Sunday, January 27, 2019
Management accounting and decision making Essay
tally to Burger (2008) score is the language of stage argument. A wad of people think its just numbers, but its sincerely a forget me drug to a greater extent than that. on that point argon a lot of beas outside of numbers that take to be looked at, processes and procedures, what the tone of the company is. Accounting result take you in just about any counseling in a company. Wade Becker, CPA, Beard, Miller Co. The job description of many an(prenominal) professions is changing nowadays. The skills to perform a certain job pick up more skills to perform a particular job. If an example of Information Technology is to be taken then it is realized that once they were left to do IT colligate jobs or make calculators work however, in todays orb IT professionals are now moving into higher level prudence positions which require them to perform many a nonher(prenominal)wise tasks which may non be this instant related to the their profession.Therefore, a stereotypica l role of an control was once considered a number person but todays epoch demands occupancy relationship professional to own and use inter alive(p) and communication skills to help with the last making process across all areas of a business. In a passenger vehicleial account world all professionals moldiness communicate their ideas to other companies using offices which are tactful and powerful. Siegel (2000) states that counsel accountants should be gigantic communicators. Durry C (1992) accepts that perplexity accounting is concerned with providing nurture to managing directors that is people inner(a) an organization who direct and control the operations. In the 19th Century pecuniary accounting was considered to be the need of a society which later evolved to Management accounting. Management accounting became a prerequisite for more detai direct information for stock control, product following and decisions affecting the future. Accounting is facing numerous tak e exceptions, as Elkington (1998) states business people must increasingly recognise that the challenge now is to help to deliver simultaneously economic prosperity, surroundal reference and social equity.All this is making business managers to re-examine the practices that are shortly led. Cokins G and Hicks D desire that Managerial accounting is part of an organisations focussing information agreement. To follow any business or an organisation charge managers engage in activities which involve an effective toll model as it lav be a great asset to an organisation. A business or projects to be a success or failure three things need to be considered, for example, hail, schedule and performance. A project should be move inside the means provided otherwise stakeholders struggle to finance the project and its abanthroughd. A success of a manager is when appropriate tools are employed and honest safe decisions are made and follow on with applying substantial level of exper tise to have effective hail focussing.The world today is meet by increasingly advanced technology such as computer assisted manufacturing and flexible manufacturing systems. According to Cokins and Hicks organizations to compete effectively need to register the court of each product or element of their value orbit from product design and purchase of material therefore internal cost is very important as mentioned in Cokins and Hicks article because it becomes critical for matched action and increasing shareholders wealth in the live globally militant economy. Management accounting systems are the bene constituents of the precarious internal cost information. There has been few criticisms leading to the writings of Management accounting system and it has been tagged outdated and there has been criticisms linked to its consistency as it has been thought that it does non provide consistent information with the current strategic heed paradigm.Cokins and Hicks believe that sys tems designs elements should capture the fundamental technology, promote a business based on effective cost model, quality and lead time. Precise and appropriate cost information is critical to managements decision making procedures (Cokins and Hicks) and the literature being studied reveals Management accounting system reflects the organizational complications of the current world however traditional Management accounting systems do not replicate current organizational era as all cost procedures were designed around late nineteenth century. In traditional era product line diversity was not very common and cost of materials and direct labour were the main components of production cost but the environment today is surrounded around advanced technology and automation and that has led the prime cost to be the overhead component. The overhead costs are altering product cost because of the old management accounting system techniques. Management accounting ask a unique set of skills and behaviour.According to Cokins and Hicks Accounting Management framework gives business a planned move up to address all factors that will manage accounts interface and todays reality. Cooper and Kaplan believe there are six critical factors which play a authoritative role in Accounting Management framework which also backs Cokins and Hicks diary being studied for this assignment. The first one is organizational structure. It includes factors such as whom and how you manage accounts, why and how you organize around them. The second account management success factor is people as they need the appropriate skills, fellowship and skills to experience and perform the role. The third factor is tools and technology as it must support the account management processes and must rest help as control. The fourth one is compensations structures as they can inhibit change or accelerate adoption. The fifth account management success factors are processes and methodologies as they should a lign with the customer, drive growth and opportunity plan and the last factor channels and alliances must be managed effectively through the account manager interface.it is up to an organization to structure their useful employees around their winder customers and that can compel a deep impact on their performance. First few deliberate decisions need to be taken in terms of post of accounts management resources such as market and territory.Cokins and Hicks believe management aggroup need to plan using methodology a number of factors to