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Assignment Guidelines
General Guidelines:
1) Please avoid relying too heavily on descriptive sections reproducing
information available from course material or the set text. Further research and the use of current
or recent literatures are encouraged.
2) References: Harvard style
Q1. Strategic management accounting (SMA)
is concerned with providing information that will support the strategic
plans and decisions made within a business: you are required to critically review
this statement.
a)
Establishing
mission, vision and objectives
b)
Undertaking a
position analysis such as SWOT
c)
Identifying and
assessing strategic options
d)
Selection of
strategic options and formulation of long- and short-term plans
e)
Performance
review and control
This should be approximately 1,200 words.
(Guidelines: again, you should answer this question in an
essay format)
I) The major difference of strategic management
accounting from traditional management accounting 200
II) What SMA tools are useful in each steps a-e, e.g.
Life-cycle Costing (i.e. not only consider the production cost to determine a
product’s costing, but also the R&D costs in development stage, and also
the after-sales service cost in the after-sales stage.) 750
Please note while you need to mention all steps in
strategic planning process as above, but you are not expected to discuss all
the strategic management accounting tools in details, you are free to choose
the tool you would like to focus on.
Conclusion (100)
Critically investigate this argument by considering the following
areas:
a) Demonstrate and discuss the underlying differences between the ABC
and traditional approach?
b) What has been the basis of the theoretical criticism of ABC?
c) Outline the practical problems that may be encountered in
implementing ABC techniques in manufacturing and service industry and comment
on how they may be overcome?
(Guidelines: you should answer this question in an essay
format but not separately in 3 different parts, so the following three sections
are only for your easier reference)
a) You can compare their differences based on the
following aspects:
(Guidelines: you may
first mention some background aspects of ABC, example: higher indirect cost
portion.
Then, comparison as
follows
- methodologies (slide #8
in lecture 5 notes, differences in cost centres and cost drivers, etc.)
- effects from different
methodologies (e.g. more accurate)
b) What has been the basis of theoretical
criticism of ABC?
(Guidelines: theoretical criticism on ABC could be in the
following areas:
- mainly based on Noreen’s 1991 paper:
i) the total cost can be partitioned into cost
pools
ii) the cost in each cost pool
must be strictly proportional (i.e. a linear relationship) to the level of
activity
iii) each activity can be
partitioned into elements that depend solely upon each product)
** please try to elaborate by providing examples on each of the above
and also add other possible literature review)
c) Outline the practical problems that may be encountered in
implementing ABC and how they may be overcome?
(Guidelines: you may refer to slide #15 in the Lecture 5 notes, such as
low adoption rate, etc., and discuss the solutions for each of these practical
problems.
Q3. The calculation question on
Absorption Costing & CVP Analysis
(Guidelines:
please refer to our practice question in class and also seminar 3 Question 5
and Seminar 4 Question 4.)
MANAGEMENT ACCOUNTING
FOR BUSINESS
by (Name)
The Name of the Class
(Course)
Professor (Tutor)
The Name of the School
(University)
The City and State
where it is located
The Date
Management Accounting
for Business
PART ONE
Introduction
Strategic management
accounting (SMA) refers to the delivery and examination of information and data
that apprise the process of decision making in an organization. It involves the
management of accounting data from different periods concerning a business as
well as its rivals which aids in the establishment and monitoring of its
strategy. SMA entails accounting tools that establish and nurtures a
competitive organizational strategy by applying relevant information that leads
to the development of useful products and service costs. SMA provides
information that supports strategic decisions that have both internal and
external elements with significant effects on the operations of a corporation.
Difference between SMA
and Traditional Management Accounting (TMA)
SMA predominantly
focuses on comparing an enterprise to its rivals while TMA's significant
attention is on the internal business functions of an entity. SMA offers corporations
a closer perspective on "……. business [techniques and competitors’
procedure] that lets companies make decisions effectively” (Hoque, 2012, Chp.
1). On the other hand, TMA concentrates on the internal affairs of a firm; for
that reason, critics accuse it of overlooking possible organizational dangers
and external opportunities (Atrill & McLaney, 2016). Therefore, SMA is an
advanced version of TMA which examines not only private financial information
but also the external environment of an enterprise. Thus, despite SMA and TMA
helping in strategic decision making, the two elements have different focus
areas.
Strategic Planning
Processes
The
Theory of Constraints (TOC) in Mission, Vision and Objectives
TOC influences
strategic planning through identifying constraints that affect the attainment
of specific organizational goals and then continually developing that restraint
until it is no longer an infringement. Most organizations apply this theory as
it prioritizes the implementation of approaches that can enhance the
establishment of mission and vision (Atrill & McLaney, 2016). TOC allows
firms to identify weakest links in their operations as it hypothesizes every
process in a business is linked. TOC warrants the achievement of profitability
both in the short and long-term; therefore, it is an important instrument that
ensures an enterprise makes proper decisions (Ward, 2012). All of these shows
that TOC is essential in setting mission, vision and objectives since its core
concept dictate that every process has a constraint; therefore, identifying how
a company can improve itself despite limiting factors. Thus, TOC, as an SMA
tool, supports the establishment of mission, vision, and objectives through recognizing
and rectifying effects of constraints, affecting strategic plans.
Benchmarking
in Position Analysis
As an SMA instrument,
benchmarking affects decision making as it lets a business measure and compares
itself against its leading rivals to acquire information that can aid it in
identifying and implementing improvement programs. Through provisions such as
SWOT Analysis, benchmarking enhances organizational decision making since it
compares processes such as marketing, production, and design as opposed to
outcomes (Ward, 2012). According to Atrill and McLaney (2012, 332),
“benchmarking should be a never-ending journey. There should be regular, as
well as special-purpose, reporting of cost information for benchmarking
purposes.” All of these indicate that benchmarking influences strategic
planning since it lets an organization set goals and measure its productivity
in comparison to its direct competitors. As a consequence, benchmarking is an
SMA tool that impacts decision making processes in an organization since it
involves the acquisition of information on performance.
Target
Costing in Assessing Strategic Options
Target costing
enhances decision making since it lets a business plan for its margins,
production costs and price points in advance in line with its objectives and
operations. Using SMA tools, an organization can determine the viability of
manufacturing a product, as a consequence, if it establishes that production
will be unprofitable, then it can abandon the design projects entirely (Ward,
2012). With target costing, an enterprise has a useful instrument that supports
strategic planning since it monitors products from the design stage to the
final phase of manufacturing. As a consequence, Atrill and McLaney concluded
that “……target costing is a market-based approach to managing costs” (2012, 329).
Target costing is an essential element for maximizing the profit function; for
that reason, it provides a firm with valuable information, influencing decision
making processes. Amongst the tools of SMA, target costing is vital as it
enables a firm to decide on outstanding strategic options through providing
analyzed data on functional elements such as price points.
Life
Cycle Costing (LCC) in Selection of Strategic Options and Plan Formulation
External situations affect organizations; as a result, management teams use LCC to enhance strategic planning by directing the selection of action-oriented responses. According to Noreen (1991), LCC concentrates on costs over the life cycle...
