Management Accounting Business Case Study Assignment - 275 Words

Management Accounting Business Case Study Assignment (Case Study Sample) Content: MANAGEMENT ACCOUNTING BUSINESSBy Insert here your course details,Your tutor's nameYour universityYour department20th December 2015Let us now consider the first questionWe shall first understand what we mean by the term Activity Based Costing (ABC) before moving into the necessary parts.By the term ABC, we assign a cost to something, be it a project or a service or a product etc., based on the activities they consume. This method thus differs from the traditional cost accounting, which assigns costs arbitrarily for overheads and has been developed primarily to overcome the perceived weaknesses of the traditional method (Kfknowledgebank.kaplan.co.uk, 2015). A management which uses ABC method for decisions is called as Activity Based Management (ABM). We shall now illustrate with an example how the traditional and the ABC methods vary.Suppose, let us assume that XYZ Company produces Compact Discs as a part of its expanding business. Then, via traditional and ABC methods , this can be depicted as follows:Manufacturing Overheads Manufacturing OverheadsDirect labour Cost Setup AssemblingCompact Discs Number of Number of HoursBatchesCompact DiscsThis innovative system depends majorly on the following parameters: * Cost incurred significance * Importance of the output produced * Cost drivers.Now let us discuss part I of the question.Basically, the Traditional method of costing product is labour intensified wherein the Indirect Costs will always be lesser than the direct ones. This is basically driven by the principle that, when the production is higher, its overhead costs will also be higher. Thus, in this case the OAR (i.e.) the Overhead Absorption Rate will be either in man or machine hours or in units and is directly proportional to the work done. This was suitable in the past era since there were no heavy rivalries vying for the same group of customers or a heavy competitive market whereas now it is not so. The following point can very well be taken into consideration here: * Overheads always depend on the costs incurred as they would have constituted only a small portion of the total costs. This was because the traditional way is more labour oriented and hence the direct costs will be way higher than the indirect ones and hence a rough estimate of the overheads was thus far more enough during those periods.Now in the modern era, as more horizons are being researched and many businesses getting expanded, it becomes impossible for an organization to get struck with this elementary method and thus, in the emergence of 1980s the actual birth of this ABC method took place albeit its roots are much older. Every method has its shares of positives and negatives and clearly ABC is also a no exception. Here, we primarily try to reduce the head costs by c alculating the amount that an activity needs and simply allotting that much money to it. Every output needs a relevant activity to take place and this form ABCs basic principle. By implementing this, we at every stage identify the unwanted processes and eliminate that and thus improving and speeding the overall process time and according to this, the pricing is also determined based on the relevant cost drivers. Thus both, Time and money, the crucial aspects of any business are saved here. Also, through this method the profitability of a particular area of Business and the profit probabilities of different areas can be adjudged. Thus a fair allocation of overheads happens here and can be effectively applied to the entire business.But, due to the modern processes getting more machine intensified, this method leads to overheads especially production ones growing more than the direct costs and hence an exact estimate is needed every time. Also, as heavy market competition is happening now-a-days, the diversity of the products has also increased. Then, it is not possible for us to reduce the overhead costs every time, especially in the time when the volume of production is huge. The Next point is in each and every stage it becomes practically not feasible to identify the parameters which influence the costs and hence selection of important cost drivers becomes difficult which thereby leads to difficulty in evaluating costs based on activities, which incidentally is the very basic purpose of implementing ABC, thus small industries like cottage industries thus find it extremely difficult to use this as it heavily leans on skilled labour. Let us consider the case of the XYZ Company depicted above. When, it was a small expanding company, it would have used the Traditional Method, which by then was sufficient for the companys production as manual labour is more prioritized here than the machine work which was used only at the latter stages of production contributing li ttle to the total costs and hence negligible. The cost allocation base here was only the labourers. Now, let us assume that this company has grown up, established new bases and in order to maximize its production, goes on buying more and more machines, minimizing labourers. Now, for the machines an initial setup is needed, periodical maintenance is needed and assembling is needed. Thus, here the indirect costs at every stage will obviously be far greater than the direct ones and thus the pricing of CDs also differs. Here, errors can be minimized, a complete finished product is produced and production is quadrupled. Now ABC plays a vital role. It identifies the unnecessary