Motivation and Management Control Systems - Research Paper Example

MANAGEMENT ACCOUNTING By Presented to I. Introduction Costs can be referred to as awful things experienced or fine things lost. Standard costing and variance analysis by any government involves expenditure, levying, loaning, regulating, altering assets liberties or liability regulations. Government or organizational action normally formulates both good and things in trade. The decisive issue in management accounting is whether the government, organization or consumer is more contented with the transaction or dealing made. Civic actions will tend to generate either more benefits or demerits that determine the advantages of traditional budgeting. Economists and accountants imply that two diverse fields in terms of cost and variance analysis. Therefore, when economists describe cost through variance analysis and standard costing, they include the sacrifice of opportunities and important choices. From an accountant’s perception, standard costing and traditional budgeting are prospective, subjective, and occasionally costs-evaded. The following paper will look into the alleged advantages, and demerits of standard costing, variance analysis and traditional budgeting in management accounting (Callahan, Stetz, and Brooks, 2011, p. 199). I. Alleged advantages and disadvantages of traditional budgeting Certain criticisms of traditional budgeting arise from the descriptions of the significant terminologies used by economists and accountants in the government and organizations (Emmanuel, Kominis and Slapnicar, 2008, p. 2). Time management is the establishment of interceding variables that improve the perception of time. A budget is an estimated total cost or income for an operation or activity covering a particular period. This way, accounting managers are able to ease pressure on their behaviors and perceive control over time and operations assumed significant in variance analysis (Emmanuel, Kominis and Slapnicar, 2008, p. 3). A budget can also be an arrangement for the management and control of assets and expenses. Motivation in variance analysis involves control through a set of processes, instruments, performance measures that organizations or governments deploy to lead and inspire all workers to accomplish set goals (Callahan, Stetz, and Brooks, 2011, p. 199). Human relations association forms part of the base for motivation in accounting to enhance an easy repetitive assignment involving financial compensation of all transactions in an organization (Eker, 2007, p. 105). Performance evaluation is the valuable control of the chief tasks from diverse units. These units are normally situated at the very end of the production procedure to complement itinerant analysts. The opening output is checked by equipment after the pieces of equipment overshadow (Callahan, Stetz, and Brooks, 2011, p. 199). Control in accounting management is the conduction of approaches reached in the tactical planning procedure. As a result, the organization accomplishes the set objectives and mission. Control becomes a device that facilitates accounting managers in making critical decisions (Olum, 2004, p. 3). Time management is the establishment of interceding variables that improve the perception of time. This way, accounting managers are able to ease pressure on their behaviors and perceive control over time and operations assumed significant in variance analysis. Coordination and communication are skills that deploy signs used in organizational semiotics to bridge the gap between technical and social aspects of accounting (Callahan, Stetz, and Brooks, 2011, p. 199). Coordination and communication skills are progressive volumes of information structures and technology. Resource allocation within an organization or government implies the appliance of concepts of finances of higher education and management accounting breakthroughs (Callahan, Stetz, and Brooks, 2011, p. 199). Zero-based budgeting is a mechanism of budgeting whereby all operations are reassessed every time a budget is produced. Distinct levels of every operation or transaction is valued and a combination of selected to correspond with the finances that are currently accessible now. Incremental in zero-based budgeting involves a quick contrast that is inclined to begin with a balance that is similar to the previous financial year’s entire balance (Eker, 2007, p. 108). Rigidity is the implementation of flexible management that does not awaken the foundation of an organization’s management (Olum, 2004, p. 5). To a certain extent of rigidity, management becomes a quality of assurance and both aspects mutually turn out to have a supplementary affiliation. Flexibility is an aspect of management that can be re-engineered to create rigidity required in settling of activities in an organization. Knowledge in accounting assists in the provision of precision and a well-timed report of monetary results (Emmanuel, Kominis and Slapnicar, 2008, p. 3). II. Alleged benefits to be derived from standard costing and variance analysis Standard costing and variance analysis is a procedure that involves the use and implementation of multiple accounting techniques (Olum, 2004, p. 5). Standard costs are normally linked to a manufacturing organization’s expenses on express material, direct manual labor and manufacturing operating cost. The choice of standards is the decision made by companies nominated for worldwide accounting standards to decrease the extent at which the organization makes local accounting values (Emmanuel, Kominis and Slapnicar, 2008, p. 3). These standards are grounded on expenses, labor and income made by the organization or government. Attainable standards are the stages of performance that directors could accomplish practical levels of endeavor. These standards create allowances for ordinary imperfections, spoilage, misuse and ineffective time (Callahan, Stetz, and Brooks, 2011, p. 199). Provision of information is normally observed as a management activity or operation, as well as a staff function. The provision of data engages staff supervision and sustenance in line organization through the stipulation of information for planning and control purposes (Eker, 2007, p. 108). The provision of information is viewed as an important part of the management procedure. This is because immediate data and knowledge becomes openly accessible to accounting management in a similar manner as the difference between staff and accounting management as it becomes increasingly distorted. The concentration on the use of resources to create worth in costs and labor is also an important part of the management procedure in firms that involves the provision of data (Eker, 2007, p. 105). Motivation is important in managerial control procedures because it is well recognized in the accounting prose (Eker, 2007, p. 116). Motivation in variance analysis involves control through a set of processes, instruments, performance measures that organizations or governments deploy to lead and inspire all workers to accomplish set goals. Nevertheless, in spite of its pressure on motivation, the accounting prose does not offer much knowledge about the particular affiliations between motivation and accounting control systems (Olum, 2004, p. 5). Human relations association forms part of the base for