Management Accounting: Information for Creating Value and Managing Resources

9692 Words Jul 16th, 2011 39 Pages
CHAPTER 1

MANAGEMENT ACCOUNTING: INFORMATION FOR CREATING VALUE AND MANAGING RESOURCES
ANSWERS TO QUESTIONS
1.1 There are several possible answers to the question. QANTAS, the national airline of Australia, has faced a number of changes to the business environment in recent years, including deregulation of the domestic aviation industry. This resulted in increased competition as new firms attempted to enter the industry. The most notable of these was two failed attempts by Compass to succeed in the market and gain market share by savagely cutting prices. Its major competitor, Ansett Australia, collapsed in 2001 resulting in QANTAS having almost a monopoly for a short period. A powerful UK airline, Virgin, has also entered the market
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They also have non-financial resources such as staff and employees, information, work processes, patents, logos and trademarks, committed customers and suppliers and so on. Management accounting should be concerned with non-financial resources, because these determine the capabilities and competencies of the organisation which enable it to survive in a business environment that is becoming increasingly more global and more fiercely competitive. Organisations manage both financial and non-financial resources in order to enhance customer and shareholder value. Management accountants use a variety of processes and techniques to help management to enhance value creation, including: (a) (b) (c) (d) Systems which support the formulation and implementation of strategies. Provision of resource management systems such as information for planning (budgets) and control (performance measures). Provision of cost estimates for various purposes. Contribution towards activities which enhance the organisation’s competitive advantage. Management accounting information is provided to managers and employees within the organisation, whereas financial accounting information is provided to interested parties outside the organisation. Management accounting reports are unregulated, whereas financial accounting reports are legally required and must conform to Australian accounting standards and corporations law. The primary source of data for management accounting…