Discuss and critically evaluate the role of management accountants in providing relevant information to managers to manage strategies effectively.
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TABLE OF CONTENT 1.0 Executive Summary 3 2.0 Introduction to Management Accounting 4 2.1 Concepts of Modern Management Accounting Techniques 5 3.0 Modern Management Accounting Techniques 3.1 Activity-Based Costing 3.1.1 Background and Development 6 3.1.2 Strategic Benefits 7 3.1.3 Limitations 8 3.1.4 Conclusion 8 3.2 Just-In-Time 3.2.1 Background and Development 9 3.2.2 Strategic Benefits 10 3.2.3 Limitation 10 3.2.4 Conclusion 11 3.3 Total Quality Management 3.3.1 Background and Development 12 3.3.2 Strategic Benefits 13 3.3.3 Limitations 13 3.3.4 Conclusion 13 4.0 Conclusion 14 5.0 Bibliography 15-16 ASSIGNMENT TOPIC Top Managers are increasingly and intensely focusing on strategic directions and trying to manage organizations to gain and sustain competitive advantage. Discuss and critically evaluate the role of management accountants in providing relevant information to managers to manage strategies effectively. EXECUTIVE SUMMARY The core purpose of this report is to introducing to management accounting, modern management accounting techniques, as well as formulates strategic directions to manage, to gain and sustain competitive advantages. Hence, coming along in the report, we would describe and explain the different modern management accounting techniques such as activity based costing, just in time and total quantity management. By which, in doing so, the organizations would immediately evaluate the impact on change through the strategic directions and benefits. Often, the role of management accountants entail providing relevant and reliable information about the sources of competitive advantages for example the cost, productivity and etc. Management accountants analysis and evaluate records submit by the bookkeepers as a result to investigate any losses, leakages or changes in value. That is, this role requires the management accountants to consider several alternatives and then decide which one is the best. To the same degree management accountants requires knowledge and expertise in system design, change management, strategic to cost management and much more. Importantly, under IMA's overarching a practitioner of management accountants shall behave ethically and shall act in accordance with these principles which include honestly, fairness, objectivity, and responsibility.
Some overhead costs are difficult to assign even happen in ABC method as an overhead costs such as the directors' salary. These costs refined as business sustaining and do not mean to assigned to department because there is no meaningful method by doing so. If do so, the allocation might eventually result in inaccurate cost estimation and causes wrong decisions. CONCLUSION In general, ABC has more advantages than limitations. When implemented properly, ABC can bring about constructive changes in financial control systems of an organization. However, there is no such thing as the best costing method in an organization. There is only the most suitable costing method. As such, the management should evaluate the pros and cons of each of the costing method to identify the most appropriate costing method for their organization JUST-IN-TIME BACKGROUND AND DEVELOPMENT JIT (Just-in-Time) is a production strategy that aims to reduce in-process inventory and its carrying costs. JIT production method is also well known as the Toyota Production System. For essential, Toyota manufacturing plants was first introduced and devleped by Taiichi Ohno and as a goal of meeting consumer demands with minimum delays. Taiichi Ohno is also well known as the father of JIT. The success of Toyota during the 1973 oil crisis has attracted the interest among Japanese firms as well as Western companies (Hallihan, 1997). In late 1970s, US manufacturers have widely adopted JIT concept to improve their performance and regain their competitive edge (Ansari, 1984; Celley, 1986; Im, 1989) The philosophy of JIT is simple: inventory is waste. Inventory is seen as incurring costs, or waste, instead of adding and storing value, contrary to traditional accounting. Best described JIT is an approach and practice with the objective right part in the right place at the right time. The philosophy requires all resources be acquired and used only as needed. It has most profound effects on manufacturing companies, which maintain three classes of inventories i.e.
Without gaining support, failure of implementation may become an issue and make disappoint to organizations after spending bulk of money. Secondly, educating and training employees in new accounting systems throughout the organizations allow workers use their knowledge to make better improvements. The results are dramatic because employees are empowered and motivated to implement such as cost-saving projects, quality ensures and etc. However, too often, managers and management accountants seek big result and major changes too quickly. In most situations, achieving a significant change overnight is difficult. Therefore, managers and management accountants should seek small short-run success as proof that the implementation is results. In conclusion, mangers and management accountants must recognize that implementation of new accounting techniques is not perfect and it's have their own limitations in each models. For essential, open and honest communication to all levels ensure that managers and management accountants use the new techniques thoughtfully to make good decisions and most importantly to gain and sustain competitive advantages. BIBLIOGRAPHY 1. Chaeles T. Horngren, Srikan M. Datar, Madhav V. Rajan, Cost Accounting, 14th Edition, Pearson Education Limited, England. 2. T. C. Edwin Cheng, Susan Podolsky, P. Jarvis, Just in Time Manufacturing, an introduction, 2nd Edition, Published by Chapman & Hall, UK.. 3. Marshall Sashkin, Kenneth J. Kiser, Putting TQM to work, Berrett-Koehler Publishers,Inc, CA. 4. Wikipedia.com, Activity-based-costing, Retrieved 20th June, from http://en.wikipedia.org/wiki/Activity-based_costing 5. Thomas & Alex, Financial Management Services, Activity Based Cost Management, Retrieved 20th June, from http://www.thomasandalex.com/articles/finance-accounting/activity-based-costing-2/ 6. Thomas & Alex, Financial Management Services, Activity Based Cost Management, Retrieved 20th June, from http://www.thomasandalex.com/articles/finance-accounting/activity-based-costing-2/ 7. Michael S.C.Tse, Maleen Z.Gong, Innes, 2000; (Kaplan R.S., 2004: Cohen, 2005) Recognition of Idle Resources in Time-Driven Activity-Based Costing and Resource Consumption Accounting Models. Journal of Applied Management Accounting Research, JAMAR, Vol.7 2nd Nov 2009. 8. Adam S. Maiga, Surendra P. Agrawal, (Ansari, 1984; Celley, 1986; Im, 1989) Impart of the Extent of Management Initiatives on Manufacturing Plan Profitabilit, an Exploratory Investigation. Journal of Applied Management Accounting Research, JAMAR, Vol.1 2nd Nov 2003. 9. Accounting Coach, Activity-Based Costing, Retrieve 20th June, from http://www.accountingcoach.com/online-accounting-course/35Xpg01.html 10. Management and Leadership, ABC, Retrieve 21st June, from http://www.emblemsvag.com/abc.
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