Comparison of Wearable Fitness Trackers

Wearable fitness trackers are becoming increasingly popular in personal healthcare. Tech Companies advertise these devices as accurate and user friendly however, there are no objective research results to prove it. This research proposal proposes to compare four wearable fitness watches. Experimental data will be taken and compared from four real participants which will be used to calculate the accuracy, user friendliness and user satisfaction of these devices.

This essay will also match the opinions between participants and reviews on internet websites. We expect to find if some devices perform better than others in terms of accuracy, repeatability and user friendliness as well as steps and distance tracking, which are the most crucial measurements for fitness tracking. The manufacturing companies can thus use these real user reviews to develop new devices and reduce errors. This can be used as a recommendation to users looking for a fitness tracker.

Wearable trackers can help to motivate you during workouts and provide information about your daily routine or fitness in combination with your smartphone. These devices are becoming increasingly popular in personal healthcare, motivating people to exercise more throughout the day without the need for lifestyle changes.

The various choices in the market for wearable devices are also increasing, with customers searching for products that best suit their needs. Further, using a wearable device or fitness tracker can help people reach a fitness goal. Generally, companies display advertising for these kind of products and depict them as accurate, user friendly and beneficial however, there are no objective research results to verify their words.

Reviews of wearable trackers appear on many Internet sites [6]. Often, they show different opinions about the reviewed products. However, these opinions are subjective and do not show any research results that provide the accuracy of the information or the identity of the subjects in the experiments or the reviewer. Further, there is no objective data to show the results of the subjects reviewed.

This research proposal will compare the subjective and objective experimental results based on satisfaction, user friendliness and accuracy, which will reveal if some devices perform better than others. A wearable device is a new type of technology in the form of a small hardware that includes an application with tracking and monitoring fitness data such as distance walked, calories consumed as well as heart rate and sleep tracking.

Wearable devices can be synced to a computer or smartphone for data tracking. Wearable devices can be thought of as tiny computers that users wear on various parts of their body and are smarter and more accurate and can do much more than just calculate how far you walk. It is also possible to integrate them into more easily worn equipments.

Four wearable devices will be chosen randomly that are found in the top ten of best 2018 fitness trackers according to reviews and comparisons. For this proposal, we propose to choose devices which are described in details below: Comparison of Wearable Fitness Trackers.

  1. Apple Watch Series 3 – A device that monitors health, tracks workouts and gets the motivation needed to achieve the fitness goals. The market price of the Apple Watch Series 3 is US $279.
  2. Samsung Gear Sport – It tracks your fitness and diet, keeping you on the right path to reach fitness goals. It sets health and diet goals on phone and Gear Sport makes it easy to keep calories in balance and track calorie intake. It also offers tips and insights that one can use to stay on track. The market price of the Samsung Gear Sport is US $179.
  3. Huawei Watch 2 – It has GPS to track runs, an optical heart-rate sensor for health and NFC for mobile payments. It even offers a 4G LTE cellular connection. The market price of the Huawei Watch 2 is US $264.98.
  4. Fitbit Versa – It has 24/7 heart rate tracking with a smart, sharp touch screen and upto 4 days of battery life. It also features real time pace & distance with guided breathing sessions and customizable clock faces. The market price of Fitbit Charge 3 is $199.95.

The comparative results of the wearables that we will acquire will give us a clear picture about the performance and usefulness of these devices. The satisfaction evaluation will be used as a recommendation system for these four devices because it will compare the most important factors like step counting, hardware design, sleep tracking, UI app, nutrient analysis, calorific analysis and battery performance.

These evaluation results can be used by users to figure the best possible smartwatch as per their requirements. The opinions of all the participants will be compared and summarized with reviews from internet. These comparative reviews when combined with the satisfaction scores will be used to showcase the advantages and disadvantages of every device.

The experiment for accuracy and repeatability of each device will be used to assign a score based on table 4 which will help the users to compare these devices. The accuracy of tracking user activity is an important measurement for fitness monitoring however, the accuracy of personal tracking is different.

Factors like calories burned and steps counted depends on individual measurements such as gender, age, weight and height. At the same time, the accuracy of tracking daily activities like sleeping, walking or running is important as well and this experiment will give us useful insights about each device. This will be used by users to choose a specific device which satisfies their needs.

This research will try to evaluate if some devices perform better than others by focusing on both subjective and objective methods. The two experimentation methods will be used to verify the quality of the devices, both objectively and subjectively. There are many free fitness apps available to be downloaded on your smartphones without any special hardware requirements however, the results of these apps are not guaranteed to be 100% accurate.

Read more

POS system

Helene Hernandez (College Instructor) (College College Instructor) Instructor) General Problem: Mister Boron’s Fast Food is having difficulty in manually dealing with the customers in terms of ordering, payments, generating reports and maintaining their inventory. Specific Problems: 1 . Is the cashier easily and accurately computes the bills especially when dealing with huge number of customers? 2. And how long did employees check their stocks? 3. Does Mister Boron’s Fast Food provides official receipt to customers? 4.

Are their sales report accurate? . How do the customers wait for their orders? General Objective To provide a system that will automate the process in dealing with the customers in terms of ordering, payments, generating reports and maintaining their inventory. Specific Objectives 1 . To provide a system that will make the computation of bills faster and more accurate. 2. To provide a system that will allow the customers to have a receipt in every transaction. 3. To provide a system that will maintain the inventory easier and faster. . To provide a database that will store records for generating reports. 5. To provide a queuing management that will help customers. Features 1 . The system will notify if the stocks are insufficient. 2. Easy to use interface for the cashier. 3. The system can be easily updated when there are changes in the price of the meals. 4. The system will provide accurate weekly, monthly, quarterly and yearly reports of sales. 5. Easily update the menu. 6. It shows the time started and time ended of the cashier. 7.

Admit, manager, cashier and owner will have their own accounts and privileges 8. A separate monitor will show the queuing of costumers 9. It will provide a receipt with the name of the cashier, time and date of transaction, queue number and Official Receipt (O. R. ) number. 10. The cashier will have a touch screen monitor to easily input orders. 11. Receipts will be given right after the transaction using a POS printer 12. A monitor inside the kitchen will show the queue numbers with the orders of the customers to know which order they will prioritize.

Read more

Management Accounting essay example

Use the following to answer question 1: Marger, Inc. , provided the following data for two recent months: [pic] |1. |Which of the following classifications best describes the behavior of Cost T? | |A) |Variable | |B) |Fixed | |C) |Mixed | |D) |None of the above | 2. |The following data pertains to activity and maintenance costs for two recent years: | | | | | |[pic] | | |Using the high-low method, the cost formula for maintenance would be: | |A) |$1. 50 per unit. | |B) |$1. 25 per unit. | |C) |$3,000 plus $1. 50 per unit. | |D) |$6,000 plus $0. 75 per unit. | |3. Rible Company has observed that at an activity level of 8,000 units the cost for maintenance is $15,000, and at 10,000 units the| | |cost for maintenance is $16,500. Using the high-low method, the cost formula for maintenance is: | |A) |$15,000 plus $0. 15 per unit. | |B) |$9,000 plus $0. 75 per unit. | |C) |$1. 65 per unit. | |D) |$1. 875 per unit. | |4. |Which of the following types of firms likely would have a high proportion of variable costs in its cost structure? | |A) |Public utility. | |B) |Airline. | |C) |Fast food outlet. |D) |Architectural firm. | |5. |Factory overhead is an example of a: | |A) |mixed cost. | |B) |fixed cost. | |C) |variable cost. | |D) |irrelevant cost. | Use the following to answer question 6: Buffo Company fabricates metal folding chairs. Data concerning the company’s revenue and cost structure follow: [pic] |6. |If Buffo plans to produce and sell 3,000 units next month, the expected contribution margin would be: | |A) |$30,750. |B) |$74,250. | |C) |$26,750. | |D) |$96,500. | Use the following to answer question 7: Frank Company operates a cafeteria for its employees. The number of meals served each week over the last seven weeks, along with the total costs of operating the cafeteria are given below: [pic] Assume that the relevant range includes all of the activity levels mentioned in this problem. |7. |Using the high-low method of analysis, the variable cost per meal served in the cafeteria would be estimated to be: | |A) |$1. 50. | |B) |$2. 0. | |C) |$2. 80. | |D) |$1. 00. | Use the following to answer question 8: Stewart Company is attempting to classify costs according to their cost behavior. Data concerning activity and costs are listed below: [pic] |8. |If Stewart Company sells 1,150 units in March and this activity is within the relevant range, the expected total cost would most| | |likely be closest to: | |A) |$2,610. 50. | |B) |$1,774. 00. |C) |$4,343. 92. | |D) |$4,384. 50. | |9. |A disadvantage of the high-low method of cost analysis is that: | |A) |it cannot be used when there are a very large number of observations. | |B) |it is too time consuming to apply. | |C) |it uses two extreme data points, which may not be representative of normal conditions. | |D) |it relies totally on the judgment of the person performing the cost analysis. | Use the following to answer question 10: Marger, Inc. provided the following data for two recent months: [pic] |10. |Which of the following classifications best describes the behavior of Cost U? | |A) |Variable | |B) |Fixed | |C) |Mixed | |D) |None of the above | |11. |Fox Company’s contribution margin ratio is 20%.

