Management Accounting: Structure Involved in Administrative Coordination - Assignment Example

Management Accounting Management Accounting Part Question Structure involved in administrative coordination Chandler introduced a bureaucratic management system that superseded the old regime of market mechanism that existed as within the invisible hand era. Chandler explained how modernity has contributed to generation of increased production and distribution of goods and services resulting into the need for efficient administration coordination. Consequently, Chandler introduced a line-staff structure of cooperate system that would be imperative in efficient management of the modern business enterprise system. The structure described by Chandler consists of line and staff employees within a bureaucratic system of vertical arrangement. Within the corporate structure of modern business, there exist salaried managers organized from top management through the middle managers to the lower ranking management (Chandler, 1997, p. 2). Lower management directly handles the junior most line personnel including foremen or supervisors. Each of the management line consists of coordinated operating units with managed accounts, administration offices and managers. Most importantly, the hierarchy system from top to lower structure remains under the operation of salaried managers (Daft and Marcic, 2010, p.228) (Marquis and Huston, 2009, p. 273). Process involved in administrative coordination The administrative coordination described by Chandler consists of a constant processes system that assists in effective flow of information within the bureaucratic system. The constant process within the administration coordination involves a vertically monitored and integrated vertical system where the top management conveys information to the lower managers. Therefore, the salaried managers ensures effective administration of the established units within the cooperate structure towards production and proper management. However, the constant process inherent described within the modern business enterprise system enables establishment of vertical performance where strategic management begins from top management with coordination towards the lower ranks. Question 2 Direct costs relates to those expenditures that remains logically and directly attributable to specific cost of an object or project. The direct costs include such costs as labor and materials that are imperative in successful achievement of specific project tasks. Also known as variable costs, direct costs directly vary depending on the inherent rate at the performance of a particular project within an organization or business. Normally, direct costs do not get incurred when there exists no work done within the project (Portny, 2013, p. 156). Moreover, direct costs usually add value to the project. For instance, direct costs incurred in health care services include compensation payments, medical services, and first aid costs. On the contrary, indirect costs relates to those expenditures that do not directly and easily remain traceable to the cost of a particular project or object (Flouris and Lock, 2012, p. 41). It is imperative to note that indirect costs do not directly remain attributed to costs of projects or objects. Rather, indirect costs relates to common costs that remain beneficial to two or more costs related to objects. Therefore, indirect costs do not always target a particular object but remains incurred over varied number of objects (Shelly and Rosenblatt, 2009, p.659). For instance, the salary paid to an operational manager who supervises varies departments and projects exist as an indirect cost. However, the salary of the production manager remains a direct cost to the department of production and indirect mainly to the products gained from the operational process. It is indispensable to note that indirect costs directly relate to the inherent overhead running business costs (Crosson and Needles, 2011, p. 179). Question 3 The most conceivable example of indirect cost that can directly contribute to the management and coordination of activities within a production unit exist as salaries paid to operational or production managers. Production managers within manufacturing industries for instance, have the inherent role and obligation to ensure coordination of various departments that directly contribute to success of the final products. It is essential to note that most manufactured products comprise service contribution from various specialized departmental units. The services offered by the production manager in ensuring success of the final product remain significant in coordinated management. The production manager ensures that all the departments within production line manufactures the right specifications of final products parts before final assembly. Therefore, the production manager directly acts in coordinated supervision of labor within the production line mainly in ensuring success of the final product. Such coordinated supervision of labor in ensuring success within all the production lines directly constitutes production management. The inherent indirect cost paid to the production manager remains equally distributed throughout the final products. Therefore, it remains clearly evident that salary paid to the production manager inherently due to services offered in ensuring success of final products through a production line exists as an example of indirect cost. The indirect costs existing as the final product directly results from the management coordination activities of the production manager within the departments within the line of manufacturing. Part II Question 1 In management accounting, significant reduction of operational costs remains as the most conceivable achievement for the manager. A manager must ensure that he or she comprehensively conducts cost analysis in ensuring that the company does not incur extra unnecessary costs during production of goods and service provision. The most effective method in ensuring