HI5017 Managerial Accounting Assignment: MAS Relevance Analysis

This report examines the implementation of a new Management Accounting System (MAS) in Company A, a manufacturing firm, to assess its relevance to contemporary organizations. The analysis explores various MAS techniques, including ABC, BSC, JIT, and TQM, and their practical application within the company. The report evaluates how different levels of management utilize MAS for decision-making, highlighting the system's relevance at operational and tactical levels, while noting a decline in its significance for strategic decisions. It also compares and contrasts the findings of Oboh and Ajibolade (2017) and Watts et al. (2014) regarding the effectiveness of MAS techniques. The conclusion emphasizes that the chosen MAS system and its functions were not optimally suited for Company A's needs, leading to underutilization and limited benefits. The report underscores the importance of selecting appropriate MAS functionalities to align with a company's business model for maximum efficiency and effective decision-making.

Management Accounting 1
MANAGERIAL ACCOUNTING
By (Student’s Name)
Professor’s Name
College
Course
Date

Management Accounting 2
MANAGERIAL ACCOUNTING
Abstract
Company-A was a manufacturer producing simple procedures with less raw materials as
well as less steps in the process of manufacturing. The paper analyzes the case of a new
management accounting system (MAS) implementation in Company-A to establish whether
MAS is relevant to the contemporary organizations and also to showcase whether the system
selected for Company-A and the associated functions were suitable to allow the firm scoop
maximum benefit.

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Table of Contents
Abstract............................................................................................................................................2
1. Examples of MAS Methods and/or Techniques..........................................................................4
2. MAS Relevance to Contemporary Organizations:......................................................................4
i) Case Company Evidence Examples.........................................................................................4
Ii) Compare and Contrast Oboh and Ajibolade (2017) and Watts Et Al. 2014 Findings............8
3. Conclusion on MAS Relevance...................................................................................................9
4. Outcomes or Lessons Learned...................................................................................................10
A. Watts et al. (2014) Study Lessons/Outcomes.......................................................................10
B. Oboh and Ajibolade (2017) Study Lessons/Outcomes.........................................................12
Conclusion.....................................................................................................................................13
References......................................................................................................................................14

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1. Examples of MAS Methods and/or Techniques
The Company A was trapped in a dilemmatic decision to make on which specific MAS to
be implemented among the following techniques of MAS; ABC, BSC, Value Chain Analysis
VCA, JIT, TQM. Thus Company-A decided to hedge and subsequently implemented an array of
methods of MAS. Company-A built a system into SAP R/3 system which integrated ABC, BSC,
JIT, TQM, benchmarking and standard costing. Every user of this system was capable of seeking
information anchored on any of such techniques, nonetheless, they stood underutilized when
compared with original intention (Maas, Schaltegger and Crutzen 2016). Subsequently, the
company A realized that ABC/ABM, in its standard form besides BSC and to some extent, JIT
remained extremely sophisticated for their demands or needs. From the case, it is learned that
while a system allowed for the utilization of such techniques interdependently of one another, the
Company A’s decision to generalized its process and used certain key elements of every
scorecards, undertook infrequent systematic internal and external benchmarking, used certain
suppliers and certain deliveries just-in-time and have developed their independent TQM
iteration, which integrated safety was ill-advised (Watts, Yapa and Dellaportas 2014).
2. MAS Relevance to Contemporary Organizations:
i) Case Company Evidence Examples
There is enormous evidence to justify the relevance of MAS to the needs of the decision
makers. As observed in the case of Company A, its structure is designed in a manner that its head
office stays in control of every division on strategic level with each division autonomously
operating in terms of making operational decisions. When describing the use of Management
Accounting Information (MAI), it is unraveled that every level of management use the MAS in a

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range of practices and to a diverse degrees to perform managerial duties. According to the
interviews held with Company A interviewees, the findings were that the respondents indicated
that managers at lower ladder stood highly engaged with MAS and used a great share of MAS’
functionality in operational decisions making. It was also evident that middle management uses
the MAS in diverse ways, based on info in various formats and further certain extrinsic info
when making tactical decisions. Further, senior management use the MAS parsimoniously and
depend on the substantial quantities of outdoor data to reach strategic decisions. Such a varied
use of MAS showcases an extent of relevance, however, a great portion of it is stressed at the
tactical and operational decision-making ladder, specifically, middle managers (Watts, Yapa and
Dellaportas 2014).
MAS is significantly used in the Company A’s operational decision making. As reflected
in this case, the Company A has set KPIs for every facility of production. Decision making
regarding matters, several of which, use short-run durations, put operational managers at the
organizational ground level. Such KPIs are yielded significantly by the historical precedents and
remain premised on extrinsic and intrinsic benchmarking which depends on particular plan
capabilities as well as mechanism of supply chain. These operational manager continually seek
for the incremental enhancement and periodically inspected based on intrinsic benchmarking.
They further use certain scorecards as activity-based management, however, probe of enablers of
activities remain performed seldom that ABM and ABC models remain regarded almost as non-
existent or simply not relevant. An example lies in the stamen made by BFM which indicated
that they never utilize ABM and ABC in their operations as internal benchmarking is performed
with the other global and regional plants in regards to given products being manufactured
alongside the scrutiny and explications effectively sought. At the level of operation, the

