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It has been suggested that the so-called traditional systems should be replaced by new approaches. Factors Shaping Management Accounting Change However, before describing our observations on the changing nature

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1) Management accounting change and stability: Loosely coupled rules and routines in action Kari Lukka. 2) Management accounting change. John Burns and Juhani Vaivio. CONTENTS: * Introduction * Management Accounting Defined * Management Accounting changes for the 1990s * New element to be consideration in management accounting * Main changes is Activity Based Costing (ABC) * Traditional costing today * Conclusion Introduction: During the last years we have seen innovative practices and new methods in the field of management accounting. For different subject areas it was advocated that existing concepts and techniques ware obsolete and create dysfunctional behaviour. It has been suggested that the so-called traditional systems should be replaced by new approaches. Factors Shaping Management Accounting Change However, before describing our observations on the changing nature of management accounting and the changing roles of an accountant. In capital budgeting, there is a call for strategic investment appraisal instead of traditional discounted cash flow methods. In cost accounting, activity based costing is becoming popular. Also, new concepts and theories are being sought for ensuring performance. Management Accounting Defined: Management Accounting is an integral part of management concerned with identifying, presenting and interpreting information used for: * Formulating strategy * Planning and controlling activities * Decision tacking * Optimising the use of recourses * Disclosure to shareholder and other external to the entity * Disclosure to employees * Safeguarding assets. ...read more.


4. Increase flexibility: The same equipment will handle both current high volume models and discontinued models; machines can serve as backups for each other; and they can easily accommodate product changes. 5. Shorter lead time: The new technology allows the company to respond to customer demand more quickly. 6. Gaining experience with the technology: This will enable managers and employment to be in a better position to deal with any future technological advances which may drastically alter the market situation. Main Changes is Activity Based Costing (ABC): Traditionally cost accountants had arbitrarily added a broad percentage onto the direct costs to allow for the indirect costs. In a business organization, Activity-based costing (ABC) is a method of allocating costs to products and services. It is generally used as a tool for planning and control. This is a necessary tool for doing value chain analysis. Definition "A method of measuring the cost and performance of activities and cost objects. Assigns cost to activities based on their use of resources and assigns cost to cost objects based on their use of activities. ABC recognizes the causal relationship of cost drivers to activities." Process description of the first phase of the ABC-process: The first phase of the ABC-process of the day-surgery unit started in 2003 and ended in spring 2004. ...read more.


These include sales, marketing, advertising and administrative functions. In many manufacturing and non manufacturing companies, these costs represent a substantial part of the total value chain cost. The management cost system should address these issues as well. Conclusion: New Management Accounting techniques have been developed such as activity-based costing (ABC) and strategic management accounting. However, such so-called 'modern' techniques are not being used as widely as their advocates might have expected. For example, various surveys indicate that ABC is only used by between 20% and 30% of companies (e.g., Innes and Mitchell, 1995). Whereas traditional management accounting techniques continue to be used widely. However, rather than change being necessarily in the type of management accounting techniques adopted, it seems to be more about the manner through which management accounting, including many traditional techniques, is being used. Whilst it is difficult to disagree with the findings of surveys that, at a superficial level, traditional management accounting techniques continue to be used, these surveys fail to identify changes in the way that traditional accounting techniques are now used in practice. The Changing Nature of Management Accounting, there have been considerable advances in information technology in recent years. One of the most important, apart from the speed and capacity of modern systems, has been the development of data-base technologies which provide the ability to store vast amounts of information in easily accessible ways. ...read more.

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