In the following essay I will be looking at the arguments put forward by Robert S. Kaplan and others on why management accounting techniques had lost their relevance to organisations by the 1980s. Since the 1980s new management accounting techniques have been developed, I will be looking at two recent developments in management accounting and assessing whether they have sufficiently addressed the concerns raised by Kaplan and if they have improved the usefulness of management accounting in organisations
composition of MA used in the research i.e. MA techniques, skills and roles. Change in Management Accounting Technical innovation has been a marked feature of MA over the past two decades. New methods such as activity based costing, quality costing, life cycle costing, target and kaizen costing, throughput accounting, the balanced scorecard and ‘beyond budgeting’ have been prominent developments extending the management accountant’s tool kit. Empirical research confirms that the new techniques are
One of the basic parts of cost accounting is to gauge the cost of tangible or intangible product or service. All costing models are attempting to discover the "correct" cost 1.e actual cost without any cost variances for all cost objects, for example, product, profit, segment, and division. costing methodologies all over the world apportion overhead by utilizing volume- driven measure, for example, unit transformed to first gauge a foreordained overhead rate then assign overhead by applying this
The current issue and full text archive of this journal is available at www.emeraldinsight.com/0951-3574.htm AAAJ 21,2 Strategic management accounting: how far have we come in 25 years? Kim Langfield-Smith Monash University, Melbourne, Australia Abstract Purpose – The purpose of this paper is to provide a review of the origins of strategic management accounting and to assess the extent of adoption and “success” of strategic management accounting (SMA). Design/methodology/approach – Empirical
Pushing the art of management accounting Despite the many strides the profession has made over the years, some still believe that management accounting practices haven’t taken as strong a hold in organizations as they should. FCMA Alexander Mersereau describes the challenges that are slowing the adoption of critical management accounting tools in broader business By Alexander Mersereau, CMA, FCMA M anagement accounting practice has developed substantially over the past century, but recent
Changes in roles and activities of management accounting due to rapid changes in technology, can be described on following points: a. Changes in activities of data collection and control With advanced in technology, most companies are using accounting software or even Enterprise Resource Planning (“ERP”) system (such as SAP, Oracle, etc.) has the potential to have significant impact on the work of management accountants, as it reduces routine information gathering and the processing of information
Target Cost Management: Linkage Between Cost Maintenance and Kaizen Cost Management It is believed that target costing activities are mainly carried out at the concept and development stage of a product. This belief is based on the assumption that about 80 percent of costs for a particular product is locked before the beginning of production stage. Even after all TCM related activities are effectively done during the concept and development stage, this does not assure that once the production begins
(Horngren et al., 1999). Products were either under- or over-costed because the bases used did not accurately reflect the activities consumed by the product. Another problem was that the bases did not accurately reflect the overhead triggered by either batches or product lines (Johnson, 1988), nor were all the production costs driven by these bases. Another source of inaccurate costing has been the mis-measurement or exclusion of relevant costs (Weisman, 1991). Since business firms are subject to a multitude
The Activity-Based Costing Method: Development and Applications Gregory Wegmann* This paper analyzes the management accounting applications, which try to improve the Activity-Based Costing (ABC) method. First, the paper describes them using the Strategic Management Accounting (SMA) stream. Then it presents the main features of these applications. Second, the paper examines in detail two of these features: the widening of the analysis perimeter and the relevant level of details to analyze the
Company Readings 14-1: “Standard Costing Is Alive and Well at Parker Brass” by D. Johnsen and P. Sopariwala, Management Accounting Quarterly (Winter 2000), pp. 12-20. The Brass Products Division of the Parker Hannifin Corporation is a world-class manufacturer of tube and brass fittings, valves, hose, and hose fittings. Despite the introduction of popular new costing systems, the Brass Product Division operates a well-functioning standard costing system. Discussion Questions: 1. What