adidas, are cited to illustrate how these techniques are implemented. The report emphasizes the significance of consistent cost control and continuous improvement in achieving organizational goals. The conclusion reiterates the value of these methods for businesses aiming to optimize production costs and enhance overall financial performance. References from academic journals are included to support the analysis.

RUNNING HEAD: MANAGERIAL ACCOUNTING 1
Managerial accounting
Cost efficiency

MANAGERIAL ACCOUNTING 2
Introduction:
The goal of each association is to limit the cost incurred in promoting effort created to
build the mindfulness and do publicity of their item. The promoting effort is for amplifying
the number of exposures to decrease cost to all the intended interest group.
Relevance of cost in organization
It is attractive for all organizations to boost their cost productivity with a specific end
goal to carry out most prominent product introduction for a minimum measure of money
contributed. The firm can hold intensity by general cost streamlining and guarantee nonstop
development and advancement (Yazawa and Shakouri 2011). Consistent control usage is
likewise a key achievement factor in ventures for expanding the general skill.
Every business will attempt to enhance his business. Keeping in mind the end goal to
detail appropriate arrangement and dependable choice, he needs to know answers to specific
inquiries, such as,
(a) The greatest benefit which a business can make.
(b) The benefit earned by it is much contrasted with the before years.
(c) Comparison of product offering benefits
(d) Capital invested in crude materials.
(e) The cost of creation and previous year comparison.
(f) Product offering cost must update

MANAGERIAL ACCOUNTING 3
Cost accounting fills in as a valuable apparatus in the hands of the administration toward this
path. By breaking down the cost of generation of each unit, it causes the administration to
know the responses to the above questions.
Methods to achieve cost efficiency:
Training: Companies should check training procedure to make sure that employee is given
proper leadership and aid them in doing the job. Any employee can excel in their field when
he or she is having with correct tools. Investing in the training programme may cost short run
cost for the organization but it will increase profitability in the long-term (Stuebs & Sun
2010). Example: Infosys is big corporate, but it provides its employee training on regular
basis to help them achieve lower cost during product development process. It increases cost
during employment time but helps in reducing overall cost in the long run.
Monitor performance: Monitoring employee on regular basis keep staff productive.
Monitoring is implemented by examining their performance of sales and figures.
Example: Hewlett-Packard adopted this technique to achieve cost efficiency. It proactively
detects problems during production. Then it rapidly identifies causes, and if they are due to
employee negligence immediate action is to be taken, and if the problem is
technical than defects in the software is identified (Ray & Das 2010).
Establishment of manufacturing unit: Establishing manufacturing unit in other
countries helps in which providing cheap raw material and labour which helps in cost
reduction. This technique helps in cost reduction as the country having cheap labour helps a
company to reduce manufacturing cost and become efficient. Example Apple established its
manufacturing plant in China to achieve cost efficiency in product development
and reduce organization cost.

MANAGERIAL ACCOUNTING 4
Outsourcing:
A business organization can also outsource its some of the activity to some other
company or country to achieve cost efficiency. It means like giving out part of the production
by business to other firm to cut its product cost (Michela, Carlotta & Andrea 2012). This
technique is followed by some companies to avail this facility at the lower cost than incurred
originally by the organization, so reduces time and cost both. Example: Adidas has
outsourced most of its primary raw material need from Country mainly Cambodia and
Canada. Both countries are providing raw material supply on contract basis regularly to
Adidas which helped its raw material supply cost and time as well.

MANAGERIAL ACCOUNTING 5
Conclusion:
Cost efficiency helps a company to cut its cost of production by various techniques. It
indirectly helps achieve company’s aim with minimal cost and maximum production.
Monitoring performance, outsourcing, setting up manufacturing plant and training are few of
usual technique used by many organizations to achieve cost efficiency.

MANAGERIAL ACCOUNTING 6
References:
Michela, P., Carlotta, M.C. and Andrea, C., 2012. Organizational change: Business
process reengineering or outsourcing?. Annals of Faculty of Economics, 1(2), pp.277-287.
Ray, S.C. & Das, A., 2010. Distribution of cost and profit efficiency: Evidence from Indian
banking. European Journal of Operational Research, 201(1), pp.297-307.
Stuebs, M. & Sun, L., 2010. Business reputation and labor efficiency, productivity, and
cost. Journal of Business Ethics, 96(2), pp.265-283.
Yazawa, K. & Shakouri, A., 2011. Cost-efficiency trade-off and the design of thermoelectric
power generators. Environmental science & technology, 45(17), pp.7548-7553.