If the degree of operating leverage is 15 at the $225,000 sales level, net | | |operating income at the $225,000 sales level must equal: | |A) |$2,250. | |B) |$6,750. | |C) |$3,000. | |D) |$5,063. | |12. |Korn Company sells two products, as follows: | | | | | |[pic] | | |Fixed expenses total $300,000 annually.

The expected sales mix in units is 60% for product Y and 40% for product Z. How much is | | |Korn’s expected break-even sales in dollars? | |A) |$300,000 | |B) |$420,000 | |C) |$475,000 | |D) |$544,000 | |13. |Brown Company has sales of 2,000 units at $70 per unit. Variable expenses are 40% of the selling price.

If total fixed expenses | | |are $44,000, the degree of operating leverage is: | |A) |0. 79. | |B) |1. 40. | |C) |3. 50. | |D) |2. 10. | Use the following to answer question 14: Budget data for the Bidwell Company are as follows: [pic] |14. |If fixed expenses increased $31,500, the break-even sales in units would be: | |A) |34,500 units. | |B) |80,500 units. | |C) |69,000 units. | |D) |94,500 units. Use the following to answer question 15: Evergreen Corp. has provided the following data: [pic] |15. |The number of units needed to achieve a target net operating income of $49,500 would be: | |A) |1,238 units | |B) |2,750 units. | |C) |3,200 units. | |D) |2,057 units. | Use the following to answer question 16: A manufacturer of premium wire strippers has supplied the following data: [pic] |16. The company’s degree of operating leverage is closest to: | |A) |20. 09 | |B) |7. 73 | |C) |1. 86 | |D) |55. 64 | Use the following to answer question 17: Consider the following budgeted data for Urqhart Corporation: [pic] |17. If the unit contribution margin is increased by 10%, the total fixed expense is decreased by 20%, and all other data remain as | | |in the budget, net operating income will be: | |A) |$102,500. | |B) |$105,000. | |C) |$ 90,000. | |D) |$ 93,750. | Use the following to answer question 18: The costs of publishing a grade school textbook can be assumed to be as follows: [pic] Each book sells for $10 per copy. |18. |The unit contribution margin for each copy of the book is: | |A) |$5. 5. | |B) |$4. 15. | |C) |$5. 40. | |D) |$7. 15. | |19. |If a company decreases the variable expense per unit while increasing the total fixed expenses, the total expense line relative | | |to its previous position will: | |A) |shift downward and have a steeper slope. | |B) |shift downward and have a flatter slope. | |C) |shift upward and have a flatter slope. | |D) |shift upward and have a steeper slope. | Use the following to answer question 20:

A company that makes organic fertilizer has supplied the following data: [pic] |20. |The company’s degree of operating leverage is closest to: | |A) |3. 50 | |B) |1. 49 | |C) |9. 54 | |D) |2. 41 | |21. Trumbull Company budgeted sales on account of $120,000 for July, $211,000 for August, and $198,000 for September. Collection | | |experience indicates that none of the budgeted sales will be collected in the month of the sale, 60% will be collected the month| | |after the sale, 36% in the second month, and 4% will be uncollectible. The cash receipts from accounts receivable that should be| | |budgeted for September would be: | |A) |$169,800. | |B) |$147,960. |C) |$197,880. | |D) |$194,760. | Use the following to answer question 22: Young Enterprises has budgeted sales in units for the next five months as follows: [pic] Past experience has shown that the ending inventory for each month should be equal to 10% of the next month’s sales in units. The inventory on May 31 fell short of this goal since it contained only 400 units. The company needs to prepare a Production Budget for the next five months. |22. |The desired ending inventory for August is: | |A) |540 units. |B) |680 units. | |C) |720 units. | |D) |380 units. | Use the following to answer question 23: Balmforth Products, Inc. makes and sells a single product called a Bik. It takes three yards of Material A to make one Bik. Budgeted production of Biks for the next five months is as follows: [pic] The company wants to maintain monthly ending inventories of Material A equal to 20% of the following month’s production needs. On January 31, this target had not been attained since only 2,000 yards of Material A were on hand. The cost of Material A is $0. 80 per yard.

The company wants to prepare a Direct Materials Purchases Budget. |23. |The desired ending inventory of Material A for the month of March is: | |A) |9,300 yards. | |B) |7,140 yards. | |C) |3,100 yards. | |D) |8,400 yards. | Use the following to answer question 24: The Gomez Company, a merchandising firm, has budgeted its activity for December according to the following information: * Sales at $500,000, all for cash. * Merchandise Inventory on November 30 was $250,000. * The cash balance at December 1 was $20,000. Selling and administrative expenses are budgeted at $50,000 for December and are paid for in cash. * Budgeted depreciation for December is $30,000. * The planned merchandise inventory on December 31 is $260,000. * The cost of goods sold represents 75% of the selling price. * All purchases are paid for in cash. |24. |The budgeted cash receipts for December are: | |A) |$125,000. | |B) |$375,000. | |C) |$530,000. | |D) |$500,000. | Use the following to answer question 25:

Young Enterprises has budgeted sales in units for the next five months as follows: [pic] Past experience has shown that the ending inventory for each month should be equal to 10% of the next month’s sales in units. The inventory on May 31 fell short of this goal since it contained only 400 units. The company needs to prepare a Production Budget for the next five months. |25. |The beginning inventory in units for September should be: | |A) |460 units. | |B) |6,800 units. | |C) |540 units. | |D) |680 units. | Use the following to answer question 26:

May Company, a merchandising firm, has budgeted sales as follows for the third quarter of the year: [pic] Cost of goods sold is equal to 65% of sales. The company wants to maintain a monthly ending inventory equal to 130% of the Cost of Goods Sold for the following month. The inventory on June 30 is less than this ideal since it is only $65,000. The company is now preparing a Merchandise Purchases Budget. |26. |The desired beginning inventory for September is: | |A) |$117,000. |B) |$ 76,050. | |C) |$ 91,000. | |D) |$ 59,150. | Use the following to answer question 27: Smith Company makes and sells a single product called a Pod. Each Pod requires 1. 4 hours of labor at a labor rate of $9. 60 per hour. Smith Company needs to prepare a Direct Labor Budget for the second quarter of the year. |27. |The budgeted direct labor cost per Pod would be: | |A) |$13. 44. | |B) |$9. 60. | |C) |$7. 38. | |D) |$11. 00. | |28. Self-imposed budgets typically are: | |A) |not subject to review by higher levels of management since to do so would contradict the participative aspect of the | | |budgeting processing. | |B) |not subject to review by higher levels of management except in specific cases where the input of higher management is | | |required. | |C) |subject to review by higher levels of management in order to prevent the budgets from becoming too loose. | |D) |not critical to the success of a budgeting program. |29. |Shocker Company’s sales budget shows quarterly sales for the next year as follows: | | | | | |[pic] | | |Company policy is to have a finished goods inventory at the end of each quarter equal to 20% of the next quarter’s sales. | | |Budgeted production for the second quarter of the next year would be: | |A) |7,200 units. |B) |8,000 units. | |C) |8,800 units. | |D) |8,400 units. | |30. |The Carlquist Company makes and sells a product called Product K. Each unit of Product K sells for $24 dollars and has a unit | | |variable cost of $18. The company has budgeted the following data for November: | | | | | | | | |* Sales of $1,152,000, all in cash. | | | | | | | |* A cash balance on November 1 of $48,000. | | | | | | | | |* Cash disbursements (other than interest) during November of $1,160,000. | | | | | | | |* A minimum cash balance on November 30 of $60,000. | | | | | | | | |If necessary, the company will borrow cash from a bank. The borrowing will be in multiples of $1,000 and will bear interest at | | |2% per month.

All borrowing will take place at the beginning of the month. The November interest will be paid in cash during | | |November. | | | | | |The amount of cash that must be borrowed on November 1 to cover all cash disbursements and to obtain the desired November 30 | | |cash balance is: | |A) |$20,000. | |B) |$21,000. | |C) |$37,000. | |D) |$38,000. | Use the following to answer question 31: The following materials standards have been established for a particular product: pic] |31. |What is the materials quantity variance for the month? | |A) |$1,740 U | |B) |$4,350 U | |C) |$4,590 U | |D) |$1,836 U | Use the following to answer question 32: The following standards for variable manufacturing overhead have been established for a company that makes only one product: pic] |32. |What is the variable overhead spending variance for the month? | |A) |$3,010 F | |B) |$3,010 U | |C) |$10,435 U | |D) |$10,435 F | Use the following to answer question 33: The following materials standards have been established for a particular product: [pic] |33. What is the materials quantity variance for the month? | |A) |$5,050 U | |B) |$5,125 U | |C) |$9,292 U | |D) |$9,430 U | Use the following to answer question 34: Arrow Industries employs a standard cost system in which direct materials inventory is carried at standard cost.

