Fluent Essays

Follow the instruction to write 1900words management assesmentPlease read all instructions very carefullyAll the work must be originalTurnitin report is required individual_assignment_q2_2020_1_.docx assignment_1.docx harvard_referencing_guide.pdf Unformatted Attachment Preview Individual Assignment Sydney Graduate School of Management School of Business 200494 Management Accounting Individual Assignment (20\%), Quarter 2, 2020 Key factors to keep in mind when writing your submission are: 1. The due date for the hard copy of the individual assignment is at the beginning of your seminar in Week 8, week commencing 25 May, 2020. The electronic copy is to be lodged on vUWS by 12:00 midnight on Monday, 25 May, 2020 2. You must submit Microsoft Word (electronic) copy of your assignment through vUWS by 12:00 midnight on Monday, 25 May, 2020. Please also refer to instructions within the Learning Guide. 3. The file name for the electronic copy must follow the following pattern: your student ID number followed by 200494Assignment. For example, if your student ID number is 17432968, the file name should be 17432968_200494Assignment. 4. Students are to keep a copy of all assignments submitted for marking. 5. Ensure you use accurate spelling and grammar. It is often best to state things simply and clearly rather than using complicated language in the wrong context. Prior to submission make sure you use tools like spelling and grammar checkers in WORD. You may also want to make use of online tools (e.g. the Writer’s Diet http://writersdiet.com/WT.php?home to improve the quality of your written work). 6. All sources of information must be appropriately acknowledged. Ensure that all in-text references are accurate and comply with the Harvard referencing style. A guide is available on the vUWS with examples to assist you. Ensure you use only credible sources appropriate to your level of studies. Wikipedia, for example, is not a credible source. A Reference list of all works cited in your submission must be provided. 7. THIS IS AN INDIVIDUAL ASSIGNMENT REQUIRING AN EVAUATION OF A CONTEMPORARY MANAGEMENT ACCOUNTING TECNIQUE. IT IS NOT A GROUP ASSIGNMENT. Each student must present their own work. Failure to do so could lead to accusations of academic misconduct. Please refer to the Misconduct Policy. For the full definition of academic misconduct and the consequences of such behaviour, you are advised to read the Student Misconduct Rule at http://www.westernsydney.edu.au/about_uws/leadership/governance/student_misconduct_rule. 8. Use the Assignment Cover Sheet and include your Name and Student ID on the cover sheet. Ensure that the declaration is signed and dated on the Assignment Cover Sheet. 9. In addition to loss of marks for incorrect answers, marks may be deducted for untidy presentation including inappropriate formatting, poor numerical punctuation, not adhering to other requirements of the assignment. Begin each question on a new page. All journals, tables and statements must have appropriate headings and be presented in a proper format. All answers must be supported by relevant calculations. 10. Solutions to the questions contained in this assignment may require research beyond the recommended textbook. 11. Assessment percentage 20\% (out of 100\% total for the unit). Assignment will be marked out of 100 and converted to 20\%. Marks for each question are shown alongside the question number. Page 1 of 3 Task: Reporting on economic, social and environmental ramification of COVID 19 You are working as a management accountant with Clean Living Limited, a large travel company that specialises in green tours- package tours to environmentally sensitive destinations. These type of tours had been growing in popularity among local and international tourists until the breakdown of the COVID 19 pandemic in December. The Clean Living Limited has branches in Australia, China, India, and Singapore. The company management had been contemplating to expand its open tours packages to the Arctic National Wildlife Refuge in Alaska and Serengeti safari park in Tanzania by the end of 2020. However, due to the worldwide spread of the COVID 19 as a pandemic, the company’s current operation has become totally stagnant. The company’s management is seriously considering redesign its strategic planning and operation to minimise the damage and to ensure future sustainable operations. Remember, your report is crucial for management to undertake immediate strategic changes. Required: You are asked to prepare a report on the following: 1. Identify and briefly explain the possible financial, environmental, social and broader economic consequences the company is being exposed to. 2. Identify the key stakeholders of the company that are going to be affected by the pandemic 3. Highlight the possible changes to the following indicator: (a) Return on Investment (ROI) (b) Residual Income (RI) (c) Economic Value Added (EVA) (d) Earnings Per Share (EPS) 4. The company management anticipates