Managerial Accounting Systems and Decision-Making in Global Companies

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Managerial Accounting
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Abstract
By the usage, various structures of the board accounting report have been shown infront
of the association the board for examining such systems and choose better decisions for
the energy of the association similarly as various business-related activities which might
be noteworthy for considering. The report of this is made subject to MA systems and by
taking such structures by the journal article.In the given article an association is given who
is busy with amassing at the widespread level and another association taken for the
gained outcome from each journal article for makingcomparison was taken a bits of dress
affiliation which is furthermore arranged in the UK. In the wake of evaluating all aspects of
the two journals by then give proposals about the complete and assignment of MAS in
forceful business divisions.
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Contents
Abstract...........................................................................................................................................................2
Introduction.....................................................................................................................................................4
Question 1......................................................................................................................................................5
Question 2......................................................................................................................................................6
Question 3....................................................................................................................................................10
Question 4....................................................................................................................................................12
Conclusion....................................................................................................................................................14
References...................................................................................................................................................15
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Introduction
In the competitive world the scope of the managerial accounting system is rising inspite of
other techniques (i.e. Value chain analysis, TQM, JIT and Balanced Scorecard etc,)that
are already present and management of the companies are using to take decisions.
Choosing best technique is the first step towards the success of organization. And the
most important function in any organization is taking decision, one correct decision will
take the organization to the greater heights and vice-versa. As the future is uncertain, so
the need of managerial accounting system raised and it works in preparing the managerial
reports which are related to the day-to-day operations, that will help the management in
taking decision for both short or long-term. In the world of technology only taking decisions
are not enough so managerial accounting is added with the technology, now it becomes
technology based managerial accounting that will help in reducing the time. By connecting
the MAS to the IT, it becomes centralised processed system.
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Question 1
Solution:
Examples of various types of techniques or methods mentioned in the case:
a. ABC technique- ABC means Activity based costing technique. This tool is used by the
business organizations so as to realize the best technique of cost accountancy for the
allocation cost according to the activity (Watts, et., al., 2014). Actually, ABC is a technique
in which overhead and other indirect costs are allocated to the service or the product to
which it is associated with. There are several benefits of using ABC technique like this
helps the managers in eliminating the cost which are not relevant to the activity and also
helps in reducing the cost, it is also helpful for know which product or department is more
beneficial but there is huge cost incurred in implementing ABC. This technique is widely
used by Fortune-500 companies i.e. 51% (Watts, et., al., 2014).
b. ABM (Activity based management)- It is a management system in which the management
of the company is finding the loopholes in the business from where the money of business
is going waste, this technique analyses the total cost incurred recruiting employees and
equipment of the organization and also keep track on the overheads and any other type of
cost which is required to be allocated to the particular activity so that the business
improves the Quality of the product and eliminate the mistake. As a result, the business
becomes profitable. Implementing ABM is less costly but difficult to understand for the
employees. This technique is used by the 18% of the fortune-500 companies (Watts, et.,
al., 2014).
c. TQM (Total Quality Management)- This is an ongoing process for finding and eliminating
the errors which occurred at the time of manufacturing and better-quality customer
satisfaction and also provides training to the employee so as to speed up the work (Watts,
et., al., 2014). The main focus of the TQM is the complete satisfaction of the customers so
for the satisfaction of the customer it is necessary that quality of the product is best but not
on the cost control of the product. This technique is also mostly used by the organizations
but less than the ABC technique and ABM techniques. And now it is a part of the
management accounting System.
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Question 2
i. Management accounting system is relevant for the modern organizations because the
scope of MAS is very huge. Management accounting system works as per the needs of
the organizations and is also provides material information which helps in taking the
decision so this system work in the direction of both the operational as well as strategic
decision. The information that is provided in this system is relevant for both the internal as
well as external users.
First aspect of the Management account system is taking the strategic decisions and that
is very difficult in the competitive world because the competition is increasing and so the
pressure from the side of the shareholders also increases. Shareholders wants to earn
maximum return from the capital they invested in the business in the form of dividend and
second thing that shareholders want is that the rise in the price of the share. And second
aspect of the management accounting system is operational work management, as this
system provides all the relevant information for the proper functioning of the operations in
the organizations (Jones, and Dugdale 2012). The MAS is required at all the levels of the
Organization i.e. whether top level, middle level or the lower level because decisions are
taken at all these levels and for taking the decision information is required and that
information is provided by the MAS.