parameters, cuts the head costs and saves monetary loss. Here, implementation of ABC becomes imminent.Part IIMany theoretical criticisms have been put forth in defiance of ABC, the major ones being, * ABC cant be universally adopted (i.e.) those firms which dont offer diverse products cant use this method. * If the implementation is flawed, then the total system just doesnt work out. * It cant provide full relevant information to any firm.The first one can be attributed to the fact that small industries find it increasingly difficult to adopt this technique. The basis, theoretical criticism of ABC is argued by (Conditions Under Which Activity-Based Cost Systems Provide Relevant Costs, 1991). This is due to the fact that the calculation of full production cost per unit is a tad too inconvenient. Also, Noreen argues that the condition of direct proportionality must be taken as both a necessary and sufficient condition for correct calculation and must not be omitted, which will lead to a huge flaw in the method. Also, according to (Conditions Under Which Activity-Based Cost Systems Provide Relevant Costs, 1991), three if and only if conditions must be considered here: 1 The total cost must be divided into cost pools and for each cost pool; there must be only one cost driver. 2 Those cost pools w hich have an influence on the activity level must be considered and all other zero intercepts must be excluded. 3 Individual activity costs at each stage must be summed up to form the whole activity costs.The conditions (2) and (3) are stronger and show the inherent flaw in ABC (i.e.) the inability to identify the unnecessary parameters in all the stages. Also, assuming proportionality as a framework may overstate the relevant overheads. These, theoretical criticisms by Noreen and others led to modifications in the ABC method, which took place in the 1990s. Kaplan and Cooper redefined the concept of resources and cost hierarchy, thus modifying the original ABC description named as first-wave ABC. New concepts were introduced and were collectively termed as Second-wave ABC. But, still many of the textbooks follow the first original one. The modified one is noted for the fact that for the first time, a cost hierarchy basis was introduced, especially unit and batch level, product and c ustomer based ones were considered. Also, the time frame is taken as an important parameter determining the relevance of ABC in a particular situation. (Kaplan and Atkinson, 1998) argue that avoiding this timeframe concept can have many ramifications in the outcome.Part IIIThe main practical problems for not considering ABC in an organization are as follows: 1 Lack of suitability for the business. 2 Lack of internal support from the organization 3 Lack of managerial interest 4 Lack of resourcesAlso, ABC is treated mainly as one of the decision making tools and not a viable replacement for cost accounting systems. (Troxel, et al, 1990). It should be viewed as a one that should yield a more structured and uniform implementation. Basically, when we consider the business accounting information of a company, the following persons most need it to decide the next course of action. They are the Owners, the Customers, Rivals, its Employees, the Shareholders, the Managers, Trade Analysts, Sup pliers, Money lenders and so on. Many companies use standalone ABC packages and specially customized ABC software applications for the above said purposes. Those firms which use ABC are considerably reduced having under its aegis, those who have used and rejected it and those who havent thought of it at all. It is mainly used among the users as a parallel costing system in addition to the main one and hasnt been used as a primary source and this may be attributed to its low success rate and even these users opt for a general package rather than a tailor made one. Hence, more manufacturer...

Dean’s QA Lynn Wooten, Cornell’s Dyson

Dean’s QA: Lynn Wooten, Cornell’s Dyson by: Andrea Carter on July 17, 2018 | 0 Comments Comments 1,910 Views July 17, 2018Lynn Wooten is Dean of the Charles H. Dyson School of Applied Economics and Management at Cornell University. Courtesy photoOut of the eight prestigious institutions that make up the Ivy League, Cornell University is one of two that offer an undergraduate program in business. Sitting at the helm, overseeing the Dyson School of Applied Economics Management, is Lynn Wooten. Wooten assumed the Dyson deanship position one year ago, continuing a decades-long career in academia that has included 19 years as a faculty member of management, first at the University of Florida’s Warrington College of Business followed by the University of Michigan’s Ross School of Business which is her alma mater. In the six years prior to joining Dyson, she served the dean’s suite as associate dean of Ross’s undergraduate business programs. B y her own account, Wooten herself is a long-time consumer of higher education and business education. She recalls her own experience as an undergraduate accounting student and life as a PhD business student to now, years later, having a son who’s completed Cornell’s Hotel School of Administration and a daughter who’s currently exploring colleges and universities to attend. Because of these personal experiences, Wooten’s outlook on the Cornells Dyson School remains big picture. Her goal as dean? â€Å"I want to make sure they have a thriving experience that is truly transformational,† she tells PoetsQuants for Undergrads in a one-on-one interview. This includes a personalized experience for every student who enters