motivation in accounting to enhance an easy repetitive assignment involving financial compensation of all transactions in an organization. Motivation puts forward an open, methodical statement of these affiliations through thorough comparison and combination of two previously distinct models (Emmanuel, Kominis and Slapnicar, 2008, p. 5). One such paradigm is the accounting paradigm of control and the other is a thorough behavioral paradigm of motivation. Motivation in accounting management aims at incorporating behavioral principles with accounting applications to put effort towards solutions of significant issues involving motivation and management control systems (Olum, 2004, p. 7). Participation in accounting management can be active or inactive. Active participation involves research in all fields of cost gathering and evaluation that assists in the creation and implementation of strategy (Eker, 2007, p. 117). Biased analysis illustrates that secondary employees with extreme performance participate in the analysis of information than employees with low performance. Rewards determine the attainability of objectives and goals set by an organization or government. Rewards also determine the accuracy of performance signs of a straightforward significant control over motivation in firms (Eker, 2007, p. 118). Extrinsic and the intrinsic rewards vary in the level and significance of the direct effect of motivation amongst workers in the firm. The union of precision, performance markers, attainability of objectives and missions, and simplicity of performance-associated rewards appear to stipulate the effect of extrinsic rewards on executive motivation (Stolowy and Ding, 2003, p. 213). FIFO (first in, first out) and AVCO (average cost) are techniques of stock assessment. The mechanisms involve the use of shops ledger or stock card credentials to determine the cost of the closing stock (Eker, 2007, p. 119). Management of time involves the disapproval of the traditional management accounting and control regards its temporary direction (Callahan, Stetz, and Brooks, 2011, p. 200). Absorption costing varies with a decision ought to be simply included in decision assessment. For multiple decisions that require intervention from moderately small variations from available practice and from comparatively restricted periods, fixed costs are not applicable to the decision made (Stolowy and Ding, 2003, p. 213). Direct costs are expenses that are directly contribute to the making of a commodity or provision of a certain service. A perfect example of a direct cost is the expenditure on materials required for the manufacture of a certain commodity. The utility of the materials is openly connected to the production of the commodity being produced (Stolowy and Ding, 2003, p. 213). Management faces contemporary strategies that seem to be effective in terms of reduction of production costs, and increment in output (Emmanuel, Kominis and Slapnicar, 2008, p. 5). One of modern approaches to management includes technical skills. Technical skills include the familiarity and proficiency in operations that involve techniques, procedures and dealings. Therefore, technical skills involve putting effort in certain dealings using definite instruments and particular mechanisms. Human skill is another improved strategy in modern management (Callahan, Stetz, and Brooks, 2011, p. 200). Human skill has been enhanced to involve a supportive effort or teamwork, alongside the ability of accounting managers to work well with other people in the firm. Human skill currently requires a surrounding where people feel secure and liberated enough to articulate their judgments. Conceptual skills have taken a serious turn in accounting management with the recognition of important components in a situation that assist in better understanding of the affiliations amongst these components of cost and variance (Callahan, Stetz, and Brooks, 2011, p. 200). Design skill is the ability to solve issues through methodologies that will be advantageous to the firm. Currently, organizations deploy this feature of the skill to benefit the employees too. This way, future problems might not require much attention from the superior positions of the firm. Volume is the performance of both costs and income all the way through a linear and applicable variety of trading operations (Spathis and Ananiadis, 2004, p. 201). This presumption prevents the idea of volume discounts on either purchased materials or sales. Costs could be precisely categorized as either fixed or variable. Direct labor includes salaries and other payroll expenses of the workers that directly work to convert direct raw materials into finished commodities. These expenses are also openly traceable to the finished commodity through its price (Emmanuel, Kominis and Slapnicar, 2008, p. 5). Time delays call for frequent updates of the project program with the aim of coming up with a precise depiction of the schedule observance. Delays in the projected development of time might be absorbed in the firm’s operational drift (Olum, 2004, p. 23). As a result, time delays do not cause overall delays in the project’s or transaction finishing. This ambiguity is also accountable for preferable revisions in accounting management. III. Conclusion Beneath traditional accounting, operations are prepared into managerial units in accordance with the assignment, function and area (Spathis and Ananiadis, 2004, p. 196). A firm’s managerial departments and their associations with each other comprise of its managerial structure. The outline normally illustrated in organizational charts forms part of the accounting unit that determines the costs and evaluates the income generated by the organization to influence the budgeting of the organization. Traditional budgeting involves the distribution of power and tasks to all workers within a firm (Spathis and Ananiadis, 2004, p. 196). This influence comprises of an organization’s assignment, objective or goals outline. Traditional budgeting needs a system of calculating and assessing performance through data or inputs, expenses, operations and productivity (Emmanuel, Kominis and Slapnicar, 2008, p. 5). This kind of budgeting is the organization’s account or influence outline through variance evaluation and standard costing. Under a completely developed accounting and budgeting management system, managerial departments and job centers are coterminous and entirely adjusted to the account outline of the firm. This is generally attributed to data the organization provides to coordinate departmental operations together with the influence on managers supervising jobs centers (Callahan, Stetz, and Brooks, 2011, p. 201). IV. References Callahan, K. R., Stetz, G. S. and Brooks, L. M. 2011. Project Management Accounting: Budgeting, Tracking, and Reporting Costs and Profitability. New York: John Wiley & Sons Eker, M. 2007. The Impact of Budget Participation and Management Accounting Systems on Performance of Turkish Middle Level Managers. Business administration, Volume: 9, Issue: 17, Pages: 105-126 Emmanuel, C. R., Kominis, G. and Slapnicar, S. 2008. The effect of intrinsic and extrinsic rewards on the perceptions of middle level managers. Research executive summaries series, Vol 4, Issue 4 Henri, J. 2006. 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