At the top-level decision are strategic where as at the lower level decisions are related to
operational level decisions. So, every organization wants to implement the system which
provides more information(Watts, et., al., 2014).
Example- Company-‘A’ is a large manufacturing company and is come in the top 10 rank
for its gross sales amount and the capitalisation and is physically present in twenty-seven
countries and selling their products in more than hundred countries. The company
centralised its management control at headquarter so that the decisions are taken at the
global headquarter (i.e. at east coast of the US and religious biasness is avoided. At that
time Company- ‘A’ surrounded by high level of competition, so company established some
of the strategic plan so that they achieve production efficiency and lead of
technology(Jones, and Dugdale, 2012). So as continued to be in the top 10company
acquired all those firms which are usingmodern high- technology. Every new firm takes the
company to the next level oh heights because that new firms are using modern
management of accounting and this improves the performance of the operational
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department, also at that time company also implemented some new Systems Analysis and
program development software (i.e. SAP R/3). This software includes financials and
controlling, customer- resource management, supply chain management etc.
After implementing this software company marked a one-year revolutionary. The head
office controls all the strategic level decisions, as every department operate freely with
respect to decisions that are taken in relation of operations. And senior management use
this system to rely on the external information. While in the middle management use this
for making tactical decisions.
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ii. Finding from 1st Journal Article
This Journal article demonstrated the various types of management accounting
techniquethat the business world is using like TQM, ABC technique, Balanced-scorecard.
The problems facing while using these techniques and implementations of the modern
accounting management techniques. Earlier more than 51% fortune-500 companiesuse
the ABC techniqueand approx. 18% companies use ABM technique and others use either
TQM or the Balance score card. ABC technique determines the cost is as per the activity
and overheads are also allocated to the department or service. So, ABC is only focussing
on the cost reduction, but the company some technique for the customer satisfaction, so
this is very complex method (Jones, and Dugdale 2012). So, the need of new software
arises where all the techniques are implemented together that all the decisions can be
taken at one time. After implementing the modern management accounting system, the
performance of the companies increased and still decisions are taken by the top-level
management but now it become easy for the companies to consider the external
information to come on the decision (Jones, and Dugdale 2012). The operational level now
able to meet there KPI (key performance indicators. The MAS is connected with the
technology and now this becomes centralized. All the data of the company is store at the
server, so there is more transparency in the system and the decision are taken without
biasness. This also helps in knowing previous records of the company and the
shareholders of the company can easily access the information (Jones, and Dugdale
2012).
Findings from second article journal
The second article Journal is based on how the management accounting technique in the
companies. The problems facing while using these techniques and implementations of the
modern accounting management techniques. The focus of the article is on the use of ABC
technique. Unlike the traditional costing system, activity-based costing is also focussing on
the efficient utilization of the resources and then assigned the cost on the basis of the
activities. This method is the difficult to understand for the employees. ABC identifies the
relationship between the cost and the activity. And that helps the manager in taking the
decision like which department is doing well and which product gives more profit
(Graves,2001).
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There is some similarity in both the journal articles that both are related to the
implementing the management accounting techniques and impact after implementing
these techniques. The 1st journal is about all the techniques that are in the management
accounting system and effects after connecting the MAS to the technology whereas the 2 nd
article is only about the ABC technique. How to reduce the cost and how decisions are
taken at the department level and implementation of the ABC technique. When companies
connected the MAS to the IT the business goes to the new heights. Problems that are
come in taking the decisions are now resolved and this help the companies for the
success (Watts, et., al., 2014).
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Question 3
Management accounting system is a system of accounting which involves the process of
making and providing Important Financial and statistical Importance to Business Managers
which helps them to make Effective Decisions. In today’s Competative and Uncertain
business environment Management accounting system plays a very important role in the
Organisation. Management accounting system not Only Helps Managers in Taking
Business Related decisions but also helps in Increasing Efficiency of Employees.
Management Accounting System helps the organisation in Preparation of Business Plans,
Measurement of Performance, and Helps in Increasing Efficiency of Business and also
helps in Maximisation of Profits (Smallbusiness, 2019).
