STRATEGIC MANAGEMENT ACCOUNTING
This report will attempt to explain what Strategic Management Accounting (SMA) is, how it developed, why Traditional Management Accounting (TMA) is not sufficient to provide information for strategic decisions and the difference between SMA and TMA. It will further outline some of the essential analytical tools or techniques in SMA such as Activity Based Costing (ABC) and the Balanced Scorecard (BSC). SMA is an extremely broad concept, so in order to give a bird’s eye view of the subject this report mainly focus on comparing SMA to TMA and finally describes the importance and criticisms of SMA.
What is Strategic Management Accounting?
“A form of management accounting in which emphasis is placed on
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Bromwich, (1990) contends that SMA enables the management to have a bird’s eye view of the competitors’ procedure and business techniques business and to take decisions accordingly. In this way a major hallmark of SMA is its inclusion of non-financial aspects for the purpose of decision making.
Lords (1996) identifies the following functions which are commonly associated with SMA: 1. Collecting information related to the competitors. 2. Using accounting for strategic decisions. 3. Cutting costs on the basis of strategic decisions. 4. And, gaining competitive advantage through it.
Wilson and Chua (1993) tabulate ten key differences between MA and SMA as following: | Traditional MA | Strategic MA | 1 | Historical | Prospective | 2 | Single entity | Relative | 3 | Introspective | Out-ward looking | 4 | Manufacturing focus | Competitive focus | 5 | Existing activities | Possibilities | 6 | Reactive | Proactive | 7 | Programmed | Un-programmed | 8 | Data orientation | Information oriented | 9 | Based on existing systems | Unconstrained by existing systems | 10 | Built on conventions | Ignores conventions |
Critics have regularly complained that TMA focuses too much on internal business functions of accounting in order to meet the requirements of the internal managers. Some argues that while special attention is given to the internal affairs of the business sight is lost of the external
|Selling Price per|Year 1 Sales Units |Year 1 Year End Stock units |Year 2 Unit Sales |Sales Revenue Year 1 |
Management accounting is about adding real value to the organization by combining accounting, finance and management with the business skills and techniques. It involves in management decision making, devising planning and performance management systems. Management accounting provides expertise in financial reporting and administer to assist management in the formulation and implementation organization's strategy.
Rothschild, J. M., Lee, T. H., Bae, T., and others. "Survey of Physicians' Experience Using a Handheld Drug Reference Guide." (Presented at AMIA 2000 Annual Symposium). American Medical Informatics Association, Los Angeles, California, March 2000.
This report demonstrates the evaluation of current performance of JD Sports Company. Method of Analysis includes Ansoff’s matrix and Porter’s generic growth strategies to discuss the nature of the market which JD Sports invest in. The financial methods are including the flexibility and stability of JD sports which judged by the liquidity, current ratio, operation capital, gearing and profit margin of this company. These figures could be collected from the annual report or balance sheet. This report analyzed the JD sport’s position in the market, and used generic and external growth method to expand market size. Such as acquired a lot stores to improve business profitability. Obviously, JD has expanded to the European
Assume that Pittman Company decides to continue selling through agents and pays the 20% commissions rate. Determine the volume of the sales that would be required to generate the same net income as contained in the budgeted income.
|6. |If Buffo plans to produce and sell 3,000 units next month, the expected contribution margin would be: |
|11. |Fox Company's contribution margin ratio is 20%. If the degree of operating leverage is 15 at the $225,000 sales level, net |
COGS (Cost of Goods Sold) is an “inventoriable cost” ( recorded in the Balance Sheet as inventory and expensed (Income Statement) when goods are sold
Bromwich draws on economic theories. He stated that we need to release “management accounting from the factory floor” to assist it to meet the global challenges in product markets, and to allow management accountants to focus on the firm’s value-added relative to competitors. There are two key themes captured in this paper.
Accounting is a crucial part in running a business. There are various forms of accounting that can be used, it is very important to know which technique is best to use for what companies. Once you figure out a particular technique to use, it is important to keep an open mind if there are any changes that need to take place in the business. By keeping an open mind helps the business adjust and be able to make the right decisions. Every business wants to make a profit; accounting is an important part in helping understand how profits and expense amounts are derived. One form of accounting I will focus on is managerial accounting or also known as management accounting. Managerial
Globalization changes have impacted Burger King in the following ways; since the company began in 1953 with its first restaurant in Jacksonville, Florida and opened several locations across the United States, the company began its international expansion in 1969 with its first international franchise location in Canada, followed by Australia in 1971, and Europe in 1975. The setting up of franchises outside the United States was as a result of fast food opportunities arising outside the United States. So as to fully integrate in the international market, Burger King had to adopt and embrace
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This examination paper comprises 6 pages Candidates should answer questions as follows: All questions should be answered. Show all major workings for your numerical calculations. The examination will be marked out of 100 marks. Question 1: 60 marks Question 2: 11 marks Question 3: 14 marks Question 4: 15 marks The following material is provided: Nil Use of calculators: Only calculators on the University of Otago list of approved calculators are permitted. (Subject to inspection by the examiners) Candidates are permitted copies of: One A4 (or smaller) sheet of paper that is
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Future- oriented: Strategic management encompasses forecasts, what is anticipated by the managers. In such decisions, emphasis is placed on the development of projections that will enable the firm to select the most promising strategic options. In the turbulent environment, a firm will succeed only if it takes a proactive stance towards change.