Arrow has established the following standards for the prime costs of one unit of product. [pic] During May, Arrow purchased 160,000 pounds of direct material at a total cost of $304,000. The total direct labor wages for May were $37,800. Arrow manufactured 19,000 units of product during May using 142,500 pounds of direct material and 5,000 direct labor hours. |34. |The direct material price variance for May is: | |A) |$16,000 favorable. |B) |$16,000 unfavorable. | |C) |$14,250 favorable. | |D) |$14,250 unfavorable. | |35. |Perkins Company, which has a standard cost system, had 500 pounds of raw material X in its inventory at June 1, purchased in May| | |for $1. 20 per pound and carried at a standard cost of $1. 00 per pound. The following information pertains to raw material X for | | |the month of June: | | | | |[pic] | | |The unfavorable materials purchase price variance for raw material X for June was: | |A) |$ 0. | |B) |$130. | |C) |$140. | |D) |$150. | |36. |If variable manufacturing overhead is applied on the basis of direct labor-hours and the variable overhead spending variance is | | |favorable, then the: | |A) |actual variable manufacturing overhead rate exceeded the standard rate. |B) |standard variable manufacturing overhead rate exceeded the actual rate. | |C) |actual direct labor-hours exceeded the standard direct labor-hours allowed for the actual output. | |D) |standard direct labor-hours allowed for the actual output exceeded the actual hours. | Use the following to answer questions 37-38: The Odle Company makes and sells a single product called a Kitt. Odle employs a standard costing system. Each Kitt has a standard cost of 5 pounds of material at $12 per pound and 0. 9 direct labor hours at $15 per hour. There were no inventories of any kind on June 1.

During June, the following events occurred: – Purchased 17,000 pounds of material at a total cost of $190,000. – Used 15,000 pounds of material to produce 2,400 Kitts. – Used 1,900 hours of direct labor time at a total cost of $38,000. |37. |To record the incurrence of direct labor cost and its use in production, the general ledger would include what kind of entry to | | |the Labor Rate Variance account? | |A) |$ 9,500 credit. | |B) |$ 9,500 debit. | |C) |$15,200 debit. | |D) |$ 2,000 debit. | |38. |Odle Company purchased material on account.

The entry to record the purchase of materials will include a: | |A) |credit to Work in Process. | |B) |debit to Accounts Receivable. | |C) |credit to Accounts Payable. | |D) |credit to Raw Materials Inventory. | Use the following to answer question 39: The Geurtz Company uses standard costing. The company makes and sells a single product called a Roff. The following data are for the month of August: – Actual cost of direct material purchased and used: $65,560 – Material price variance: $5,960 unfavorable – Total materials variance: $22,360 unfavorable – Standard cost per pound of material: $4 Standard cost per direct labor hour: $5 – Actual direct labor hours: 6,500 hours – Labor efficiency variance: $3,500 favorable – Standard number of direct labor hours per unit of Roff: 2 hours – Total labor variance: $400 unfavorable |39. |The labor rate variance was: | |A) |$3,900 favorable. | |B) |$3,900 unfavorable. | |C) |$3,100 unfavorable. | |D) |$3,100 favorable. | |40. |Home Company manufactures tables with vinyl tops. The standard material cost for the vinyl used per Type-R table is $7. 80 based | | |on six square feet of vinyl at a cost of $1. 30 per square foot.

A production run of 1,000 tables in January resulted in usage of| | |6,400 square feet of vinyl at a cost of $1. 20 per square foot, a total cost of $7,680. The quantity variance resulting from the | | |above production run was: | |A) |$120 favorable. | |B) |$480 unfavorable. | |C) |$520 unfavorable. | |D) |$640 favorable. | Use the following to answer question 41: The Chase Company has a standard cost system in which manufacturing overhead is applied to units of product on the basis of direct labor-hours (DLHs).

The company recorded the following activity and cost data relating to manufacturing overhead for October: [pic] |41. |The fixed overhead budget variance for September was: | |A) |$2,700 favorable. | |B) |$2,700 unfavorable. | |C) |$5,400 favorable. | |D) |$5,400 unfavorable. | Use the following to answer question 42: A furniture manufacturer has a standard costing system based on machine-hours (MHs) as the measure of activity. Data from the company’s flexible budget for manufacturing overhead are given below: [pic] |42. What was the fixed overhead budget variance for the period to the nearest dollar? | |A) |$2,440 F | |B) |$1,200 U | |C) |$1,999 U | |D) |$704 F | Use the following to answer question 43: A manufacturing company has a standard costing system based on direct labor-hours (DLHs) as the measure of activity.

Data from the company’s flexible budget for manufacturing overhead are given below: [pic] |43. |How much overhead was applied to products during the period to the nearest dollar? | |A) |$79,118 | |B) |$76,035 | |C) |$77,440 | |D) |$80,145 | Use the following to answer question 44:

The Chase Company has a standard cost system in which manufacturing overhead is applied to units of product on the basis of direct labor-hours (DLHs). The company recorded the following activity and cost data relating to manufacturing overhead for October: [pic] |44. |The amount of fixed overhead cost contained in the company’s overhead budget for September was: | |A) |$45,900. | |B) |$54,768. | |C) |$49,920. | |D) |$47,703. | |45. |Baxter Corporation’s master budget calls for the production of 5,000 units of its product monthly.

The master budget includes | | |indirect labor of $144,000 annually; Baxter considers indirect labor to be a variable cost. During the month of April, 4,500 | | |units of product were produced, and indirect labor costs of $10,100 were incurred. A performance report utilizing flexible | | |budgeting would report a spending variance for indirect labor of: | |A) |$1,900 unfavorable. | |B) |$700 favorable. | |C) |$1,900 favorable. | |D) |$700 unfavorable. |

Use the following to answer question 46: Wicks Company has established a flexible budget for manufacturing overhead based on direct labor-hours. Budgeted costs at 100,000 direct labor-hours are as follows: [pic] |46. |If Wicks Company plans to operate at 90,000 direct labor-hours during the next period, the flexible budget would show indirect | | |labor costs of: | |A) |$144,000. | |B) |$63,000. | |C) |$90,000. | |D) |$81,000. |

Use the following to answer questions 47-48: The Steff Company has the following flexible budget (in condensed form) for manufacturing overhead: [pic] The following data concerning production pertain to last year’s operations: – The company used a denominator activity of 15,000 direct labor-hours to compute the predetermined overhead rate. – The company made 6,850 units of product and worked 14,200 actual hours during the year. – Actual variable overhead was $15,904 and actual fixed overhead was $30,850 for the year. – The standard direct labor time is two hours per unit of product. |47. The fixed overhead budget variance was: | |A) |$3,450 unfavorable. | |B) |$3,450 favorable. | |C) |$850 unfavorable. | |D) |$1,200 favorable. | |48. |The fixed element of the predetermined overhead rate was (per DLH): | |A) |$4. 15. | |B) |$3. 00. | |C) |$2. 00. | |D) |$1. 15. | Use the following to answer question 49: Barrick Company has established a flexible budget for manufacturing overhead based on direct labor-hours.

