Managerial Accounting Report: Analysis of Toyota's Accounting System

This report provides a comprehensive analysis of Toyota's managerial accounting system. It begins with an abstract defining managerial accounting and its importance in recognizing potential profits, focusing on internal departments like finance. The main body identifies examples of management accounting techniques such as JIT, Kaizen, and Lean accounting, and discusses their relevance to contemporary organizations, particularly Toyota. The report examines evidence from Toyota's case, comparing and contrasting different activities to understand the management accounting system's impact. It concludes on the relevance of MAS in today's competitive environment and provides specific outcomes from research findings useful for management accountants in Australian companies. The report highlights the role of MAS in improving productivity, profitability, and resource allocation within Toyota, emphasizing techniques like JIT and Lean accounting for cost-effective operations. Furthermore, it compares Toyota's approach with other organizations, emphasizing the importance of modern management techniques and technology in financial departments.

Managerial accounting
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Abstract
Managerial accounting system is defined as a technique which helps an organization for
recognizing the potential profits of the firm. The main agenda to implement managerial
accounting system is to complete their work in an inappropriate manner. Management
accounting is based on the internal departments of the firm. The major activities that are
performed by the financial department and management accounting system are related to
budgeting, cost analysis, and various procedures. This project is written from the perspective of
the Toyota which is a leading manufacturing organization in the automobile industry. Moreover,
projects highlight on relevance and reliability of the accounting system. Toyota implements a
management accounting system to perform its operations with more efficiency to complete their
work at a global level.
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Contents
Managerial accounting.....................................................................................................................1
Abstract............................................................................................................................................2
Main Body.......................................................................................................................................4
1. Identification of various example used by management accounting techniques...............4
2. Are MAS relevant to contemporary organisations? Discuss this with reference to:..........5
I) What evidence is there from the case company?...........................................................5
ii) Comparing and contrasting of different activities of the firm for understanding
management accounting system........................................................................................6
3. What conclusions do you make about the relevance of MAS in today’s competitive and (in
most cases), uncertain business environment?.......................................................................7
4.Provide four (4) specific outcomes or lessons learned from each of the two articles’ research
findings that will be useful for management accountants in Australian companies to learn
from, and justify your answer.................................................................................................9
Conclusion.....................................................................................................................................11
References......................................................................................................................................12
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Main Body
1. Identification of various example used by management accounting techniques
Every organization implements a management accounting system to expand its business at the
global level (Nguyen, et. al., 2017). It determines that it increases the profitability of the firm
through executing effective management techniques such as JIT, Kaizen method and lean
approach for increasing the productivity of the organization.
JIT- The just in time refers to a management strategy that is used by the organization to maintain
the balance between the purchase of raw materials and to deliver finished products to the
customers. Further, it works with two different contrasts in which the first refers to the holds the
exact number of inventories for fulfilling the demand of customers. Whereas just in time
approach is also used by management of Toyota for the completion of their work in a cost-
effective way, this approach results that it is easy for management to increase the efficiency of
their products by completing them before the deadlines (Otley, 2016).
Kaizen- This approach is used by most of the organization to increase the efficiency of their
products at a global level. Kaizen technique helps the organization by modifying small changes
in the organization which leads the firm to earn a high amount of profits. Moreover, it is based
on various improvements which leads the organization to increase their efficiency by increasing
the cooperation within various methods. The main motive to implement this in the organization
is to reduce waste and encourage worker motivation for completion of their work by bringing
innovation in their products (Mia Winata and Chong, 2017). Thus, it is beneficial for Toyota
because it increases the productivity of their work.
Lean accounting system- The lean manufacturing system refers to the approach in which an
organization increase the value in their products. Lean accounting system works on various
principles and process that provides various numerical feedback for manufactures through
executing inventory practices. Toyota introduces this system in the organization to perform its
operations smoothly. With the effective implementation of the lean manufacturing system,
favourable results are achieved by Toyota by cost-effectively accomplishing their goals.
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2. Are MAS relevant to contemporary organisations? Discuss this with reference to:
I) What evidence is there from the case company?
