Strategic Management Accounting Author Institution Strategic management accounting Introduction The mobile phone industry is characterized by an environment in which market and technological changes occur at an ever-accelerating pace. Pear Ltd faces potential challenges in the form of rising margin pressure and decreasing return on invested capital, quality and cost reduction pressures, and increasing expectations on customers centring on quality…
Download file to see previous pages...
The business functions within Pear Ltd’s value chain encompass aspects such as research and development, design of products, services, and processes, production, marketing, distribution, and customer service. As such, cost management is critical component to the company’s operation in integrating and coordinating activities in all spheres of business function. Alternative Methods of Budgeting The traditional budgeting employs the incremental approach whereby the previous year’s budget is used a basis, subsequent to adjustments up and down, from that budget to mirror the changing assumptions for a new year. This incorporates employing the previous year’s budget, adjusted to accommodate known factors such as anticipated price inflation. Although, incremental budgets are crucial for planning, they may be less useful for control. The incremental approach to budgeting has the effect of incorporating last year’s inefficiencies into the present budget (Bhimani and Bromwich, 2010). This necessitates the consideration of alternative methods of budgeting. Zero Based Budgeting Zero-based budgeting avails a better approach to dealing with the drawbacks associated with incremental budgeting. Unlike in incremental budgeting, zero-based approach does not necessarily start from the previous year’s budget level; instead, the existing operations remain evaluated and continuance of the operation or activity ought to be justified based on its utility and its need to the company (Bhattacharyya, 2011). Every plan in this case remain justified as per the total cost, and the total benefits and past performance are not in any way referred as a building block. Zero-based budgeting approach avails some distinctive advantages compared to traditional incremental budgeting such as it allocates financial resources based on planning requirements and results; and, in order to attain efficiency, zero-based approach encourages managers to search for alternative operation plans. However, the process can consume a lot of managerial time and may appear to be “too drastic a solution for the task at hand.” Moreover, short-term benefits may take precedence and obscure long-term planning and there may be annual conflicts over budget allocation (Bhattacharyya, 2011). In order to circumvent these drawbacks, especially concerning the managerial time required, one alternative may be to conduct a rolling budget every year and carry out zero-based budgeting perhaps three to five years, or in cases where a considerable modification that occurs within operations. This compromise may aid weeding out waste and inefficiency, especially within a period of intense competition and reengineering that is characteristic of the mobile phone industry (Bhattacharyya, 2011). The adoption of zero-based budgeting will aid Pear Ltd to save costs and exercise restraint in developing budgets, minimizing the entitlement mentality with regard to cost increases, and budget decisions to be more meaningful during review sessions. Zero-based budgeting approach is applicable to Pear Ltd in aiding the company to utilize the latest insights and business priorities that reveal fresh opportunities to minimize investments and costs in areas where Pear Ltd market share is lower than critical thresholds. Activity Based Budgeting
...Download file to see next pagesRead More
Cite this document
(“Assigment for Strategic management accounting Essay”, n.d.)
Retrieved from https://studentshare.org/finance-accounting/1403608-strategic-management-accounting
(Assigment for Strategic Management Accounting Essay)
“Assigment for Strategic Management Accounting Essay”, n.d. https://studentshare.org/finance-accounting/1403608-strategic-management-accounting.
Management accounting is considered to be useful when it properly displays an external image and a futuristic picture for an organisation. Strategic Management Accounting on the other hand can be distinguished from other management accounting activities through its extensive external orientation; this extensive external orientation includes focus towards customers, competitors, suppliers and all other stakeholders that get affected by the organisation’s normal course of business.
In above connection, strategic management accounting presents numerous benefits in organization decision making. Some of its benefits include; helps in analysis of variances, monitoring and control, financial reporting, controlling cost among other benefits (Codjia, 2013).
Performance measures can be considered as metrics for monitoring the success of an activity and competence of the workforce in utilizing the available resources. Competence can be attained by maximising the output with the minimum number of resources. Improvement in competence can be achieved by providing fewer inputs that can be used to produce a particular amount of output.
The project report then looks at the aims and objectives of establishing a management accounting system and the characteristics of information flow at the strategic level. It also analyse the effectiveness of SMA system in the provision of information to assist the senior management team in the achievement of the corporate objectives at Highline.
ds of 25 sizeable British firms serve as evidences for the statement that British entrepreneurs used standard costing methods even in pre-industrial period 1760-1850 (Fleischman and Parker, 1991), it is still considered that cost accounting began to attract wide interest of
The merit of gun control is supported by the latest research. Most important, Altheimer reported that although that many studies have been done, “most of the research has found a significant association between gun availability and violence.” Altheimer enumerated that the studies that indicate association between gun availability and violence.
trategic management accounting which leads to evaluate an organization’s interaction between its product market and capital market, analyze the internal architecture of the company and its cost considerations so that it can be evaluated whether it is required to bring any
mitting Diode) technology that was new and had enormous potential across globe in making the best cost effective and environmental friendly elements in its use over existing technologies. For the case, let’s understand the product which needs a few technical understanding to
It does not also have periods where there is no depreciation as is the case with the units of production method.
Straight-line depreciation method involves depreciating an asset at a uniform rate throughout
2 Pages(500 words)Assignment
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Essay on topic Assigment for Strategic management accounting for FREE!