Total budgeted costs at 200,000 direct labor-hours are as follows: [pic] |49. |At an activity level of 170,000 direct labor-hours, the flexible budget for factory overhead would show the budgeted amount for | | |utilities as: | |A) |$ 85,000. | |B) |$140,000. | |C) |$160,000. | |D) |$100,000. | Use the following to answer question 50: The Steff Company has the following flexible budget (in condensed form) for manufacturing overhead: [pic]

The following data concerning production pertain to last year’s operations: – The company used a denominator activity of 15,000 direct labor-hours to compute the predetermined overhead rate. – The company made 6,850 units of product and worked 14,200 actual hours during the year. – Actual variable overhead was $15,904 and actual fixed overhead was $30,850 for the year. – The standard direct labor time is two hours per unit of product. |50. |The fixed overhead cost applied to work in process was: | |A) |$27,400. | |B) |$30,000. | |C) |$30,850. | |D) |$13,700. |

Read more

APC 309 Strategic Management Accounting

Module Title: Strategic Management Accounting Module Code: APC309 Individual assignment SUNDERLAND BUSINESS SCHOOL Date: 16/04/2011 Introduction: As Gowthope (2005, p. 148) said that: “A budget is a plan, expressed in financial and/or more general quantitative terms, which extends forward for a period into the future. Budgets are widely used in organisations of all types and sizes. ” –Budgeting actually refers to the process that, after the strategic plan of the business has been made, companies made a short term plan (usually one year) to meet the strategic purpose. Traditional budgeting has offered a lot of contributions in so many years? ractice; no one has a better summary of all advantage of traditional budget as (Umapathy, 1987, p. xxii): “I believe that budgeting provides managers with a wonderful opportunity to rejuvenate their organisations. There is no other managerial process I am aware of that translates qualitative mission statements and corporate strategies into action plans, links the short term with the long term, brings together managers from different hierarchical levels and from different functional areas, and at the same time provides continuity by the sheer regularity of the process. . So, many organisations use a „traditional budget? –the short term plan that meet the strategic purpose of the organisation- because of the easiness of preparation and its simplicity to coordinate budget across various departments. But it seems it is more and more unsuitable for the modern business. In this paper, I will give a brief induction for traditional budgeting; and then discuss the strengths and weaknesses of the traditional budgeting; last I will explain and evaluate the alternative approach that will be more accurate and work for today? dynamic markets. In the second part I will tackle the working capital concept by giving some ways to improve parts of Working capital in XYZ limited which is a medium sized manufacturing business. Today, reducing costs, improving quality, and saving time through all parts of an organisation are the mantra of executives in every industry. In their pursuit of those goals, however, they tend to overlook working capital productivity because it is an indirect measure.

They see it as a narrow financial calculation and miss its link to the overall systemic performance of an organisation. As a result, executives forfeit a powerful lens to track improvements across the company. Section 1: Budget and Budgeting: “Budget reflects a choice – not an easy choice, but the right choice. And when you think about it, the only choice. The choice to take the responsible, prudent path to fiscal stability, economic growth and opportunity. ” –George E. Pataki. An American politician.

The use of budgets dates back to 1920 where it was used as a financial tool for business enterprises (Hofstede, 1968, p. 20). The budget is an indispensable management tool or as Horngren, T. et al, (2000, p. 178) said: “the most widely used accounting tool for planning and controlling organisations”. A budget is an estimated plan over a given period of time expressed in monetary terms for the allocation of funds and distribution of scarce resources through internal communication to get the planned activities done.

When used properly a well designed budget can be a helpful tool in decision-making, it can ensure the controlling process and performance measurements, facilitate communication, and can act as a motivational tool. (Highered. mcgrawhill, accessed 2011) “Budgeting may be defined quite simply as the process of compiling budgets and subsequently adhering to them as closely as possible” (Maitland, 2000, p. 1). Though budgeting process is complex, time consuming and requires a lot of decision-making (refer to Appendix, figure. for an outline of the budgetary process), it is an essential part of the strategic planning process that helps communicating the goals of the organization and facilitates, coordinates and controls various departments of the organization in order to steer the company to its desired goals, it involves the annual cycle to plan actions, better coordination and allocation of resources, and at the end measuring and controlling performance with regard to the plans agreed.

Traditional Budgeting Approach (TBA): There are various methods to prepare a budget. Here we are concerned with the traditional approach to budgeting known also as the incremental budgeting which involves basing next year? s budget on the current year? s results plus an extra amount for estimated growth or inflation (APC309 Workbook, 2008).

It is claimed that in many organisations the traditional budgeting remains widespread, and that 99% of European and US companies are using budgets and have no intention of abandoning them, it was also stated that over 60% of those companies claim that they are not highly satisfied with their current budgeting systems and are continuously trying to improve the budgeting process to meet the demands set for management in creating sustainable value (report: Better Budgeting, 2004, p. 2-3).

From this perspective it is obvious that traditional budgeting approach and budgets in general hold many benefits as well as problems. Implementing TBA on a static market: When implemented within businesses, such technique will be more suitable for firms where each year? s performance and activities are similar to the previous one and conditions are predictable, an active market that can take up large sales which do not change much in relation with changes in prices and where demand is slack.

If we take an example of a company „A? operating in a static market, let? s say that our company is selling „sugar?. So for such company using the TBA (Traditional Budgeting Approach) will be perfect and will work well because first, sugar is a necessary good so the market demand is steady i. e. the buying behavior of sugar does not change much, it is a food basic that people consume on a daily basis, the market demand in this case is predicted and quite unchanged, so „A? an constantly base its expenditures and estimated revenues on those of previous year and that makes it suitable for our company here to be using an annual budget based on historical data, thus, will make it easier to compare actual results with budgets and monitor organizational functions. Second, senior managers won? t be forced to spend an amount of time reviewing budgets. Again, focusing on the benefits of TBA we can say that this approach enhance controlling and is asy to prepare and understand, administratively unambiguous and simple to operate, so this method is cheap. It is probably the simplest method that ensures a quick and low preparation costs, however, I would insist on the point that for any business it? s good to provide and introduce change gradually, therefore, the only major weakness that would limit our company „A? is the fact that senior managers will never be able to have a general and overall picture of the performance, and also some people will be offended when it comes to supervision, humans tend o work at their lowest possible standards especially when there is lack of motivation and rewards, as a matter of fact the budgetary control touch on the culture of blame and mistrust, plus there is a fact that scarce resources will not be allocated effectively and efficiently so that would create an obstacle and prevent employees from performing at their best, and their creative spirit would then be stamp down. Implementing TBA on a dynamic market: “Fixed budgets don? t work today. A budget is a too static instrument and locks managers into the past – into something they thought last year that it was right.

To be effective in a global economy with rapidly shifting market conditions and quick and nimble competitors, organisations have to be able to adapt constantly their priorities and have to put their resources where they can create most value for customers and shareholders. ” Juergen H. Daum. (A management and executive adviser) As Juergen explained, budgeting tools that were created to serve businesses back in the manufacturing era where production costs and revenues were foreseeable will not be effective in today? s „information age? where the market is globalised.

This traditional annual budgeting system is not suitable or relevant in rapidly changing markets, many companies believe that budgets do not deal with intangible assets like brands and knowledge and fail to focus value (Davies T. and Boczko T. 2005 p. 408). In today? s global market where conditions and demands are unpredictable and hard to be determined in advance, an event like 9/11, the Arab? s revolution, and the earthquake that hit Japan will definitely change the way organisations do their businesses especially those big companies that are opened to the global market, in this matter, adopting a raditional budgeting approach will cause more damages. Considering a company „B? operating in a typical dynamic changing market let? s assume here that „B? is a hotel business where each year? s activities and number of tourists accommodated are completely different than the previous year and hard to be predicted, this kind of businesses system is changeable, adjusted constantly and boost employees to give their best with waking up their creativity spirits, our company „B? needs a full use of its potentials and should keep innovating in order to survive in its market and that would not be achieved if employees and managers are not motivated.

For „B? to become the success that all companies are striving to reach today, it has to avoid relying on historical performances or fix their employees performance on fixed budget to deliver the planned outcome, and if adopting any method of budgeting it should do so by designing it on a „bottom-up? basis. So, in a dynamic market a use of TBA would cause more problems to such companies. TBA is inaccurate for our company „B? where each year is very different to the previous one in terms of activities, cost, and market demand.

Here, I would suggest the use of the ZBB (Zero Based Budgeting) approach since the number of tourists change according to seasons and unexpected events worldwide, it will be beneficial to re evaluate all of the company? s activities from a zero base annually and respond to any condition changes within the environment each year. Thus, inefficient and inaccurate activities will be removed and any wasteful cost will be cut which means a better allocation of resources, also, this technique promotes the bottom-up of budgeting which will automatically lead to bring up the motivation of employees.

Nevertheless, the weakness of this method is that each pound spent must be justified, and if we have a big company which held too many activities, using a ZBB will generates more work that is hard to managed, and because decisions are made at the budget time, it will be difficult to react and deal with changes that might occur during the year, so here as a suggestion the company while performing the zero based budget may use a rolling budget every year. Furthermore, it will be challenging especially for private organisations that have indefinable activities and discretionary cost to be put into decision packages.

There were some argues about the traditional budgeting approach being as a barrier to change. For that Hope and Fraser (1997) suggested a new alternative process to budgeting which is termed as “Beyond budgeting approach”. They claimed that this approach will free people from the top-down performance contract and allows a use of knowledge and best allocation of resources to satisfy customers and beat competitors. This alternative way of budgeting is about the development of leadership principles and help decision making to be made.

