The Impact of Contingencies on Management Accounting System Development.

1725 Words Jan 1st, 2013 7 Pages
TABLE OF CONTENTS

ACKNOWLEDGEMENT ii

TABLE OF CONTENTS iii

1.0 INTRODUCTION 1

2.0 Contingency Theory on Management Accounting SYSTEM 1

3.0 THE IMPACT OF CONTINGENCIES ON MANAGEMENT ACCOUNTING SYSTEM DEVELOPMENT 2 ( i ) Environment 2 ( ii ) Strategies and mission 3 ( iii ) Technology 4 ( iv ) Firm interdependence 4 ( v ) Business unit, firm, and industry variables 5 ( vi ) Knowledge and observables factors 5 ( vii ) Culture 6

4.0 Summary and Conclusions 6

5.0 REFERENCE BOOKs 7

1.0 INTRODUCTION
The management of a company needs to develop cost and management accounting systems which will provide adequate information about main impacts on cost characteristics and companies performance. The cost and
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* Organisation that is continuously launching new products needs more sophisticated forecasting capability from its system than one that is well established in a stable predictable markets.
Internal contingencies are determined as organizational aspects, technology and strategy. The effectiveness of performance measurement and evaluation depends on the internal factors and the management accounting practice. Additionally, feedback from the effectiveness of performance measurement and evaluation of the management accounting practice can be considered features within the environment of an organisation that affect the design of an accounting-based control system include its degree of predictability the degree of competition faced in the marketplace, the number of different product-markets faced, and the degree of hostility exhibited.
( ii ) Strategies and mission
The adoption of varying corporate strategies and firms’ strategic mission also determine the level of management accounting system to be in place. The strategies may be to lower the cost or differentiation, defending or prospecting and harvesting or divesting. It is observed that with low cost and defending strategies the firms main focus remains towards standardized or limited product lines, lower costs, economies of scale, and ensuring operating
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