that the situation will get back to normal by the end of September. Traditionally, the peak season starts from the beginning of November and continues until the end of March. In the meantime, they are contemplating the development on a sustainable Balanced Scorecard to regain its competitive position in the market within the shortest possible time. You are given the following list of variables related to the economic, social and environmental perspectives. Select one variable from each perspective that you consider as the most important, provide your argument in favour of your selection. Economic Social Profitability Employment Diversification of tourism package Safety Destination’s competitiveness Health Pricing Environmental Natural heritage and biodiversity of the tourist location Cultural and historical heritage Contamination Page 2 of 3 Instructions: Your report should be structured as follows: Structure Cover Page Executive Summary Table of Contents Introduction Body Conclusion Reference list Maximum Word limit 50 100 100 1500 150 Page limit 1 1 1 1/2 3-5 1/2 1 (Please read all the information provided in the previous page before starting the report Page 3 of 3 ACTIVITY BASED COSTING 1 TABLE OF CONTENTS EXECUTIVE SUMMARY .............................. 1 INTRODUCTION ........................................ 1 BODY ........................................................ 1 ACTIVITY BASED COSTING vs TRADITIONAL COSTING METHOD 1 ACTIVITY BASED COSTING METHOD IN THE MANUFACTURING INDUSTRY 1 EXAMPLES OF COMPANIES IMPLEMENTING ABC 1 PROS & CONS OF ABC ............................... 1 CONCLUSION ............................................ 1 EXECUTIVE SUMMARY 2 This report talks about the Activity-based Costing and how effective is the method for a large manufacturing firm. Even though it does have some limitations but due to its constant growth, it is known to be more accurate and complexed then traditional costing. ABC is widely implemented due its allocating techniques. INTRODUCTION ABC system is a widely adopted contemporary method that can provide relevant information which can lead to a more sustainable performance measurement, cost estimation and better strategic managerial decision (Sengphanich 2007). ABC can identify multiple indirect manufacturing over-head costs, these selected activities and cost drivers provides the mangers to transfer various manufacturing overhead costs to cost objective and trace them as accurately as they identify direct material and direct labor cost because of which ABC is more systematic than the traditional method, these arguments have encouraged a growing number of firms to impose ABC system 3 BODY According to (Schoute 2011) It is widely recommended that costing practice should be closely interconnected to the fundamental work of a firm. These interconnections can help improving the company’s profitability and overcoming limitations and deficiencies caused by traditional costing approaches. Moreover, the traditional costing system has been criticized due to its insufficient way of allocating overhead cost and are not similar to the authoritative production system for most of the manufacturing firms. Whereas, ABC is one method which determines these short comes. As mentioned by (Turney 2010) ABC provides an accurate result related to performance measures for customer profitability, structuring sustainability plans and aiding budget preparation and strategic planning. As mentioned by (Cardos & Pete 2011) in today’s time companies and mangers necessitate cost system to implement three paramount functions: • To evaluate the inventory and quantify the COGS for reporting. • Approximation of the costs of activities, products and customers to improve the internal operations. • Anticipate the cost information more accurately to have an efficient data regarding both essential and operational improvement. 4 ACTIVITY BASED COSTING vs TRADITIONAL COSTING METHOD 5 6 According to (Reynolds 2014) ABC helps the company to allocate the activity costs which are collected in multiple costs pools to each product on the basis of its usage per product unit, whereas in traditional costing, the resources are directly assigned to the production units against a single cost driver such as direct materials/direct labor. According to (Baykasoglu & Kaplanoglu 2008), The traditional costing system is unable to satisfy the manufacturing sector due to the cost system which disfigures the cost by using the overhead method, whereas the ABC method helps the manufacturing sector to improve their understanding related to product costing behavior. As mentioned by (Rasiah 2011), traditional costing only identifies the cost which are spent and cannot reveal the actual cost related to indirect cost of an individual product, while ABC recognizes and allocates every activity relating overhead cost to cost objective which then helps the company to reduce the cost and improve their performance and helps them maintain their cost per product. ACTIVITY BASED