What are the reasons for the role of management accountants changing?
- Elimination of routine jobs
- Line managers with accounting knowledge
- More forward looking information
- A wider role for the management accountants
What are the reasons of elimination of routine jobs
- Data generated from an “IT system”
- Changed quality and quantity of information used to make decisiions.
- Wide variety of reports that can be generated from IT systems.
- More analytical and interpretative skills required.
Why do line managers now have more accounting knowledge?
- Shift in responsibility for budgeting
- Shift in accountability of producing budgets
- Reporting to senior managers
- All changing the information needs for meetings - progression of organisation.
What difficulties may MA’s facce in the broadening of the role?
- Difficulty in interpreting mgmt expectations.
- Difficulty in adapting to differential styles of mgmt.
- Conflict w/ operational managers who may not want them to be involved.
What is Total Quality Management (TQM)
Continuous improvement in quality, productivity and effectiveness obtained by establishing mgmt responsibility for processes as well as outputs.
Also known as Kaizen
Why do we want to ensure goods are of a sufficently high quality?
- avoid goods being returned
- avoid wasted efforts of return
- avoid reputational damage.
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What is the definition of quality?
- Fitness of use
- The totality of characterisitics .. ability to satisfy customers’ stated or implied needs’
What is quality management?
Overseeing all the activities needed to achieve and maintain the required quality.
What are the costs associated with quality?
*** Costs of conformance **
* Prevention Costs - assurance
* Appraisal Costs- quality control
What is a lean system?
The idea of getting:
* To the right things
* To the right place
* At the right time - connecrted w/ RIFD technology
To reduce wastage, obsolescence, staff time and change org culture.
What is the five S concept
- Structurise- Logical for where inventory stored.
- Systemise - system for identifying inventory.
- Sanitise- look after inventory.
- Standardise - consistent approach.
- Self-discipline -reports should identify items stored incorrectly. It systems now manage quality not just finance.
What is the acronym for the problem solving approach?
- DMAIC
- Define - Define proble, clarify purpose, develop project plan.
- Measure- data collection to quantify the problem. CSF’s
- Analyze- consider process, materials, environmental factors and staff.
- Improve- develop solutions, implement.
- Control- monitor changes. Deal w/ problems arising. Control process.
What is lifecycle costing?
Seeks to ensure costs in all phase of product: design, manufacture, operation and end of life are exceeded by revenue.
What are the four principal lessons of Lifecycle costing?
- All costs considered when working out cost per unit and profitability
- Better chance of achieving target of cost reduction and profit.
- May costs are linked. Improved training reduce end-of-life costs.
- Costs are committed and incurred in the future because of decisions that have already been made.
Just-In-Time
Focus is on allowing the demand to demand to determine the production (‘demand-pull’ production).
Results in greater customer satisfaction, savings resulting from greater efficiency, and savings resulting from the need to have lower stock levels.
When may JIT not be appropriate?
Raw Materials
* Some materials produced seasonally so must be purchased when available.
* * To obtain bulk discounts
Work-in-progress
- Having some partially completed will allow fast completion.
- Chemical processes that take time to complete.
Finished goods
* To deal w/ variable demand.
* Chemical processes that take time to complete.
Main Featurs of A Just-In-Time Approach?
- Very little (or no) inventory held
- A pull approach: inventory is ‘pulled in’ response to orders recieved.
- A very high degree of coordination is needed internall and with suppliers and customers. Good management information system.
- Reliable suppliers and transportation.
How may one reduce a cost gap?
- Simplification of design
- New suppliers to reduce inputs cost.
- Use of standardized components
- Training of staff to improve productivity reduce waste
What are the benefits of target costing?
- Early external focus
- Value adding features only
- Early cost control
- Lower costs per unit
- Reduced time to market
What is Environmental Accounting?
Accounting information of managers in relations to corporate objectives
* Identifying and estimating costs of environmental related activities.
* Identifying and monitoring the usage and cost of resources such as water and fuels.
* Assesing the likelihood of environmental risks.
* Setting environmental related indicators as part of the control and monitoring process.
* Benchmarking activitiies against environmental best practice.
What are the major areas for the application of EMA?
- Assesment of annual environmental costs/expenditures
- Product pricing
- Budgeting
- Investment appraisal
- Calculating costs
- Savings of environmental projects, or setting quantified performance targets.
What are the costs of classifications?
1. Environmental preventon costs: prevent waste
2. Environmental detection costs:
ensure compliance with standards and laws.
**3.Environmental Internal failure costs: ** activities that have produced contaminants and waste that have not been discharged into the environment.
4.Environmental external failure costs: -costs incurred on activities performed after discharging waste into the environemnt.
What are Identification of Costs?
Conventional costs: Direct inputs
Potentially hidden costs: captured by accounting systems but lose identity in overheads.
Contingent Costs: e.g. clean up costs
Image & relationship costs: intangible. Cost of preparing environmental report.
Methods for accounting for environmental costs?
- Input/Outflow analysis
- Flow cost accounting
- ABC costing
- Lifecycle costing