The thing about it is that this model does not lead to change in some parts but require a systems transformation. (Refer to appendix, figure: 2 for a budgeting and beyond budgeting model). However, even with this model that will break managers free from the annual performance of budgeting, it has a disadvantage that it underpinned their organisation? s performance transformation. To alleviate all those limitations, companies must seek for alternatives approaches that combines and put in practice the benefits of each approach without forgetting to give priority to employees and managers? otivation, the human aspect behavior plays a crucial part in every business because success of any company nowadays rely on its number one asset which is the human labor (knowledge, know-how, expertise, experience….. etc. ). Section 2: Working Capital: Nowadays, the market requires companies to diversify its products and services within a short time delivery, so, companies are striving to keep on track with global markets? need and competition from other rivals in order to meet the customers? expectations and satisfy their needs. For that, companies will have to focus its resources and potentials to create the business? value, satisfy the shareholders and balance between its liquidity and profitability, this will be through improving all forms of cash flow and increasing their working capital productivity. In an article from (tutor2u, accessed 2011) working capital is: “The period of time which elapses between the point at which cash begins to be expended on the production of a product and the collection of cash from a customer” (Refer to appendix, figure. 3 for working capital cycle) Working capital is the concern of all firms; it is defined as the current assets minus the current liabilities (working capital = current assets – current liabilities).

While in the APC309 Workbook, (2008) it was said that: “Working capital required because the company has to pay for goods and services before recovering the money from customers, and represented by the difference between current assets and current liabilities. ” Company XYZ: a manufacturing business: Considering XYZ Limited, a medium sized manufacturing business. For such manufacturing businesses, XYZ needs to spend cash to purchase raw materials (inventories) and manufacture them. While waiting for the finished goods to be sold it needs to stock them.

After selling the goods it can incur some costs. And before receiving the revenue (cash) it waits for the cash receipts from the customers (accounts receivable) and can delay the payments to vendors (accounts payable). So, working capital is an important source of cash throughout the business cycle. (Refer to Appendix, figure. 4 for a diagram of the Working capital cycle in manufacturing firms). Improving XYZ’s working capital: Focusing on working capital will help XYZ? s manager to create lasting value, examine the organisation? productivity and efficiency, and XYZ will become stronger. Starting with the following formula: (working capital = current assets – current liabilities) to analyze the operating cycle of XYZ in order to improve its working capital. Liquidity assessment: cut-down the operating cycle. Shorten XYZ? s operating cycle and cash holding costs by maintaining a cash balance, this would be done through a trim of the stock on hand – the XYZ company however should pay attention not to be in short of stock which will affect it badly and will be unable to meet its customers? emand-, also, make a consignment of stock obtained, lowering the time needed to manufacture the goods and selling them, and a cut down of cost which will definitely increase their cash. Stock when necessary: reduce inventories. Inventory surplus is one of the ways to neglect any cash sources, so in order to boost cash flow; XYZ would better reduce production time and its inventories and lowering them to avoid over production. By a reduction in inventories meaning made a consignment of stock, managing the supply chain and varying the goods manufactures.

Also, to increase profitability, XYZ can benefit from cutting costs through this reduction in both inventories and warehouse space needed. Accounts receivable funding: get paid now. Until the customer pays XYZ, the sale is not considered as achieved. The working capital cycle must be completed or the company will regret making the sale if the customer went away without paying. So, XYZ should take into consideration terms of payments, invoices and well manage the cash.

Some ways to improve the cash will be speeding up cash collection, ameliorate the reduction of payment terms and collection processes, besides, a strong credit control and a rigorous collection procedures will help to positively improve profitability. While collecting past due cash, XYZ should secure favorable payment terms, obtain payments, approve new customers and maintain a good relationship with clients that pay on time while keep an eye and be careful from both doubtful and risky clients. Accounts payable: negotiating the best agreements possible. While dealing with suppliers, XYZ should rethink payment terms and avoid early payments.

Paying its suppliers before the due date is strongly unacceptable and better be avoided, and accomplished within or after the due date. Raising terms and procedures of payments, and optimizing discount is highly recommended. Seeking an increase in cash flow operation and the company? s profitability will be achieved by asking for longer credit terms from suppliers, and if possible take inventories on consignment. Other ways to improve working capital can be to consider leasing when thinking of purchasing equipments this will improve the amount of cash in short term only but can lead to additional costs in long term.

Also, consider outsourcing and benefit from price differences. And always negotiate and try to get discounts, besides there is the possibility of converting debtors? cash into factoring or utilizing a bank loan or overdraft. For a XYZ Limited to have working capital the current assets must exceed the current liabilities, it is managing the use of both current assets and current liabilities to improve the company? s short-term liquidity. There is a direct connection between working capital cycle and business performance.

Hence, the most important thing that? s needed to improve and have an efficient working capital cycle is not actually focusing on components of balance sheet that are: inventory, accounts receivable, and accounts payable but is the business cycle TIME that is measured from the time we identify the customer? s need, till we receive the payment of the finished product. Then, by reducing any necessary cash or inventory we will succeed to reduce our working capital cycle. Almost any business performance improvement effort influences the working capital (W.

C) cycle productivity of the business here talking about XYZ and will also affect other businesses that deals either directly or indirectly with it. For example if XYZ did not succeed in collecting cash from its clients it cannot be able to pay its suppliers and debtors and that will be bad since the relationship between them and XYZ will be sensitive so, that would build a miss trust and XYZ will find difficulties to be supplied or get credits this later will cause trouble because it will not have any raw materials and the business will then stop operating. Taking XYZ limited as a manufacturing business, any of the ways to improve its W.

C that was mentioned above will help cut down costs and boost overall working capital productivity by shrinking inventories and driving down accounts receivable. Also, the results behind paying suppliers before the due date would lead to reduction in working capital productivity. XYZ and should closely track its competitors? improvements to ensure that it is performing better. Furthermore, it can be useful to benchmark itself with regard to other industries for perceptions and opportunities to improve working capital productivity and cash flow. Benchmarking the performance of XYZ? system as a whole more accurately with regard to benchmark with other companies in the same sector would be of benefits. References: -APC309 Module Workbook, 2008. „Strategic Management Accounting Version 1. 0?. University of Sunderland. -Davies T. and Boczko T. , 2005. „Business Accounting And Finance. Second Edition.? Mc Graw Hill Education, p. 408. -Drury C. , (2001) „Management Accounting for Business Decisions. Second Edition.? Thomson Learning. -Gowthope C. , (2005) „Management Accounting for non specialists, 2nd Edition?. Thomson Learning, p. 148. -Hofstede G. H. , (1968) „The Game of Budget Control?.

Koninklijke Van Gorcum & Comp. N. V. , Assen, p. 20. -Hope J. and Fraser R. , (1997) „Beyond budgeting: breaking through the barrier to „The third wave??. Management Accounting, London. -Horngren Charles T. , Foster G. , Datar M. (2000) „Cost Accounting: A Managerial Emphasis, 10th edition?. Upper Saddle River (NJ). Prentice Hall, p. 178. -Lucey T. (1996) „Management Accounting, 4th Edition?. London: Letts, p. 108. -Maitland I. (2000) „Budgeting for Non-Financial Managers: how to Master and Maintain Effective Budgets?. London. Pearson Education, p. 1. -Satish B. M. (2002) „Working Capital Management and Control: Principles & Practice?.

New Age International (P) Limited, Publishers. Web sites: ? Behavioral Aspect of Budgeting: http://highered. mcgraw-hill. com/sites/dl/free/0074711717/57451/Budgeting_Ch09. pdf [Accessed the 25th February 2011] ? Better Budgeting: A report on the Better Budgeting forum from CIMA and ICAEW. (2004), Chartered Institute Of Management Accountants. P. 2-3 http://www. cimaglobal. com/Documents/ImportedDocuments/betterbudgeting_techrpt_2004. pdf [Accessed the 28th February 2011] ? The Beyond Budgeting Round Table (BBRT) www. bbrt. org [Accessed the 5th March 2011] ? Beyond budgeting http://www. juergendaum. com/bb. tm [Accessed 5th March 2011] ? Working capital cycle http://tutor2u. net/business/finance/workingcapital_cycle. htm [Accessed 20th March 2011] http://blog. maia-intelligence. com/2009/06/15/working-capital-management-and-bi-part-ii/ [Accessed 20th March 2011] Appendix: Source: Lucey, 1996, p. 108. Figure. 1: Outline of the budgetary process. Figure. 2: From traditional budgeting model to the emerging management model „beyond budgeting? Source: http://blog. maia-intelligence. com Figure. 3: Working capital cycle. Source: tutor2u. net [accessed 20th March 2011] Figure. 4: working capital cycle for a manufacturing firm

Read more

Does Ma Relevant

  • Has The Management Accounting Information in Malaysia Losing Its Relevancy?

Rosniza Binti Ramli Universiti Teknologi Mara, Malaysia. Abstract Malaysia is one of the developing countries that affected by the globalization process and emerging economic environment throughout the world. To be sustain in future, Malaysia organization especially should cope and response effectively with the changes in economic sector.

  • But, has the management accounting information can help the manager in making good decision for their organization?

Does management accounting in Malaysia also evolve or changes due to an emerging economic environment? Research papers on Relevance Lost: The rise and Falls of Management Accounting and Evolution of Management Accounting (IFAC, 1998) will be discussed further in this research in order to have better understanding about changes and evolution of management accounting in Malaysia. This research done by reviewing the prior research, articles, thesis and journals. The changes and evolution has been found based on the reviewed of prior research.

