The Rise and Fall of Management Accounting

Problem Statement

• Management accounting’s report fail to help manager make decision to reduce cost & improve productivity
• Lack of information to interpret real meaning of data
• Fall of management accounting that the improvement does not reflect with the changes business condition

Objective

• Identify the problem causes the fall of management accounting
• Solution to find a way to improve management accounting that provide accurate information an easy access for manager make decision
• Criticism of lack of management accounting
• Link between past management accounting & present management accounting

Methodology of Study

1. Historical & Background of management accounting

i. Early age
- Simple transaction  No level of management
- Focus on conversion cost (Labor, Material, & some attribution overhead)

ii. Middle Age
- Advances in transportation & communication (railroad & television)
- Much larger geographical area distribution products
- Provide summary measure of performance

iii. Modern Country
- Problem coordinating diverse activities
- Management accounting innovation return on Investment (ROI)
- Measure in term of multidivisional form

2. Dupont & General motor as model
• Return on Investment (ROI) measure
• Evolution of management accounting did not keep pace with the improvement in corporation product & process technologies

3. Accounting for Caravan
• Allocate total profit for short term period not meaningful exercise
• Cash flow of transaction is important for cash receipt & cash expenditure

4. Academic Led Astray
• Focus narrowly on simplified model
• Inadequate cost control
• Traditional measure approach

5. Research from Tom Johnson & Bob Kaplan
• Companies not aware the truth management accounting
• Companies apply traditional system measure which lead difficulties interpret real meaning of information from data
• Provide book for management accounting for people to aware the important of