COSTING METHOD IN THE MANUFACTURING INDUSTRY As mentioned by (Rezaie, Ostadi & Torabi 2008) Many manufacturing organizations are completely focused on worldwide competition to improve the quality of the product quickly with a competitive cost. To achieve their goals, the manufacturing organizations have become more adaptive, consolidated and highly mechanized, despite of achieving these advantages these systems cannot be used as a competitive advantage without a pragmatic and more accurate costing technique. There has been 7 8 number of initiative taken by the manufacturing industry to compete in the global market, and one of the initiative is to implementation of ABC in the manufacturing sector. ABC helps the company to reduce the production cost of the unit by decreasing the number of component used in the unit and by allocating the right process combination for an individual component of the product. According to (Park & Simpson 2008) Product diversity designs are one way of costeffectively designing different products according to the platform and allocating them to the particular market sector, these allocations of the products can demonstrate an understanding of customer’s needs and building a cost-effective product per unit. In a large manufacturing companies, product diversity with a cost-effective design of each product is one way of competing in the global market. For such companies, ABC improves the measures of overhead costs which are not equivalent to the proportion of the products produced. One of the main reasons of ABC being the right system for a product diversified manufacturing companies are: • This system helps to increase the range of products and the capacity of the production. • It considers that the total overhead cost of the total cost incurred does not change with the volume of the units produced. These factors helps a company to avoid cost distortion and helps to rearrange the cost relevant to its products. EXAMPLES OF COMPANIES IMPLEMENTING ABC There has been a vast change in the business environment due to which a large number of manufacturing firms are facing complications regarding their operating and production sector due to which many manufacturing companies have adopted ABC system. Few of the researches which indicates the success of ABC are as follow: (Chouhan, Soral & Chandra 2016): The paper demonstrates that more than 45\% of the manufacturing firms throughout the country has successfully implemented ABC cost reporting and management. And most of the management agrees that the model greatly contributed in efficient resource management of the firm. (Nassar, Morris, Thomes & Sangster 2009): The paper indicates that understanding and applying ABC method within Jordanian helps to identify the components related to increase in overhead cost, growing cost and currently the increase in product variants. (Tupmongkol 2008): According to the study provided in this paper, the organizations in Thailand which has implemented ABC indicates that this method gives more accurate details regarding the cost related information, this led them to improve the decision making on the pricing of the products and also increased the effectiveness in the organization. 9 10 (Majid & Sulaiman 2008): This study indicates that the companies in Malaysia which has adopted ABC, recognizes this system is a beneficial tool for process costing and understanding all inputs and range of activities and their cost driver related to the manufacturing process. (Duh, Lin, Wang & Huang 2009): According to the research which was conducted in a Taiwanese textile company, indicated that ABC system integrates cost drivers that are based on volume as well as the ones which are not, unlike the traditional method. These incorporation helps to contemplate the effect of modifying the product cost. (Byer, Stower & Torry 2009): This study survey which took place in Australia states that, implementation of ABC in Australia has been successful due to the information they redeem from the ABC system which helps them to improve their organizational performance. 11 PROS & CONS OF ABC PROS: According to (Askarany & Yazdifar 2009) the advantages of ABC over traditional cost method is that, ABC implements with today’s managerial needs and generates cost information help to evaluate the products profitability. ABC can lead to more precise method to evaluate the appropriate costing of the product per unit. ABC help obtain and distribute the operating cost and obliterate the overhead cost. ABC even helps mangers to recognize and decrease the overhead and cost drivers and non-valueadded activities and convert these cost drivers to cost objective. As mentioned by (Chea 2011) ABC helps the mangers to analyze and allocate the portion according to the sections like groups of indistinguishable products, individual customers or group of clients, by dividing these sections into portions will help the managers to have a closer view of each portion. For example, a production manager can view all the cost relating to the product or a group of products, such as a can or a bottle of soda which are made of different flavors and produce according to the quantity of a bottle or a can. The brands profitability can be judged by viewing the revenue earned by the soda and matching it with expenses like promotion, advertising etc, which will help managers maintain the soda’s marketplace. 