MANAGEMENT ACCOUNTING

Strategic Management Accounting



Strategic Management Accounting

Introduction

In this competitive era, the strategic management accounting is uniquely qualified to design the most rigorous and profitable strategies and take strategic decisions with minimal risk. Over the last decade, out of the pillars underpinning: financial accounting and accounting management is precisely has acquired more role in order to avoid legal interventionism trade voluntarily and stiffness of generally accepted principles of accounting in underpinning the first indulging strategic creativity.

This paper focuses on the issues regarding dealing with performance indication, dealing with product and service costing and dealing with budgeting. Moreover, identifying the potential problems that each of the current approach may cause and how alternative approaches may be more effective in the context of operational and strategic management.

Part a) Return on Capital Employed (R.O.C.E.)

The idea that underlies managing University of Newland ROCE based on corporation is that shareholders of the corporation have invested some capital, those who want maximum profitability.

The University of Newland centralizes the group's financial management, i.e. decides when to cover the capital requirements of a business with own resources, or when covered with borrowed funds. It is not business who decides, but business merely requires a certain level of resources to look for it. In this sense, the corporation is the source of funds for all business units and, ultimately, to all companies or companies that make up such business units. The business units are accountable to the corporation return on total capital employed.

Thus, the business units should not worry about obtain bank financing, or how much such funding. They should not worry about asking the corporation more capital necessary (do not have idle assets), and obtain the return Maximum business, and to require the same to their companies or societies. The University of Newland study projects that address each department, and approve, under the assumption that promise get the ROCE minimum required, and that will be able to obtain the necessary capital, either because they have cash available. This is because it will raise capital or will not pay dividends, or because it will increase borrowing (ujdigispace.uj.ac.za).

Periodically (at least every year-end), the University of Newland accounts for each department (balance sheet and income statement), and calculates A ROCE of each to see if overall compliance with the ROCE required. The accounts (balance sheet and income statement) are together embodied all the investment projects which have been approved to the company or the UN, in the state they have at the times. Because projects have different rates of return (Other TIR), and profitability evolves according to the project's life (Initial state, intermediate or final), only when you balance status and income statement for the year can deduce is still the ROCE of the UN or society as a whole. In that sense, University of Newland should not be confused ROCE (return on global resources used by an enterprise or business, as plasma on its balance sheet), with IRR (internal rate of return on a given investment ...