Make or Buy Decision Analysis
Management accounting information is used for short term decisions
--Make or buy decision analysis
Introduction
A main meaning of management accounting information is considered to support decision making for business organisations, for a foremost principle of rational decisions is the maximisation of financial benefits (Drury, 2009). This report will discuss the management accounting information and techniques used in short-term decision-making. Make or buy decision will be put forward in this report as one of typical short-term decision-making problems to illustrate that this type of short-term decisions should be made by using management accounting information and it is crucial and widely used in the management for business organisations, especially for IT industry, under current economics. There are five different sources will be presented as followed to put forward this viewpoint within this report.
Resource 1 - Book
Try to know how the management accounting information operated in make or buy decision making, the initial resource which is necessary to be mentioned is the definition of management accounting and make or buy decisions, for finding out the relationship between them.
According to Pauline Weetman (2003), management accounting is concerned with internal information for the organisation itself for management purposes. And make or buy decision is defined (Pauline Weetman 2003:610) as the act of making a strategic choice as to whether to produce an components needed for their products or provide services within the organisation, as opposed to acquired them from outside suppliers. The key point on this decisions is producing internally (in-house) or buying the already made externally (from an outside supplier) which refers to outsourcing. Knowing from the definitions, there are two links can be found: first, make or buy decision is considered to be an internal decision about producing or purchasing concerned by managers, it is a decision
--Make or buy decision analysis
Introduction
A main meaning of management accounting information is considered to support decision making for business organisations, for a foremost principle of rational decisions is the maximisation of financial benefits (Drury, 2009). This report will discuss the management accounting information and techniques used in short-term decision-making. Make or buy decision will be put forward in this report as one of typical short-term decision-making problems to illustrate that this type of short-term decisions should be made by using management accounting information and it is crucial and widely used in the management for business organisations, especially for IT industry, under current economics. There are five different sources will be presented as followed to put forward this viewpoint within this report.
Resource 1 - Book
Try to know how the management accounting information operated in make or buy decision making, the initial resource which is necessary to be mentioned is the definition of management accounting and make or buy decisions, for finding out the relationship between them.
According to Pauline Weetman (2003), management accounting is concerned with internal information for the organisation itself for management purposes. And make or buy decision is defined (Pauline Weetman 2003:610) as the act of making a strategic choice as to whether to produce an components needed for their products or provide services within the organisation, as opposed to acquired them from outside suppliers. The key point on this decisions is producing internally (in-house) or buying the already made externally (from an outside supplier) which refers to outsourcing. Knowing from the definitions, there are two links can be found: first, make or buy decision is considered to be an internal decision about producing or purchasing concerned by managers, it is a decision
References: College Accounting Coach (2006) Short Term Decision Making-Make Or Buy (Part 2). http://basiccollegeaccounting.com/short-term-decision-making-make-or-buy-part-2/ [Accessed 02/12/2009]. Drury, C. (2009) Management Accounting For Business, 4th Edition, Bath: Patrick Bond. Clyman, J. 2004. “Business IT: Rent or buy? Many companies are outsourcing IT duties to third parties and reaping benefits”. PC Magazine. pp. 129-132, 134, 136, 138. Ferrell, k. (2003) InformationWeek : Outsourcing 's Benefits May Be More Than Monetary http://www.informationweek.com/news/services/showArticle.jhtml?articleID=15200441 [Accessed 02/12/2009]. Platts, K. W. Probert, D. R. and Cáñez. L. (2002) “Make vs. buy decisions: A process incorporating multi-attribute decision-making” International Journal of Production Economics, Vol. 77, No. 3, pp. 247-257. Weetman, P. (2003) Management Accounting: An Introduction, 3rd Edition, Essex: Prentice Hall.