Introduction Research papers on Relevance Lost by Johnson and Kaplan found and gave us the picture of the rise and fall of management accounting throughout the centuries. The authors explored about nineteenth-century cost management system, efficiency, profit and scientific management on 1880 to 1910 until management lost its relevance on 1980s. Furthermore they analysed and explored the new global competition and new systems for process control and product costing and also performance measurement system for the future.

In nineteeth- century, companies having a transformation process from two or more process into a single economic activity. In all cases, the information focus on how to improve the process of managing the resources effectively and also do determine the sources of companies profit. In late nineteenth-century, conversion cost system was emerged to systematic management where focused on determination of correct information about efficiency of workers in mass-produced complex machine –made. Taylor and Emerson devised new accounting procedures to assess the efficiency of the task and processes in complex machine-making firms.

Futhermore, Church’s devices to use product costing in order to determine how much profit of individual product contribute to the firm’s overall profitability. But, G. P Norton rely on th standard cost information and comparing an integrated multiprocesstextile company’s performance with profit earned internally. After 1900, the integrated firms developed system to track the performance of the company and use one common denominator, return on investment that give attention to the amount of capital invested in the enterprise.

Furthermore, after 1900, based on discussion on cost accounting’s lost relevance for cost management, the managers not compile accurate product costs data and affect their judgement on the costs and benefits of such information not lost sense of the relevant information to management decision. The inventory costs information did not reflect the accurate guide to determine the product cost and in complex real-word setting, it also not relevant for actual management decisions.

When multidivisional organization first appear around 1920, they used ROI (return on investment) targets to assess the performance of managers. On 1980s, the author claimed that contemporary management accounting systems were became obsolete and affected the large organization. The information provided were not help in reflected the effective and efficiency of internal process. Besides that, the organization were became vulnerable to competiton and more focused organization. In the nest chapter, authors discussed the new global competiton of the 1980s.

The revolution of economic condition were contributed by the Japanese manufacturing where develop the innovative practice in management accounting such as total quality management, just-in –time inventory system and computer integrated manufacturing system. Most of the firm more focused not on the reducing cost of product but on the different strategies to attract customer with special product and services. In other word, competitive advantage that made organization more competitive than their rivals.

They were more interested to create the value of the firms and how to create long term economic wealth. Since the early twentieth century, technology has taken part and eliminated all manual operation and replaced with digital technology. Products can be processed using machine for controlled manufacturing operations company. Furthermore, the new challenges to the firm is to develop the new approach, tools and technique to design the effective cost accounting, management control and performance measurement system.

Other than that, the authors also discussed on process control and product costing systems. The objectives requires separate system for financial reporting, process control and product costing because each systems have different time frame for the activities, where process costing reported hourly, daily, weekly. Financial reporting system reported annually and quartelly and product cost information requires a longer time horizon. They also differ in terms of traceability and allocation, behaviour, set of relevant costs and audiences.

In the last chapter, authors argued that existing sytems are not posible to measure the performance of the firms. The short-term financial performance measurement has been undermined by changes in technology and innovation in the firms production operations. The measurement should be reflects the greater complexity of product and process in the firm and consisten with the firms goal and objectives. Firm should also need to determined the inadequacy of any single financial measure in order to summarie the economic performance of the firm during short periods.

Research paper of Evolution of Management Accounting (IFAC, 1998) were discussed the evolution of management accounting by Financial and Management Accounting Committee (FMAC) of the International Federation of Accountants (IFAC). They claimed that management accounting has developed through four evolutionary stages under Western approach. First stage, prior to 1950 focus was on cost determination and financial control and the main source of data was from financial statement. On that time, ratio and financial statement analysis were very popular.

The second stage, years of 1965, focus changed to the provision of information for management decision-making, planning and control such as decision analysis and responsibility accounting. The techniques that support the decision analysis were Cost-volume –profit, and marginal costing. By the year 1985 in the stage three, attention was focused on the reduction or managed the waste in business resources, through the elimination of non-value added activities, use of mathematical formula such as Economic Order Quantity (EOQ), inventory evaluation such as FIFO, LIFO and multiple regressions.

The fourth stage by 1995, focused had shifted to the generation or creation of value through the effective use of resources, through the use of technologies which examine the drivers of customer value, shareholder value and organizational innovation. The advanced management accounting methods that were popular such as Just-in-Time (JIT), Balanced Score Card, and Strategic management. IFAC (1998) had identified most of the developed countries had shifted to this stage between the years of 1985 to 1995.

Japanese or Eastern perspective on the evolution of management accounting also consists of four stages, namely Drifting, Traditional, Quantitative and Integrative Management Accounting. The drifting management accounting such as ratio analysis, traditional such as budgetary control and standard costing, while quantitative such as mathematical formula and equation and integrative such as JIT, Target Costing and Kaizen. Literature review Based on the review of the prior study, there are some purposes to be review. First, the problems with modern US cost accounting and management control system and challenges and recommendation to overcome it.

Second, changes in management accounting practices in Malaysia. Third, the rise and fall of activity based costing. Forth, the management accounting practice in selected Asian country. Fifth, the current state of mangement accounting practice in selected Malaysian companies. Problems, challenges and recommendation of modern US cost accounting and management control system The problems arose in the cost accounting and management accounting were, the business ran by the manager based on the financial performance or in numbers.

Johnson and Kaplan addressed that the process of cost and management accouting have developed to the stage where senior executives believe they can run their firms by the numbers (p 15). They were recommended that the firm should relates the human performance in organization both internally through management accounting and externally through financial accounting. They also suggested that Western approach to managing by the numbers, based in financial measure of control were became powerful of control in US and increasingly in UK business organization and remain acceptable in Japanese industry.

Based on the prior research Mahmoud Ezzamel (1990), he and collegues criticts on the suggestion by Johnson and Kaplan and gave alternative ways of acounting for the problem with cost accounting. They do not agree with the precise history that Johnson and Kaplan told, with the understanding of accounting and its power to which their history leads them. They told a history that basically good but went increasingly wrong. Mahmoud Ezzamel also argued that cost management based upon accounting has problem and bound to be problematic and that this is what the history of 19th century accounting such as how to find true cost shows.

From the historical development of cost management and cost accounting, Johnson and Kaplan derive a diagnosis of the causes of a modern ‘disease’. Changes in management accounting practices in Malaysia Malaysia has moved towards global competitivenesss, this changes makes manufacturing companies in Malaysia need to ensure their business operation and management cope with the current changes. ( Tuan Zainun, 2011). This prior study carried out to investigate how changes in Management accounting practice took place in Malaysia companies.

Following Johnson and Kaplan (1987), MAP have been further developed for better decision making and management control. Globalization has brought the new and advanced technology and made a developing country open to greater competition (Kassim et al, 2003). This condition were affect the MAP in a business organization in order to fit the changes in the business operation. This study can be an evidence that the management accounting information change due to certain reason and made it relevance to be used by the companies. The rise and fall of activity based costing.

Activity based costing tool can help the firm to determine the cost effectively based on the cost pool and cost driver. ABC is still the most appropriate cost system in management accounting. Many advantages of using ABC system in the firm such as ABC data is more accurate and reliable than traditional costing. It also can be used for decision making and performance evaluation. Furthermore, Kaplan, Weiss and Desheh (1997) reported the successful implementation of ABC transfer prices at Pharmaceutical Industries, which diminished the endless disputes between the marketing and production departments.

ABC also handles overhead costs and leads to a better understanding of the cost drivers that generate these cost. Besides that, ABC also suitable to implemented by the service organization sucha s government organization, insurance firms and banks. But, ABC also have the weaknesses such as ABC is based on subective arbitary cost allocations where ABC costing system more complicated and cannot predict profits and not adequate for decision making. ABC also ignores constraints and not take an account a bottleneck. The cost of the various products are irrelevant for product mix decision.

ABC regards the relation between activities and resource consumption as linear, absolute and certain, where in reality the cost is discontinue. Even though most of firms tried ABC ultimately decided to abandon it, they did seem to regard it favorably, based on many case studies and articles (R. Cooper and R. S. Kaplan, 1991). ABC should emphasize the need to focus and cut down the cost of operational complexity. Management accounting practice in selected Asian country Prior study by Maliah Sulaiman observed the management accounting practices in Asian countries, Singapore, India, Malaysia and China.

Authors claimed to be excellent in running the business and to be competitive in the global economic, firm should use the advance management techniques such as Just in Time, ABC, TQM and process re-engineering. Various authors have argued that traditional budgeting and cost volume profit analysis are no longer adequate to be used as planning andd control tools in the present manufacturing environment (Brownwich and Bhimani,1994). Many have predicted that traditional tools cannot cope with the changes of the shorter product life cycles, advanced manufacturing technologies and global competition.