create a ranking based on the business goal for the tie beam and ability to deliver. Once these methodologies are selected they can play a lively role in team structure and it will help to get laid with issues such as ownership or shareholders Cokins and Hicks discuss the difference in the midst of cost accounting and managerial accounting and the strength of their article is that managerial accounting is tied with GAAP whereas cost accounting is use within a business to manage that particular business.Accounting standards of a estate provide guidelines to an accountant so they can be used charm reporting economic transactions of a business. United Kingdom accounting has mitigated a lot as mentioned in the journal being studied for this particular assignment. Managers have bulky pressure to improve financial management practices to improve service to the community and it is not only done on national level. Managerial accountants have to keep accountant standards charming globally and that is mainly done through Accounting Standards Committee. What gets measured gets managed, What needs managed gets measured (Peter Drucker) famous recites has cause many criticisms but if the practices and originatement mentioned in Cokins and Hicks journal are to be analyzed, one can conclude this quote has some truth. Managers of a business often use this quote indicates that active management of businesses should be given im portance instead of accountability to come desired goals. It will lead to survive in todays world of information age competition therefore businesses should ensure they are using management systems resulting from their strengths.Any business main task is to develop an active measurement system as it is main part of the management process. Good management practices lead to using certain measures to plan, implement and improve certain aspects of an organization. According to Kaplan, (1994) measurement is a difficult task because it is not related to science so there are no facts and does not have rules between variables. Furthermore, systems which are used by management accountants will make sure that actions are taken according to the strategies and objectives developed. There has been an immense amount of research on management accountants and the research evidence has proven that businesses which are using a developed measurement system are developing and gaining profits therefore , Gates (1991) states an organizations objectives and severity of measures, varies, depending on people, culture and one-time(prenominal) experiences of the organization. The management accountant was developed after 1980s and it was seen a friendly era in management accounting research as it apothegm new techniques and practices beneficial to the management accounting.One of the techniques developed in 80s was strategic management accounting and some of the processes which fall under the category of strategic management accounting are activity based costing and difference score razz. The balance scorecard emerged after it was realized that there is a need of an integrated system which can be used to measure twain financial and non-financial performances. It helps companies to view their performances on a regular basis and it gave a clear view of what should be measured in order to balance a particular business financial perspectives. The balance score card consists of four fun ctions known as learning and growth perspective. It means how to give a certain organizations goals and how will a business will hold out its ability to change and improve. the second perspective is financial and its aim is to watch financially and is mainly concerned with making a good core to shareholders. Another perspective is based on customers as they can follow sales and to achieve business goals a good impression is to be made upon customers.The last perspective is known as internal business processes. It mainly deals with how to satisfy customers and shareholders and what business processes must a certain business excel as. (Kaplan and Norton1996) Balance scorecard is one of the necessities for any organization and it is used by the management to accomplish vision and strategies of an organization and it has few other benefits too such as, making sure managers are managing every wizard variable within an organization and are not working upon favoritism. If more de velopments are to be discussed and strength of Cokins and Hicks journal than one must not forget one of the major development in an accounting subject field known as Activity-based costing. Kaplan and Cooper gave this idea a new commencement exercise as it was not very well known in foregoing geezerhood. According to Kaplan (1996) manufacturing costs are determined by amount of activities and the key to effective cost control is maintaining the effectiveness of the activities ABC recognizes better cost pools for indirect costs and then implies cost drivers to relate the expenses in the cost pools to activities of an organization. ABC has become more popular in recent years but faces a lot of criticisms too due to the fact that sometimes businesses face difficulties in implementing this technique.ABC is enhanced further by Activity-based management as they believe in planning and measurement and class them as key factors in a competitive business environment. To conclude, If an o rganization has accounts managers or not a success can only be achieved if a successful profile is valued. It can be done through an manufacturing as it will help determine to what extent an account manager is an industry expert and the second is through customers as it is vital for an accountant to understand the businesses being worked upon. The profession Accountancy has seen many developments and criticisms however, since 1980s there has been many changes in management accountancy. The new changes are focusing on measurement tools within a business to manage its aims and objectives.Management techniques are discussed briefly in this essay and they emphasize on Cokins and Hicks journal that management decisions can be made better by using effective management measurement tools and it leads to improving the management of an organization. There can be problem with new measurement techniques as nothing in sustenance comes with a guarantee however, new ideas can be used on the basi s of guess work and the new contributions could be a way forward.
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