Management Accounting Case Study

Read Complete Research Material

MANAGEMENT ACCOUNTING CASE STUDY



Management Accounting Case Study



Table of Contents

Introduction3

Activity Based Costing3

Total Quality Management5

Continuous Improvement6

Key Performance Indicators8

Conclusion12

References13

Management Accounting Case Study

Introduction

With technological changes and state intervention, the geography of steel production witnessed significant movement away from raw materials and national markets to increasingly global markets and offshore production. With neoliberal policies, the industry is characterised by more international trade, foreign direct investment, mergers and acquisitions, and, unexpectedly, the predominance of entrepreneurs and firms from developing countries. More recently, as a result of rising energy and raw material costs, the geography of the industry is on the threshold of another round of spatial reorganisation (Nath, 2006, 18). The Tata Group, a highly diversified family business, also expanded its steel operations around the world, including Europe, Vietnam, Singapore, and South Africa. This paper is based on a case study on Tata-Corus Steel, one of the leading steel manufacturing firms. This paper highlights the importance of continuous improvement in relation to the key performance indictors based on activity based costing.

Activity Based Costing

Activity-based costing is a tool organisations can use to develop more accurate cost information to enhance managerial decision making. ABC systems are more complex than the cost reports prepared by the steel giants to determine reimbursement rates. Costs, services, and products are identified at a much finer level of detail. ABC systems extract databases to determine the quantity of all different products supplied. The costs of staff time, supplies, and equipment are assigned to departments. A schedule of relative values is used to find the cost of specific steel products. The cost of these products is assigned to specific stays or encounters according to products used in steel industry.

The costing perspectives adopted typically are those of the programme (total budget, divided by total youth mentored). Rarely are volunteered and donated resources measured and valued (Mayne, 2007, 25). Also, the estimates pertain to only a limited range of mentoring programme models, all implemented within the United States. They therefore may not generalise to other programme models (e.g., e-mentoring) and to mentoring in other countries.

Additional useful information to have in reports of costs are the types and amounts of time, space, transportation, and other specific resources that made a specific mentoring procedure possible—as well as the current monetary value of those resources. This information could include the amount of volunteered time and donated resources used, which could allow a comprehensive understanding of what it takes to operate a mentoring programme. In a comprehensive survey of mentoring programme costs, (Lala, 2007, 45) found that the monetary value of volunteered and donated resources (which they term “off-budget” costs) slightly exceeded the costs actually paid by the programme for staff, space, and other resources. This can be interpreted to imply that the cost of mentoring programmes, defined comprehensively from a societal perspective, is a bit more than double the cost reported for mentoring programmes based on their budgets or their expenditures.

An important limitation of ABC systems is that they have not been widely ...
Related Ads