Its very important to determine the practices of management accounting in the real world because it can help the academician to have an accurate pictures for their teaching, if not, the accounting curriculum should be change to better reflect the needs of industry. Willett et al (1997) concern that studies on the management accounting practices in this region lag behind studies in financial accounting. Choi and Mueller, 1992 cited that accounting is a product of it environment, means accounting is shaped by the environment, so different countries have different practice on mangement accounting.

The current state of mangement accounting practice in selected Malaysian companies Prior study, Ghosh and Chan (1997) indicated that management accounting practice in Singapore, many of the firms already used various of management accounting techniques but not more used new technique such as the ABC and TQM system. Most of the local company were not competitive and lag behind the multinational companies. The study also indicated that Singapore companies not improve their management tools since 1997. they also avoided of used the advanced toos because they claimed that the implementation of the dvanced tools required complex process and additional resources needed. Then, Adelegan (2001) were studied on companies in Nigeria, where most of the companies only focused on process of cost determination and financial control uing budgets and cost accounting technologies. They has fully in the second stage and on the move to the third stage of evolution. Nishimura (2002) that conducted research on the Japanese affiliates in three Asian countries of Singapore, Malaysia and Thailand claimed that most of the companies in that countries had shifted from the traditional management accounting practices to the next stage of evolution.

It was also found that some of the companies were move towards by using the advanced management accounting technique. There also research conducted in Malaysia that studied on the small and medium industry by Omar, Abdul Rahman and Zainal Abidin in year 2002. The research found that SMIs in the Klang Valley were still relying on the simple and not complicated management accounting practices such as budget and standard costing but they seemed to have acceptance of the advanced management accounting techniques and there was a positive trend towards the implementation of these new techniques in the future.

Findings The result from the review of the articles, found that, Johnson and Kaplan rediscovery the management accounting system in the nineteenth century history is more about the practical business management not only the historical question. These major achievements were important to the international management accounting and culture. But, in the 1980s, the management accounting has been developed. Then due to modern process of production technologies and global competition, the information was become irrelevant.

They claimed that the cost accounting is by-product of the financial accounting, so firms decided not to maintain Management accounting system separated from financial accounting system because of too expensive for them. Besides that, the irrelevance became worsen due to short-termism where the financial accounting only focuses on the short-term results, the control function, timing being too aggregated and unhelpful to organization. Then the academic accounting also failed to focus on the routine financial accounting consistently and the academic writing has lost touch with real world concerns.

Furthermore, the major innovations in US firms lead to the failure of the MAS to provide managers with the information they need. The recommendations There are third recommendations by Johnson and Kaplan, first MAS should render more relevant time frames for the activities undertaken by the firm, where should have reporting cycle specific with the process control such as daily, weekly or hourly. In product costing, MAS should change the short –term decisions in management accounting texts into longer time horizon to have better strategic decisions.

Second, the allocation of the cost between product and process control should be different to be focused on flexible budgets. Then the cost allocation for the product should be trace in order for the firms to develop strategic decisions on the product development and discontinuance. Third, the future performance measurement should be based on long term measures, not forgotten the non-financial indicators to highlight the firms performance in many areas such as marketing and manufacturing.

The changes of Management accounting practices in Asian country Furthermore, from the reviewed of the articles and journals, found that the Management Accounting practices have a significant change in traditional and advanced MAP in Malaysia manufacturing companies from 2003 to 2007. The changes might be because of changes in the business environment and the competition and advanced technology used by the firms.

This factor encourages the emergence of MAP in order to serves the organization with the accurate and reliable information to make a better decision in achieving the objectives of the organization. It also found that the manufacturing companies in Malaysia relied on the foreign multinational companies for export. This condition leads to sharing or transferring the advanced MAS to be adopted by Malaysian manufacturing companies. Besides that, the result showed that the increased in the use of MAP in manufacturing companies in parallel with the advanced technology used in the manufacturing.

The changes also shows that the management accounting in Malaysia recently have through the process of evolution and keep changes to cope with the business environment challenges. In the other hand, management accounting practices in Asians countries such as Singapore, India, Malaysia, and China the evidence reviewed suggest that there were not used the contemporary management accounting tools as a whole. For example evidence in India, most of the company still uses traditional management accounting techniques (Joshi, 2001).

They resistance to change to the new tools were because of the manager perception and culture that risk averse or not a risk taker. They also claimed that a lot of cost will incur in implementing the new tools in their organization. Same goes in Singapore where most of the companies used the traditional tools because they claimed that no reasons for them to change to the new tools. It also due to lack of expertise, knowledge and top management support to implement the new tools of management accounting.

In Malaysia and China, most of the company there also still uses the traditional method and they claimed maybe they will change to new tools such as Balance score card and ABC in the next five years. Based on other articles, the current state of management accounting practice in Malaysia, there have seven techniques of management accounting that popular such as, budgets, income statement analysis, cash flow analysis, balance sheet and financial ratio analysis, cost and benefit analysis and finally the product costing.

This is indicated that the stage one and stage two of management accounting still be practice by selected Malaysian companies. For the use of stage three and stage four among them are extremely low. But most of the selected companies in Malaysia have evolved into the third and fourth stage of management accounting evolution. (Rosmawati, 2004) In order to enhancing the management accounting practice in Malaysia, the professional body should have unit to implement and promotes the use of advance management accounting practices.

Furthermore, academician and also practitioner, or business organization should work together and discuss further about the needs and roles of management accountant in order to develop new definition of the management accounting in the country. It’s important to build a communication between the academician and practitioner because practitioner should informed the changes of the practices uses in organization to academician, so it will help in constructing the better curriculum for students that can reflects the real world practices.

Other than that, proper planning should be constructing to educate the practitioner and also public by conducting the seminar in management accounting, so they will alert and realize with the evolution and new techniques in management accounting. Next, academician especially should be encouraged to write the articles, journal and research that reflects the evolution of the current management accounting practices. Then, it should be publicize in the magazines in order to spread the new information regarding the new management accounting practices to the business organization or public. The rise and fall of Activity based costing

Activity based costing now still being used in most of the companies in the world, even though the system have problem because many organizations regard their cost systems for financial reporting, decision-making decentralization, price justification, control and performance measurement. But, ABC requires more efforts and skills without better results, so, the alternative are to hold to the traditional cost system. Prior case study, Y. Eden (2002) said it was disappointment with traditional cost accounting and lack of appropriate alternatives that prompted the initial enthusiasm for ABC.

Managers also felt that the traditional cost accounting is not relevance, so they should do something to overcome it. Even though most firms that tried ABC decided to neglect it, they did seem to regard it favorably. However, the benefits to the firms not from the cost allocation data but from the ABC pilots involved thorough analysis of processes and costs and drew attention to neglected aspects of organizational activities. ABC systems just need to focus and to cut down the cost of operational complexity.

But when manager realized these lessons, the complex data not make the improvements, so they used non-financial measurements. Conclusion From the reviewed, the management accounting practices and information in Malaysia will lost it relevancy if process of evolution did not take into action. Due to rapid changing in the global business environment, management accounting information should not lag behind it in order to stand in line with the advanced technology changes. With that, Malaysia should start to implement the advanced management accounting techniques in managing and control the business activities.

It’s important to help them use the resources effectively and to measure the performance efficiently. New advanced management accounting practice implementation will contribute significantly for creating the value and also to maintain the sustainability of the organization in the future. Management accountant also should play role and becoming a part of management team in the organization. This is to make sure that the management accounting information will remain relevant in the new challenging business environment.

Nishimura (2003), management accountant should work together with other practitioner such as engineer, marketing directors, designer and product directors so management accountant will understand more their work field and they will share opinion and recommendation with fulfill the various needs and goal from different departments and then come out will ultimate goal and objectives that can help the organization to achieve it successfully. Moreover, the suitable changes in their MAP especially in manufacturing companies should maintain effectiveness of the business activities.

The advanced and traditional system should be used both to compliment and substitute for each other. When the traditional system can be useful and able to provide some information, the organization should adopt new advanced system to assist the more useful information to make decision. But when the traditional system fail to provide useful information, then it should be replaced with a more advanced system. This is very crucial to the management accounting and should be careful when making decision on what MAP that suitable for the condition of the business. If not it might be jeopardize the firms’ performance. References H.

