ACC202 Management Accounting
Select two research-based journal articles relating to your selected topic in accounting. The journal articles need to study a real-life organisation (in any country), and its use of the management accounting tool related to your topic.
You are encouraged to choose the two journal articles from the following Accounting and Management Accounting Journals:
- Accounting, Auditing and Accountability Journal
- Journal of Management Accounting Research
- Journal of Applied Management Accounting Research
You are required to prepare a report about your findings from the literature research, and discuss how it has helped your understanding of your chosen topic.
Over the last few years, manufacturing organizations have experienced both increasing technological advancement as well as high competition. With the tremendous variations taking place in a manufacturing setting, where the standard costing has been generally practiced, particularly due to upsurge in usage of the progressive industrial innovations such as the automation, ABC, standard costing and the JIT applicability of the standard costing has increased. The variations in manufacturing setting seemingly have increased importance of the standard costing particularly as the cost device technique. The report presents analysis of standard costing as one of the chief management accounting topic. To accomplish this, two studies related with standard costing were selected. Their similarities and differences were evaluated. The report also presents key lessons learned from these studies and their implication to management accountants working in Australia.
Standard costing was originally developed and founded as the cost accounting approach aimed at managing the cost control. Since its introduction in the early 1900s, standard costing has been broadly utilized by organization across the globe for numerous drives like budgeting, assessment of the stocks, charge decrease as well as cost control (Edwards, Boyns & Matthews 2002). In essence, standard costing has enlarged approval amongst different administrators as one of the most powerful cost control device since it permitted them hire the administration by some exclusion, a technique which examined just the most important deviations from the prearranged stages of the presentation and allotting their energies to areas which deemed beneficial (Holmes, & Hurley 2003).
Standard costing is also viewed as a management accounting tool used in enhancing capacity of an organization better meet its strategic goals and enable the company to compete worldwide (Bowhill & Lee 2002). Basically, standard costing is usually a performance review approach utilized in comparing the actual financial performance of an entity against standard performance for all levels of its operations. Such is accomplished through a comprehensive discussion with numerous departmental heads within an organization. Whenever the actual financial performance happens, actual financial information are then compared with the standard ones, and in case there is any difference in between the variables, such difference is usually evaluated in order to establish the reason for the variation (Sulaiman, Nik Nazli & Norhayati 2005).
Basically, this deviation is usually referred to as the variance and such variance might either be adverse or favorable. In other words, controlling of the costs comprises of provision of concise cut info or evidence on what cost ought to be incurred, the cost incurred and actual variance reported and what ought to have been reported, the reason and remedial action that ought to be taken in ensuring that actual activities are in line with planned activities (Bowhill & Lee 2002). As such standard costing is considered as the measure of the comparison for qualitative and quantitative values and is considered as the normal reference point of re-assessment of an organization’s financial performance. In other words, standard costing has been viewed as use and preparation of the standard cost as well as measurements at points of the incidence (Holmes, & Hurley 2003). It is concerned mostly with assessment of the efficiency that defines how organization’s management could control or could have power over acquisition and utilization of the capital in manufacturing specific amount of the output.
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