Relation of managerial accounting system within a corporation
Management accounting performs an essential role in the organization which encourages the
capabilities of an organization to perform its operations inappropriate manner. Toyota is
operating its business at a global level; therefore, they need to enhance their business
performance for increasing the profits of the organization. This determines the effective
management accounting system helps Toyota to increase its productivity and profitability for a
longer period in the industry (Quattrone, 2016). Moreover, the integrated framework of
management accounting system is engaged in particular for this task. As it helps the organization
to increases the in-depth information about their work to justify the purpose of action that is
taken by management.
Changes by which top management complete their work in an organized way
Monitoring and controlling- the first action which leads the management of Toyota to complete
their work in an organized manner is to monitor all the operations of the organization. This
activity results it is easy for management to enhance their business performance by controlling
those activities that impact negatively on the organization.
Inspecting the work performance- This factor is used to deal with various issues systematically
and sequentially. The main function that is performed by this task is to ensure that all the
operations which are performed by the organization are done according to the benchmark of
market and industry (Nguyen and Phan, 2019).
By considering all the above mention factors it is concluded that there are various aspects are
needed by the organization to improve their productivity. Further, by completing this report it is
analysed that the management accounting system performs an essential role in an organization to
increase their productivity. To implement this effectively in the organization JIT, Lean
accounting system are some of the effective methods that increase the productivity of the
organization by managing the cost of the projects that are completed by them (Schaltegger and
Burritt, 2017). In the last, the major benefit which is earned by the organization is to allocate
resources effectively in the organization.
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ii) Comparing and contrasting of different activities of the firm for understanding management
accounting system
Techniques of management accounting are favourable for the organization because it leads them
to complete their work in an organized manner. Moreover, both of the organizations are well-
known among overall the world. So, it is mandatory for them their accounts in a proper manner
for obtaining a competitive advantage in the market. Therefore, to reduce the negative effects of
the financial issue both organizations must manage their accounts from the professional. This
activity results it is easy for them to achieve top position in the market by their constant efforts to
modify completing their work. For improving the performance of the organization managers
constantly focuses on the operations of an organization that is performed by both of the
organization. It results in that organizations complete their work by consuming more time.
Whereas, on the other side both of the organization need to monitor their financial departments it
determines that there is various management accounting system must be implemented which
consumes less time to complete their work efficiently (Ahmad and Mohamed Zabri, 2015).
On the other side, it is also analysed that both journals are different from each other. The first
journal considers traditional approach to manage their financial accounts. Whereas, journal or
case related with ford is more favourable in implementing modern management techniques. This
results in accomplishing to achieve their goals in appropriate manner.
In the present scenario, the utilization of technology is increasing at a rapid speed. This
determines it is essential for the financial department to execute modern management techniques
like Lean, Kaizen, etc. to increase the performance of their work. Due to this activity, it is also
easy for the organization to enhance its business performance by utilizing new and update
software that helps to deal with various operations in an effective manner. JIT is one of the
techniques that is used by both of the organization to complete their work in minimum period.
On the other side, it is seen that both of the firms perform their work through a different process.
So, they must understand all aspects through which it is easy for them to select those aspects
which result in the completion of their work effectively (Rababa'h, 2014). With the
implementation of various management techniques, it is analysed that there are various functions
of management accounting are completed by them inappropriately. Due to which it impacts on
the profitability of the organization (Ahmad, 2014).
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3. What conclusions do you make about the relevance of MAS in today’s competitive and (in
most cases), uncertain business environment?
The management accounting is considered to be one of the most important aspect in the current
world. This is the demand of current world organisation where the companies that are working in
the manufacturing sector is changing their way of accounting. This is required by the companies
as this helps them to maximise the performance and better procurement of the resources in the
company. through this process the companies are able to reduce the extra cost that is related to
them and are also able to improve the quality of the products that they are selling (Bellanca and
Vandernoot, 2014)
. As this is seen that in the manufacturing company this is important for the companies that are
working in the manufacturing sector to use this approach as if these approaches are not identified
by the company then this would lead to high cost for the companies that are working in this
sector. There are various advantages that are related to the implementation of the management
accounting system. Some of them include the following:
 Through the implementation of the management accounting system, the organisation can
get the help in predicting the cash flows for the company. This is considered that through
this the company is able to check the cost of the company and the cash flow that is being
moved towards the particular transaction. Through this the company is able to secure the
cost of the company. Also, through this the company is able to identify the revenue that is
being generated from the different transactions.