12 CONS: As mentioned by (Rasiah 2011) ABC is widely criticized due its inconsistency with the prolonged improvement and complete quality management. Another disadvantage of ABC is that it is expensive and time consuming to implement then traditional costing. Companies do require to train their employees regarding the method. Its major disadvantage is, it is not compliant with the GAAP principles which means the companies apply another costing system to incorporate with ABC. According to the rule of GAAP, the companies need to cover all manufacturing costs in its external reports, whereas ABC abstains all manufacturing costs. ABC costing fails to take into account costing like salaries of employees like managers who devote a part of their job responsibilities in the manufacturing. There is no relevant way to assign these salaries into the product absorption cost. 13 CONCLUSION As mentioned by (Abusalama 2008) ABC identifies the activities related to overhead costing which varies in proportion to change and evaluates the volume utilized by the production. ABC helps to identify the cost of the product which are underrated and avoid the costing which are overrated. As mentioned before in the report the implementation of ABC is more beneficial for a large manufacturing companies, even though it has some limitations which are cost effective, but it does help to allocate the overhead cost to cost objective and helps to view the price of the product per unit more accurately. It also eliminates some unwanted manufacturing cost from the product. 14 REFERENCE LIST • Abdul Majid, J and Sulaiman, M 2008, Implementation of activity based costing in Malaysia: A case study of two companies Asian Review of Accounting, 16(1), pp 39-55. • Abusalama, F A 2008, Barriers to adopting activity-based costing systems (ABC): an empirical investigation using cluster analysis, Doctoral, p 7 • Askarany, D and Yazdifar, H 2009, Why ABC is not widely implemented? • Baykasoğlu, A and Kaplanoğlu, V 2008, Application of activity-based costing to a land transportation company: A case study, International Journal of Production Economics, 116(2), pp 308-324 • Byrne, S, Stower, E and Torry, P 2009, Is ABC adoption a success in Australia?, Journal of Applied Management Accounting Research, 7(1), p 37 • Cardos, I R and Pete, S 2011, Activity-based Costing (ABC) and Activity-based Management (ABM) Implementation–Is This the Solution for Organizations to Gain Profitability?, Romanian Journal of Economics, 32(1), p 41 • Chouhan, V, Soral, G and Chandra, B 2016, Developing an ABC model: a case study of Indian company, Abhigyan, 34(2), pp 66-80 • Chea, A 2011, Activity-based costing system in the service sector: A strategic approach for enhancing managerial decision making and competitiveness, International Journal of Business and Management, 6(11), p 3 15 • Duh, R R, Lin, T W, Wang, W Y and Huang, C H 2009, The design and implementation of Activity-Based Costing: a case study of a Taiwanese textile company, International Journal of Accounting & Information Management, 17(1), pp 27-52 • Nassar, M, Morris, D, Thomas, A and Sangster, A 2009, An empirical study of activity-based costing (ABC) systems within the Jordanian industrial sector: critical success factors and barriers to ABC implementation, In Accounting in Emerging Economies, pp. 229-263, Emerald Group Publishing Limited. • Park, J and Simpson, T W 2008, Toward an activity-based costing system for product families and product platforms in the early stages of development, International Journal of Production Research, 46(1), pp 99-130 • Rankin, R J 2016, Exploring the Relationship among Contextual Factors and Activity-Based Costing Adoption, Northcentral University • Rasiah, D 2011, Why Activity Based Costing (ABC) is still tagging behind the traditional costing in Malaysia?, Journal of Applied Finance and Banking, 1(1), p 83 • Reynolds, A 2014, Factors influencing the success of activity-based costing in the Nelson Mandela Bay metropole manufacturing industry (Doctoral dissertation) • Rezaie, K, Ostadi, B and Torabi, S A 2008, Activity-based costing in flexible manufacturing systems with a case study in a forging industry, International Journal of Production Research, 46(4), pp 1047-1069 16 • Schoute, M 2011, The relationship between product diversity, usage of advanced manufacturing technologies and activity-based costing adoption, The British Accounting Review, 43(2), pp 120-134 • Tupmongkol, T 2008, An empirical study of the factors of the activity-based costing (ABC) implementation in Thailand: four case studies ... Purchase answer to see full attachment