Management Accounting Notes
MANAGEMENT ACCOUNTING
Lectures
Toyota – brake failure even though standards were followed, the standards weren’t revised – RIGID
Shree Renuka Sugars Ltd. ‘turned around every single one of its sick leased units, creating viability out of a liability.’
Boeing
Reached the point where between 70% and 80% of the costs assigned to the final cost objectives of a manufacturing or engineering line organisations were allocations from common overhead pools
‘Because technology related costs were buried in overhead, this approach tended to move the dollars from areas with higher technology costs into units with the larger direct labour elements.’
Now...
‘we are moving from a functional enterprise to one organised around product processes.’
‘But it’s the direct, measurable, cause-and-effect link back to the business unit’s products that was missing.’
‘Today, the organisation can exercise significant influence and control over the costs it incurs.’
‘the business manager has a much broader sphere of influence in which to exercise control and make improvements within the business unit.’
‘business units need to understand their cost drivers to increase product quality, cut costs, improve customer response time and so on.’
‘process accounting supports other concepts in our continuous process improvement strategy, including total accountability, responsibility and control; flexibility; and total cost tied to customer value.’
In absorption costing, fixed production costs are treated as part of the product cost, and it is the product cost which is the basis for the valuation of stocks.
Under marginal costing, the fixed production cost is not included in the product cost, but is treated instead as a period cost.
So it is written off in the period in which it arises, and is not included within any stock valuation.
‘Some would claim that the use of ABC is attempting to bridge the gap between the use of a variable cost/contribution approach at one extreme, and full
Lectures
Toyota – brake failure even though standards were followed, the standards weren’t revised – RIGID
Shree Renuka Sugars Ltd. ‘turned around every single one of its sick leased units, creating viability out of a liability.’
Boeing
Reached the point where between 70% and 80% of the costs assigned to the final cost objectives of a manufacturing or engineering line organisations were allocations from common overhead pools
‘Because technology related costs were buried in overhead, this approach tended to move the dollars from areas with higher technology costs into units with the larger direct labour elements.’
Now...
‘we are moving from a functional enterprise to one organised around product processes.’
‘But it’s the direct, measurable, cause-and-effect link back to the business unit’s products that was missing.’
‘Today, the organisation can exercise significant influence and control over the costs it incurs.’
‘the business manager has a much broader sphere of influence in which to exercise control and make improvements within the business unit.’
‘business units need to understand their cost drivers to increase product quality, cut costs, improve customer response time and so on.’
‘process accounting supports other concepts in our continuous process improvement strategy, including total accountability, responsibility and control; flexibility; and total cost tied to customer value.’
In absorption costing, fixed production costs are treated as part of the product cost, and it is the product cost which is the basis for the valuation of stocks.
Under marginal costing, the fixed production cost is not included in the product cost, but is treated instead as a period cost.
So it is written off in the period in which it arises, and is not included within any stock valuation.
‘Some would claim that the use of ABC is attempting to bridge the gap between the use of a variable cost/contribution approach at one extreme, and full