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managers have less control over certain differences since the do not hold any authority over
purchase of supply chain. Such is comprehended and eases the already intense pressure from
operational management in regards to certain differences. The operational level decisions are
premised on info drawn particularly from MAS, relevance remains regarded absolute.
There is also evidence that MAS is relevant in decisions making on tactical basis as
managers engage in tactical decision which assist generate KPI plants. Such decisions are a share
of both operation and partially, strategic, with stress on a half to one year time duration. Based
on this framework, such tactical managers further employ MAI as a fundamental decision-
making source. Such a management level, similarly, has performance measured against its
independent KPIs. This management level, in each identical fashion to operational managers,
further reports differences. This can be supported by the revelation by BFM which showed their
tactical decisions making, nonetheless, must consider certain externalities and this makes MAS
at this organizational level to be considered a vital constituent of the tactical decision-making.
However, at this ladder, even though MAS remains relevance, management commences to put
extra stress on extrinsic info besides MAS-supplied info (Schaltegger and Burritt 2017). Tactical
decision making deals with customer chain and supply chain issues and hence managers
increasing have less alternative but to integrate extrinsic info into the process of decision-
making. Identical to management at operational level, such tactical manager remain primarily
dependent on the MAI. Hence, the MAS stays increasingly relevant to the Company A.
In regards to advanced strata of Company A, management mainly shift their attentions on
making strategic decisions and issues over a 12-month lead time. The managers specifically seek
for the satisfaction of the shareholders, customers, employees as well as the needs of the
community at large. This makes these strategic-decision making managers to include towards

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extrinsically sourced info primarily more than intrinsically-supplied info. Both macro-and micro
economic considerations, worldwide trends alongside significant international events inform the
foundation for much of info used by MAS is perceived as minute by this management level. A
typical example is the statement by MD which showed that the main aim of strategic-decision
making managers is the deployment of historical checks and balances against internationally
anticipated patterns thus a great share of such intrinsic information remain more of financial and
is mostly identical to info accessible to outsides stakeholders. It is not doubt given this info that
managers mandated to make strategic decisions in Company A consider MAS irrelevant to this
role.
Generally, it is evident that MAI remains relevant and vital to management at Company
A, specifically at the lower cadre of management with the relevance declining with the rising
corporate hierarchy. The MAI from MAS is primarily considered as the base for which
mainstream inform upon which operational management remains anchored at the operational
decision cadre. As one ascends the corporate ladder, decision by tactical decision makers are
based on MAI as a central source for making decision. However, it must be noted that it is at this
point where management starts to put increased attention towards extrinsic info to supplement
information derived internally from MAS. Strategic managers, at the climax of management
pyramid, remain faced with increased demands from various stakeholders relying on extrinsic
information. The intrinsic MAS here becomes comparatively insignificant at Company A and it
is mostly deployed in acquiring financial reports. Subsequently, the strategic managers treat
MAS as having miniature relevance. The newly-implemented MAS’s relevance thus plunges
proportionally with preeminence and it remains solely the tactical and operational decisions that
seem dependent on info from MAS. Managers mandated to make strategic decision deploy the

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MAS, however, emphasize attention on extrinsic info when making decisions. Again, this
immediately raises doubt on the MAS relevance. Premised on the Company A’s case, it remains
apparent that MAS and methods and techniques like ABC remain relevant, with exemptions of
strategic decision-making managers.
Ii) Compare and Contrast Oboh and Ajibolade (2017) and Watts Et Al. 2014 Findings
Oboh and Ajibolade (2017) held that ABC is an effective MAS technique which is
relevant to the contemporary companies through its activities of management via which it is
feasible to effectively define actions aimed at accomplishing a competitive edge. ABC thus helps
firms in the contemporary world to known the cost by activities and which is a catalyst that
ultimately activates the necessary actions for a firm to remain competitive. The ABC’s goal is to
allow the needs of the customers and their demands to get satisfied whereas making less
demands on the resources of the company (Gibassier and Schaltegger 2015). The two articles are
in agreement that ABC can be an effective MAS technique which help the firm to be
competitive. However, there is a difference in terms of the relevance of the ABC in Company-
A’s case. While Oboh and Ajibolade (2017), argues that this is an effective model and which is
applicable to the contemporary companies, Watts, Yapa and Dellaportas (2014) would disagree
and hold that ABC is never flexible enough and hence would not generate desired or useful
information to allow the Company use such internally-generated info to improve its
performance.