 This helps in analysing the performance variance that is related to the company, as
through this the standards can be maintained and the actual performance that has been
done for the same can be compared. Through this the areas that requires to be checked
can be identified so that the extra cost that is being implemented on the same can be
tackled (Schaltegger and Burritt, 2017).
 Analysis of the rate of return on the investment that is made by the company, the MAS
system helps in identifying the rate of return on the investment that is made by the
company where the amount of investment that is made by the company is higher. Here
the company is able to identify the ROI for the future performance of the company and
through this the investment decision can be taken by the company. Hence through this the
company is able to maximise the performance through choosing the most profitable
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investment that is made by the company. These actions help the company to reduce the
extra cost that may implement on the non-profitable business.
Hence this is important for the organisations to develop a management accounting system that is
most suitable for the company. Globalisation has a broad advantage as this is seen that it has
made its way so as to change the way business operates and create value to the customers and the
companies that are working in this department (Fullerton, Kennedy and Widener, 2014)
In the present environment this can be seen that the present market is not consistent and hence
requires the firm to provide better customer value and operations. through this the overall
performance of the company can be achieved.
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4.Provide four (4) specific outcomes or lessons learned from each of the two articles’ research
findings that will be useful for management accountants in Australian companies to learn
from, and justify your answer
Through the articles that are taken into consideration for the purpose of increasing the knowledge
this is seen these both articles provide the same conclusion about the management accounting
system in the organisation (Grabinskia, Kedziora and Krasodomska, 2014). This is seen that
according to both the articles the management accounting is considered to be most important
tools which is used by the companies so that they are able to capture the cost of the product and
other strategical analysis which helps in maximising the cost of the company. Hence from the
two journal that has been developed for this purpose includes the following:
 This is seen that the management accounting system must be implemented in the
company operations so that the company would be able to identify the cost and the
expenses that are being incurred extra by the company, (Shamsabadi, Min and Chung,
2016). This would help the company to identify the variances that occurs in the budget
and the actual performance of the company.
 It is also seen through the given articles that the management accounting system is related
to the micro environment of the company. This helps in bringing change in the
management of the company where the company can take the actions so as to change the
organisational behaviour and identifying the techniques so that quality of the product can
be maintained.
 There are different tools are utilised by the organisation to monitor and control their
financial transactions. It involves JIT, Lean management and Kaizen which leads
organisation to complete their work in effective manner.
 The company is able to identify the cost that is related to inventory management of the
company through the implementation of the management accounting system and would
be able to check the inventory that is considered to be impacting the cost of the company.
In another journal that was taken for the comparison, stated the conclusion that,
 Through the implementation of the management accounting system in the company. The
company is able to identify the cost and is able to maintain a level of variance through the
implementation of the management accounting system in the company (Grosu, Almasan
and Circa, 2014)
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 Through the implementation of the management accounting principle the company is
able to provide the information that is relevant for the decision maker.
 This is also seen that the management accounting system is considered to be costly
process which helps in providing the information to the managers of the company about
the overall performance of the company (Thabit and Jasim, 2016).
 This helps in getting the information about the price that is set for the product and the
profit margin that the company is getting from the new products that are developed by the
company.
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Conclusion
The above analysis that has been done on the management accounting system provides reliable
and effective information for the tools of management accounting. This is considered that it is
important for the company to implement the management accounting tool. So that they are able
to identify the variances that occur in the company and the extra burden that the company has to
face on the revenue that they made. Through this system the company is able to consider that
accounting and the other related of the company are suitable and efficient. In the report two
journal were considered that helps in identifying the role of the management accounting in the
manufacturing industry.
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