significant reduction of costs includes budgetary analysis and future expenditure forecasting. Moreover, management accounting strategy used within the business should allow the managers to easily account for expenditures in completion of an object or project. Such cost management structure must remain traceable or attributable to a specific project or object expenditure to avoid instances of corruption. Hygiene maintenance within QMF Company should be seen by its managers as a direct costs of production and not an indirect cost within the production process. The company aims at reduction of the costs of production and improving quality while maintaining higher hygienic standards. The most effective method of ensuring reduction of costs of producing food would involve eliminating corruption within QMF departments and employees (Openshaw, 2013). Effective use of direct costs would be imperative in tracing use of resources and consequently improving accountability and transparency. Production managers who remain responsible for maintenance of hygiene within the departments must also account for use of resources. The new system of direct costs would change the cost structure by ensuring specific allocation of resources to production departments rather than generalizing expenditures over production and final products. Question 2 Management accounting remains imperative in ensuring effective administration and coordination of activities within a company. Effective application of managerial accounting concepts is domineering in making informed decisions relating to production and overall management. QMF aims at overcoming the food scandal issues relating to mismanagement of funds associated with production process and hygiene control mainly by its senior employees. As aforementioned, the company should maintain its U-form of management and ensure traceable allocation of costs to specific departments under supervision of the production managers. In addition, the management should entirely focus on quality production, which ensures production of standard foods that observes internationally accepted hygiene. It is imperious to understand that with significant improvement in hygiene and quality of the final products, QMF would realize increase in market share and consequent demand of their products. Improved demand for the company’s products is essential in realization of increased sales and productivity. In the long-term, quality focus would help in cost control by ensuring higher profit returns. Most importantly, the direct cost structure of management accounting adopted as aforementioned would be imperative in ensuring cost control (Abdel-Khader & Luther, 2006). Cost control using direct cost strategy would remain a possibility mainly because due to commitment of each production department and manager in ensuring better performance, accountability and integrity. Therefore, a quality focus based on the management accounting structure of direct costs and multi-unit enterprise system, QMF would realize production of quality products at lower costs while maintaining desired hygienic standards. Question 3 There exist various ways of rewarding excellent performing production managers mainly through external and intrinsic rewards. Mostly, intrinsic rewards would ensure provision of personal satisfaction to the manager through motivation and improvement of self-esteem. Such intrinsic ways of appreciating successful achievement includes recognition, positive feedback, and empowerment. On the contrary, extrinsic rewards ensure long-term satisfaction of the production managers and include promotion or salaries increase (McMullen and Morse, 2014, p. 36). Recognition of the production manages for their exemplary performance is imperative in motivating them. Recognition of the managers may include verbal appreciation by the top executive management. Such verbal appreciation reward strategies include recognizing the production managers’ exemplary performance before other employees. Besides verbal appreciation, the top managers may recognize production managers by giving gifts as a form of appreciation. Gifts are domineering in improving employees’ confidence and motivation towards completion of a specific task Moreover, recognition of the production managers for their brilliance performance may include thanksgiving ceremonies organized in their honor (Leonard, 2013, p. 500). Thanking the production managers before other employees would be imperative in raising their self-esteem and morale. Top management may also reward the production managers by promoting them to higher executive positions within the company. Promotion strategy remains as the most indispensable reward strategy for improving employee productivity and morale. In most cases, promotion strategy would assist in achieving long-term satisfaction of the production managers in remaining accountable, responsible, and loyal to the company. Besides promotion as an external reward strategy, the top management may consider raising salaries of the production managers. Salaries improvement is vital in ensuring long-term satisfaction of the production managers for their brilliant performance in ensuring hygiene quality while maintaining lower operational costs (Campbell-Allen, Houston & Mann, 2008, p 130). Bibliography Campbell-Allen, N, Houston, D, & Mann, R 2008, Best practices in New Zealand organizations for rewarding and recognizing employee innovations and achievements, Total Quality Management & Business Excellence, 19, 1/2, pp. 125-139, Business Source Complete, EBSCOhost, viewed 11 December 2014. Chandler, A. D. (1997). The visible hand: the managerial revolution in American business. London: Harvard University Press. Crosson, S. V., & Needles, B. E. (2011). Managerial accounting. Mason, OH, South-Western Cengage Learning. Daft, Richard and Marcic, Dorothy. (2010). Understanding Management. London: Cengage Learning. Flouris, Triant and Lock, Dennis. (2012). Aviation Project Management. 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