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3. Conclusion on MAS Relevance
The conclusion is that Company-A installed a MAS based on the wrong choice of the
system and the associated functionalities. This can be supported from the above info where it
seems that the MAS techniques or methods at the Company A’s disposal from SAP R/3 in its
initial framework was never essentially appropriate to the environment of the Company. This can
be supported by the fact the Company A harnessed facets of different MAS techniques and built
such into one system which alluded to the concern of the Company over the appropriateness of
such a single method.
It can also be justified that the BFM and MD, both as qualified accountants, remained in
solid stance to qualify the MAS used by the Company A. Hence, both BFM and MD stood
precise as they both outlined that solely an adjusted MAS would cover and meet all demands of
business model of the Company A. This is supported by the fact that MD emphasized the need
for a customized system designed by modification.
The MD stated that they were clear in their minds that solely an adjusted MAS would suit
their business model demand and in the absence of system modification, the current MAS system
would remain extremely awkward and speedily render itself unworkable. Thus, it was justified in
my view, for MD to cite ABC model as a case of modern MAS technique which was never
sufficiently flexible to them. Therefore, it was reasonable to hold that acquisition and divestment
in the plan which they were utilizing rationally called for re-establishing activity enablers hence
frequently costing itself into unsuitability or irrelevance.
This shows that when considering the implementation of a MAS system, functionality
remains a top priority to be consider before investing into the system since a wrong choice of
functions of the MAS will render it impractical. It can be seen from the case that the MAS’

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functionality remained irrelevant to Company A as they wrongly selected the functions to be
included in the system. This led to the company installing a system which encompassed
functionality with entailed a range of functions of a business without selecting corresponding
systems which would make such functions seamlessly and smoothly work to allow the full
potential benefits. It is clear that while the Company has a discretion to determine which
particular systems to be included in the MAS system, a company must always alive to the fact
that a corresponding choice of a suitable system shall determine the system relevance.
4. Outcomes or Lessons Learned
A. Watts et al. (2014) Study Lessons/Outcomes
The first important lesson or outcome for Australian accountants from Company-A’s case is that
functions must be correctly chosen which are relevant and suitable for a chosen system of MAS
if the maximum benefits are to be realized. It is concluded that Company-A never selected the
correct MAS functions and this is why such adopted functions disclosed certain challenging
results. The decisions by Company-A to acquire an array of contemporary MAS techniques was
ill-advised. The intention was to allow all users to use whichever MAS technique they believed
more useful for their respective needs. However, it should be noted that this practice received
rejection from a number of interviewees and hence the information expected to be supplied but
system to could never help Company-A to make decisions as earlier intended. Despite the
presence of JIT, TQM, ABC and BSC, the wrong choice of the functions made it impossible to
use these techniques as initially prescribed. This means that there was no smooth and seamless
working between the system and the functionality according to the specific environment of the
Company-A. Thus, what comes out clearly is that irrespective of the systems and functions used,
the firm must always ensure there is a proper match and specific to the needs of the users without

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the system would awkwardly and rapidly become impractical as witnessed in the case of
Company-A which just chose to implement ABC without scrutinizing whether would fit the
firm’s environment. Thus, the interviewees rejected the ABC as a credible technique,
notwithstanding academic rhetoric regarding its suitability for manufacturers. Moreover, BSC
was sparingly utilized with certain scorecards being in utilization, nonetheless, the BSC model
was further viewed by interviewees as not practical. Indeed, each MAS technique appeared to
have had constituents chosen for utilization, which ineffectively left a great share of the
techniques neither used not implemented. This led to the aspects of BSC and ABC being used
but the whole techniques stood regarded as extremely cumbersome as well as not practical given
the simplicity of the process of manufacturing. Thus, the Australian accounts must learn from
this case and acknowledge the revelation by the data from the interviewees that generated models
by the novel MAS might function efficiently in the deal environment, however, in an ever-
changing environment which Company A is a participant, such models stood merely too
theoretical and hence not practical (Malmi 2016).
The second lesson from Company-A’s case is that Australian accountants must ensure
that they embrace the concept of roll-back installation in cases when the MAS backfires rather
than making additional system modification. This is supported by the fact that the final verdict or
solutions to the system impracticalities noted in Company-A’s case only when the company
chose to roll-back the installation. Thus, once MAS is implemented, the Australians need to take
not that the system shall expand as they increasingly learn regarding the system. As supported by
the evidence in the case that MAS which was implemented in Company-A stood limited given
the complexities in retrieving the information alongside the realization that a great share of the
functionality remains needless. This is because the MAS system in Company-A seemed to be