Management Accounting System Helps the Managers in Taking Effective Decisions which
are Very Important for the Organisation. Generally Top Level Managers of the
Organisation has to take a number of decisions like decisions related to sales, Decisions
related to Planning, controlling of Work and for all these types of Decisions top Level
Management Requires Exact data which can be calculated only with the help of
Management Accounting System Techniques. Management accounting system
Information is used for taking High Quality Decisions in the Organization. Management
accounting System helps to solve the Business Related Information by Applying
Techniques like Total Quality Management, Financial Planning Techniques.
Management accounting system helps to identifying the Poor performance Areas in the
organisation. Generally there are many Departments in the organisation and for the Proper
Running, coordination between these Departments is necessary. If there is lack in some
Areas then Organisation will not be able to achieve its Desired Objectives. Management
accounting Techniques helps the Managers in not only finding the Lack in the organization
but also Helps in Taking Corrective Decisions to solve in Errors(Cloutier,,Felusiak,2015)
Management accounting system is a unbiased System for Performance Evaluation which
means it Gives Unbiased and Error Free Decisions to Management. Management
accounting System helps the managers in Identification of Business problem by Analysing
the Market Conditions and then Taking Corrective Measures to solve those Business
Problems. In an Organisation There are large number of Employees who are working at
different level of Organisation and It is Important for the Management to analysis the
Performance of all the Employees who are Working at Different Levels and This
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Evaluation can be Done only With the help of Management Accounting system Tools and
techniques.
Management accounting system helps to adapt changes in Business by analysing the
market conditions. It is a true fact that business environment is considered as Complex
and Uncertain which means need for changes can arise anytime in the organization. And
In some cases changes are Very Important for the business. Management accounting
helps the Management toadapt changes in an Easy Manner. If an Organisation is using
Management Accounting system in his Organisation Business Changes will not affect the
Performance because Corrective Measures can be taken by the Managers with the Help
of Management Accounting system (Otley 2016)
Management accounting system helps in Improving efficiency in the organization by
reducing the cost of products and increasing profits of the company. Management
accounting system helps in dividing the work among different Employees of the
Organisation. Management accounting system not only helps in allocating the Work to
employees but also helps in reducing the time period of Production cycle, selling and
distribution Cycle. Management accounting system Helps the Managers to respond quickly
to Different market Conditions.
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Question 4
1 In the first Article Case study of Company A isexplained along with use of Management
Accounting System. Decisions Plays an important role in the organization. If the Right
Decisions are not taken at Right point of time Then it may lead to loss in the
Organisation.In Today’s time large Number of Accounting options are Available to a
modern Firm and it is Completely Dependent on the Top Level Management of theFirm to
Apply these Management accounting options in the Organisation because Selection of
Inappropriate system may result in Detrimental Effectson its Strategic and Operational
Functioning. In this Particular case study Company A is given which a physical Presence
in has more than 27 Countries .Head office of Company A is Located in US but its
Regional and Subregional Offices are situated in Melbourne. A Research data is given
which shows that Company ais listed in Top 10 Market Capitalisation and Gross sales
Companies.
The Main Focus of Company a Was on Global Decision making Process. Company a Has
Faced Highly Competitive rivals. A Strategic Plan was also Developed By Company A to
use the Technology in Its Production and this Plans Helps in Increasing Efficiency of
Company A. Strategic direction of Company A was very strong as Company is acquiring
new High technology Firms in his Industry Sector. Each new Acquisition Gives an idea of
New Management Accounting system to Company A. The system Implemented by
Company a Includes Functionality that covers many of the Important Business Functions
which were considered useful in real terms but these functions are not Providing
information that company actually Requires. Decision making power of Top level
Management of Company A isone of The Important Thing to learn. As Company a was a
highly Competitive Global Manufacturer it has to be expected to fit nearly into a Paradigm
That Benefited from the Implementation of Modern Management Accounting Techniques
(Emerald insight,2012).
2 Utilization of various management Information Techniques is one of the important
learning from Company A .Top Management of Company A understands the importanceof
Management accounting system in the Organisation. Company A Was using various
Management Accounting Techniques like financial accounting Techniques, Supply Chain
Management, customer resource Management Technique and Management Accounting
Technique. As company A was using these Management accounting system Techniques it
was easy for the company to acquire new business unit. Management accounting System
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