Thomas Johnson, Robert S. Kaplan. (1987), “Relevance Lost: The Rise and Fall of Management Accounting, Harvard Business School Press, Boston, Massachusetts. Rosmawati Mahfar, Normah Omar. (2004), “The current state of Management Accounting practice in selected Malaysian Companies: An empirical evidence”, Universiti Tenaga Nasional, International Business Management Conference 2004. Mahmoud Ezzamel, Keith Hoskin and Richard Macve. (1990), Managing It All By numbers: A review of Johnson & Kaplan’s ‘Relevance Lost’”, Accounting and Business Research, Vol. 20, No. 78, pp. 153-166, 1990. Maliah Sulaiman, Nik Nazli Nik Ahmad and Norhayati Alwi. 2004), “Management Accounting Practices in selected Asian countries: A review of the literature”, International Islamic University Malaysia, Kuala Lumpur. Tuan Zainun Tuanmat, Malom Smith. (2011), “Changes in management accounting practices in Malaysia”, Asian Review of Accounting, Vol. 19 Iss: 3 ppp. 221 – 242. Nitza Geri, Boaz Ronen. (2005), “Relevance lost: the rise and fall of activity- based costing”, Human System Management 24 (2005) 133-144 IOS Press. Martijin van der Steen. (2011), “The emergence and change of management accounting routines”, Accounting, Auditing & Accountability Journal Vol. 24 No. 4, 2011 pp. 502-547.

Read more

Role of Management Accounting in International Firm

The international firms have disperse configuration as their activities in the value chain are spread throughout the world. Therefore, the international firms use management accounting to co-ordinate and integrate their activities in different countries. The role and scope of management accounting differs in international firms depending upon the relationship between their subsidiaries and the strategy of their top management. Porter 1986) classified international firms into the global firms, the multidomestic firms and the exporting firms. Both global and multidomestic firms have dispersed configuration but the former is an integrated unit whereas the latter is a conglomerate that achieves control by making its subsidiaries as independent of each other as possible. In a global firm, management accounting supports a dispersed configuration of the value chain located across the world. The output of one subsidiary is an input of other subsidiary located in a different country.

The dispersed location of subsidiaries call for extensive co-ordination and central management intervention in the affairs of the subsidiaries. By focusing on global product-line profitability, the central management can use management accounting to establish an integrated organization. Various operations like production, sales, R&D are positioned globally according to specific locational advantage and they are integrated through extensive planning and budgeting activities.

Management accounting in an international firm is a finely tuned information mechanism. In contrast, there is little integration of subsidiaries in a multidomestic firma as they usually operate in different businesses. Therefore, they are relatively free to devise their own strategies and plans and to monitor their progress towards them. Central management monitors subsidiaries from a portfolio management perspective which evaluates subsidiaries largely on financial rates of profitability.

Management accounting role in multidomestic firms is setting financial targets for sudsidaries and evaluating their performance using composite financial ratios like ROI( Return on investment), ROA (Return on assets) , RI (residual income) and ROE ( return on equity). There is little emphasis on information which integrates activities across subsidiaries. International firms are exposed to exchange rates fluctuation risks. These fluctuations creates uncertain cash flows in corporate currency and also can distort the performance of subsidiaries (Eiteman, Stonehill and Moffet, 1992).

Therefore, the management accounting manage the currency risks in the international firms by monitoring the short-term transaction exposure to debtors and creditors, medium term budgeting of international cash flows and long term strategic currency and exposure concerns over the firm’s strategic planning period. Management accounting uses transfer pricing between subsidiaries in different countries in order to maximize international firm’s after-tax global profits. Through transfer pricing firms may divert profits to regions where taxes are low (Radebaugh and Gray, 1993).

The threat of this puts pressure on host governments to make and adminstor tax laws that benefits the firm. However, the firms seek to be as independent of the individual location as is possible, to minimize the political risks such as change in government causing substantial changes in host country’s economic policies. The management accounting plays a key and wide role in international firms. The information technology is improving and becoming cheap with the passage of time. That will further deepen the role of management accounting in the international firms.

According to Belkauoi (1991), the financial knowledge resulting from management accounting has enabled the integration and control of dispersedly configured firms by the central control. The global firm is characterized by its large geographical reach and the considerable interdependence between its subsidiaries. Global firm uses management accounting to integrate its activities across the globe. On other hand, the multidomestic firm’s subsidiaries are quite independent in their activities.

Read more

Management Accounting for Business

A successful and sustainable business must be able to consistently earn operating profit, which is considered as the litmus test of all successful businesses (2002:109). Its realization depends mainly on the ability of a manager to make sound decisions on financial and operational aspects of the business. Businesses have many operating expenses that do not vary with sales activity but remain constant for a certain period of time (2002:112). These costs remain in place over a range of various sales activity levels, whether the business is earning or losing.

Fixed expenses are incurred because the operation needs space, equipment, personnel and other relevant activities of the business. PRM, a medium-size supply company based in Melbourne, Australia, produces three quality of papers, namely: Supreme, Recycle papers, and Durable. For the past 10 years, the company has been generating a profitable level of revenue. However, the lower value of Australian currency in the past year has made imported raw materials more expensive.

The first report shown above on the Sale performance of PRM Company for the first quarter is not suitable as basis for analysis and decision making mainly because it lacks details on the overall financial activity. Further analysis and scrutiny regarding the substantial and relevant information on sales and cost operating expenses will not be possible. The overview of the report above tells us right away that profit loss on the Durable paper may have been due to low sales volume. However, if we will present an alternate Profit Report, such as the one presented below, a more comprehensive assessment on the losses can be derived.

From the table above, we can see that per unit cost of Supreme paper is $ 40. 5 while Durable is $ 42. The respective unit sale is $ 60 and $ 40, which obviously states that the price for Durable is not cost-effective at all. In fact it generates a $ 2 loss for every unit of Durable paper sold due to its sale price while Supreme paper earns at $ 19. 5 per unit. By subtracting the Selling and Administrative Expenses, it can be concluded that more losses were incurred by the company in selling the Durable paper. Thus, it is suggested that final profit computation should be based on Net Income to take away income tax expense.

Also, it can be observed that the total sales of Recycle and Durable Papers are the same, $ 270,000. But we can see that the expenses for advertising and promotions for Durable only amounted to $ 6,000, while $ 11,000 was spent on Recycle paper and $ 23,000 on Supreme paper. This is another factor that should be considered for profit assessment because heavy advertising can bring volume and market share to a high level (2001: 340). If the general manager, Diana Button has implemented her proposed course of action in addressing the losses, it will not have been the wisest action.

To immediately drop the Durable paper based on the abovementioned factors that pushed the losses will not remedy the problem. An increase in the product unit sale price should first be implemented to cover the production and relevant administrative costs. Button also proposed an increase in quarterly sales promotion by $ 100,000 on the “Supreme” line in order to increase sales volume by 15%. If we will add the 15% to the sales volume, the amount will be $ 552,000. That is only $ 72,000 additional sales but an additional cost $ 77,000. That is still an apparent loss to the company in the amount of $ 5,000 (refer to Table 3 below).

A product cut on the “Recycle Papers” by 50% is likewise suggested by Button. According to her, the traceable advertising and promotion for this line should also be reduced to $20,000 each quarter. This proposal means decreasing volume sales and expenses. But note that it was reported that the company is manufacturing at capacity and all papers produced are sold. To address the manager on this aspect is to review the Variable Manufacturing Overhead. For this Recycle Paper, it is $ 9 per unit – a much higher value than the rest of the product’s costs such as raw material ($5), labor ($6), and fixed manufacturing overhead cost ($3).

PRM should consider various qualitative factors before identifying and deciding to drop production line. It has been reported that the company operates on capacity. Since production uses common equipment and facilities to manufacture the 3 product lines, they must consider the product that will have optimum sales. This can be done by hiking up production volume but making sure that all papers produced are sold. It is impractical to manufacture a product that utilizes same resources and time of another product which has more profitability than the former.

Profitability is directly proportional to increased sales volume and indirectly proportional to expenses and sales (2002:26). Advertising cost should be appropriated well if the returns become disproportionate to the production cost of goods especially in the case of new products (2004:31). Effective decision-making in business need comparative reports of the financial performance of the product lines as reference. It is more practical to look up the former profit reports on RPM during the previews quarters. This will help in creating frameworks and benchmarks on the actual performance of the products.

Ideally, the company should create profit targets and financial goals to look ahead, predict and be proactive on the changes in economic environments (Tracy 2002:253).

List of References Baker, M. J. (2001) Marketing: Critical Perspectives on Business and Management. Taylor and Francis. Dolly, J. (2002) Pricing for Profitability. John Wiley and Sons. Tyagi, C. L. and Kumar, A. (2004) Advertising Management. Atlantic Publishers & Distributors. Reeve, Warren (2007) Accounting. Thomson Asian. Tracy, J. (2002) The Fast Forward MBA in Finance. John Wiley and Sons.

Read more
OUR GIFT TO YOU
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat
Close

Sometimes it is hard to do all the work on your own

Let us help you get a good grade on your paper. Get professional help and free up your time for more important courses. Let us handle your;

  • Dissertations and Thesis
  • Essays
  • All Assignments

  • Research papers
  • Terms Papers
  • Online Classes
Live ChatWhatsApp