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gathering data and generating reports that nobody needed or used. Thus, roll-back installation
should always come in such cases to ensure relevance. The Australian accountants need to
embrace the decision by Company-A’s plan to reverse to an internally-developed technique,
called “multi-level” variance distribution (Bobryshev et al. 2015). This is because such a
technique stays focused on variance tracking from KPIs alongside budgeted values and
subsequently tracing and allocating them through to business at POS. Such a technique is never
overly sophisticated on a localized level, but it becomes an increasingly complicated MAS
internationally. This outcome should assist the Australian accountants to appreciate the idea that
standard modern MAS models remain unsuitable for business model of Company-A.
B. Oboh and Ajibolade (2017) Study Lessons/Outcomes
Oboh and Ajibolade (2017) study, the main lesson learned is that Australian accountants
should use ABC in their target costing to know the costs effectively and trigger actions aimed at
accomplishing advantage. This is because they will be able to know the cost and this will
eventually enable the demands and the needs of the customers to be satisfied (Oboh and
Ajibolade 2017). The ability of a Company to know the cost means ability to create competitive
edge as opposed to the rivals that might be misusing their funds due to use of obsolete
conventional methods of cost determination. Satisfaction of the customers’ demands and need is
the driving force for successful organizations.
The second lesson from Oboh and Ajibolade (2017) study for Australian accountants is to
use ABC to not only satisfy the needs and demands of the customers but also help the Company
save on the company resources. This means that ABC allow Australian accountants to reduce
wages by having prior accurate knowledge on the amount of cost attached to specific projects
(Chenhall and Moers 2015). By saving the cost of production through the minimization of

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wastages, the ABC makes the Company to be much profitable. This is because firms that use
ABC have their costs effectively determined before committing to a given project. This practice
makes the cost to stay the possible minimum level. The result is that more will be left as a profit
to the organization. This makes the employees and the entire team feel better as their input yield
results. Thus, Australian accountants need to understand that minimization cost is what yields
sufficient profit through efficient use of scarce resources.
Conclusion
It is concluded that the contemporary MAS models remain unsuitable to the case of
Company-A. However, whereas this company stays significant in regards to its position and size
in its designed area of business, it is just one company. Thus, there is a restriction of one-
Company case study since it only gives a restricted information scope and might never be
representative of a wider industry’s use of MAS or MAI. Despite this restriction, a single-case
approach of study is a specific valuable mechanism of probing real practice.
Implementing and consequential use of a MAS on a MNC gives a practical viewpoint on
how industry views the MAS relevance. Given such data, researcher stay better put to give
desired inferences as to why and what change took place and eventually establish the trends for
upcoming change. With such information, researchers can better modify models premised on
additional empirical studies alongside solutions to serve MAS practitioners. Whereas selecting
and modifying considered constituents stay viewed as a suitable approach to create a system
which remains practical and Australian accountants should note of this and create a hybrid
system and strategies.

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References
Bobryshev, A.N., El'chaninova, O.G.V., Tatarinova, M.N., Grishanova, S.V. and Frolov, A.V.E.,
2015. Management accounting in Russia: problems of theoretical study and practical application
in the economic crisis. Journal of Advanced Research in Law and Economics, 6(3 (13)), p.511.
Chenhall, R.H. and Moers, F., 2015. The role of innovation in the evolution of management
accounting and its integration into management control. Accounting, organizations and
society, 47, pp.1-13.
Gibassier, D. and Schaltegger, S., 2015. Carbon management accounting and reporting in
practice: a case study on converging emergent approaches. Sustainability Accounting,
Management and Policy Journal, 6(3), pp.340-365.
Maas, K., Schaltegger, S. and Crutzen, N., 2016. Integrating corporate sustainability assessment,
management accounting, control, and reporting. Journal of Cleaner Production, 136, pp.237-
248.
Malmi, T., 2016. Managerialist studies in management accounting: 1990–2014. Management
Accounting Research, 31, pp.31-44.
Oboh, C.S. and Ajibolade, S.O., 2017. Strategic management accounting and decision making: A
survey of the Nigerian Banks. Future Business Journal, 3(2), pp.119-137.
https://www.sciencedirect.com/science/article/pii/S2314721016300251

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Schaltegger, S. and Burritt, R., 2017. Contemporary environmental accounting: issues, concepts
and practice. Routledge.
Watts, D., Yapa, P.W. and Dellaportas, S., 2014. The case of a newly implemented modern
management accounting system in a multinational manufacturing company. Australasian
Accounting, Business and Finance Journal, 8(2), pp.121-137.
https://drive.google.com/file/d/1Yug8svVwuAnbrSPZ6g8AiLJaIB9EZ8fP/view