as well as ensuring a level playing field for each student.But there’s more. Dyson — ranked 9th among PoetsQuants’ Best Undergraduate Business Programs  Ã¢â‚¬â€ is a small program known for its astonishingly low ac ceptance rate. On her list of things the school can get better at doing? Growing the program and getting students to think beyond finance, marketing, and consulting — what she calls the big three.See the below interview that includes what Dyson looks for in prospective students, Dean Wootens thoughts on the school’s low acceptance rate, and why she feels it shouldn’t discourage students from applying to Dyson. PQ: As the new undergraduate business program dean, what are the top priorities for the program in your view?Wooten: To get people to understand who we are. Our mission is to rigorously train students in analytics, while developing students who want to change the world. A part of this is getting faculty and staff to execute this vision. Third, is creating a transformational learning experience. With us being a small school, we can have a personal design experience for each student who enters. Dean Wooten helps celebrate members of Dysons graduating Class o f 2018. Courtesy photo.PQ: What’s the one thing you think Dyson can become better at doing?Wooten: Definitely how do we grow our program? Also, I think there’s always room to have students think about careers beyond the traditional big three: finance, marketing, and consulting.We have to be intentional with students from the beginning. The world is your oyster with a business degree so how do we get students to think beyond the big three and consider going into government jobs, nonprofits, etcetera? PQ: Dyson is known to have a low acceptance rate, do you think this discourages students from applying? Wooten: It was something similar when I was at Michigan with business being the number one major and the demand for business education being so high. Here, you take only two Ivies with majors in business — Cornell and Penn — and the demand is even higher. Each year, I take 90 freshmen, then I can expand the sophomore class by taking in another 90 transfers. I don’t want people to be discouraged. I say that, by applying,  you have nothing to lose. We do have plans or intentions to expand the program. It’s taking a while because Cornell guarantees freshman housing. Once we build more dorms — in a perfect world — we’ll be expanding the business program.But there are multiple ways to pursue business education at a top school. Though we may have 750 students, you can also minor in business. We have a robust minor. One for pre-med, one for engineering, and we have a leadership minor. PQ: What does Dyson look for in prospective students?Wooten: We do a comprehensive, holistic review. Of course the academics matter, test scores, and grades, but what’s just as important is: ‘Why Cornell?’ What will you contribute to the Dyson community? I want to know who the person is. What makes them stand out and what is their story? If they’re coming to business school because they want to be a nonprofit leader, can they tell that story and tell it consistently? The canned applications are not what I’m looking for. We want to know not only who are you as a leader, but who you are as a learner. I’m looking for students who present themselves as learners and can communicate who they are and what they can contribute.PQ: If there’s one common trait about Dyson students, what would that be?Wooten: A passion for learning and a passion for understanding everyone can be a leader. Maybe the biggest trait, though, is their work ethic. They work very hard here. PQ: Describe the culture at Dyson.Wooten: I think the culture is very entrepreneurial. It’s also a work hard culture and a lift as we climb culture. There’s a lot of peer mentoring here. Students think a lot about leaving their legacy in a way that says, ‘I got through this and now I want to help someone else get through it.’PQ: Whats happening at the school right now that has y ou excited?Wooten: Im excited about the summer read were doing with incoming freshmen and transfer students dealing with a lot of things happening in society right now: immigration, social, and economic disparities. We want students to see fiction as a genre.  Behold the Dreamers  is the title of the book. Our upcoming theme this year is From Dream to Design and were going to have the author on campus in the fall. Im excited about how we think about and conceptualize diversity as an experience in and out of the classroom. The book we’re reading addresses that topic too. Something Ive seen evolve over time is diversity moves beyond race and gender. Theres first  generation, sexual orientation, all types of diversity.On another note, Dyson has been very good at integrating liberal arts with business. Im excited about continuing to help students make sense of that integration.Another thing that excites me is Dyson by Design. This initiative is where we have students become intentional about their curricular and co-curricular activities to put out this transformational experience. What will my Cornell Dyson experience be like? What clubs do I want to be involved in? Finally, Im excited about our new leadership development curriculum. Were starting the first pilot this year for this comprehensive leadership program. Leadership is not a position, but an every day choice about how I show up and contribute to a community. This is my research area, so thats also why Im excited about it.  Theres also going to be a campus-wide leadership minor. Page 1 of 212 »