Executive summary

This assignment is prepared based on a previous assignment which includes the various concepts of managerial accounting, their roles, pros and cons, and other managerial functions, which also have their main role of predicting uncertainties which further adds value to the growth of the business. On the other side, there is a value chain concept analysis in which primary or secondary activities support effectiveness. At last, there is a reflection on the concept of implementation of ABC in which there is allocation of cost based on different cost drivers.

Introduction

This reflection report is prepared to give an overview of the previous assignment on management accounting. The active role of the management accountant in helping the organization to achieve its objectives and goals. It also states the pros and cons of management accounting, the concept of value chain analysis. With the help of value chain analysis, the manager can evaluate the detailed procedures involved in each step of its activities. Their decisions with the value chain concept involve competitive advantage (Ensign, 2001, p 1(1)). The previous assignment also includes the concepts of ABC implementation and how they are done according to different specifications of the various sectors (Mahal, 2015, p 1(1)).

Overview

Management accounting is the process that helps top-level management in decision-making by providing relevant financial information extracted from the raw statistical data by management accountants. Management accountant is an expert who is also called value creators of the organization, and they also motivate the employees of the company, whether directly or indirectly. He uses his skill and experience in the extraction of useful information, also gives budgeted figures which are uncertain based on his estimation, and provide summarized reports for quick decision making by the top-level managers, which will save their time and meanwhile, they can focus on other issues, thus saving time and efforts. But if the data that reports are prepared are not reliable can hamper the workflow; also, he should not be biased in his approach.

He also helps in Value chain analysis, which identifies different processes and stages in the process of creation of a product or providing a service. He defines critical steps, helps in identifying and eliminating idle stages in the process and non-profitable products from the company and thereby investing those funds in profit-making projects. It also enables the organization to gain knowledge on its strength and weaknesses. It helps them in controlling their internal environment. Competitive strategies which are made in the organization are based on integral activities in the value chain (Ensign, 2001, p 1(1)).

Later on, activity-based costing is discussed, which assigns cost to different processes based on their consumption of resources. This is a critical stage as it helps in pricing the product based on their cost and reasonable profit margin earned after their cost allocations. In various journals, it is described that ABC costing is a more powerful tool than the traditional costing method (Mahal, 2015, p 2(2)).

Learnings

From the previous assignment, we have learned that scandals in the organization are the wake-up calls for the managerial accountants, as their role is to perform functions as business or data analysts in case of any inconsistencies in financial data. But along with all benefits, there are some disadvantages of their roles which include predicting future values and making a budget based on their historical knowledge. We also learned that the benefit of analyzing this concept is that it identifies new high-value opportunities and makes stronger the business-to-business customer relationship (Crain et al., 2008, p 1 (1)). From the concept of ABC analysis, there is learning of allocation of cost with various cost pools prepared based on operational analysis.

Applications

Strategies prepared by management accountant helps in the planning of day to day activities of the organization and also provide financial information to top executives (Tarver, 2021 p 1(1)). Their decisions help business makers to adjust long and short-term activities to overcome the hurdles in strategy-making procedures of the top management. Their forecasting helps decision-makers to even adapt to the uncertain events that arise from future inconsistencies. When a firm considers its value chain, it needs to consider its value proposition or what sets it apart from its competitors (Zucchi, 2021, p 2(1)). Their activities are associated with including or enhance the service or value of the product before or after their sales. Their primary function is to increase productivity so that a company can deliver maximum value but at the least cost. They represent all internal activities a firm engages in or introduce goods or services.

In today’s business, ABC implementation is also a broad concept which forms the knowledge of allocation of cost on different cost pools. Their activities are involved in identifies several other activities and then assigns the cost of each exercise to all products and services according to actual consumption basis. In the case of practical implementation of ABC analysis, a model assigns indirect cost to specific jobs.

Conclusion

To sum up the assignment, in short, we concluded that managerial accounting concepts are a decision-making procedure that involves day-to-day and other difficult activities which help make complex decisions. Also, the concept of value chain analysis includes evaluation of competitive analysis that how their primary or secondary activities are helpful, which further add value to the customer. With the implementation of the ABC costing method, there is allocation of different overhead costs to specific jobs or products to determine their adequate price; it is mostly used in the manufacturing industry as it increases productivity (Kenton, 2020, p 1(1)). It will prove a very effective and efficient tool for decision-making and also helps to allocate costs based on their specifications.

References

Ensign, P., C., (2001), Value chain analysis and competitive advantage, Journal of general management, https://journals.sagepub.com/doi/10.1177/030630700102700102

Mahal, I., (2015), Activity-Based Costing (ABC) – An Effective Tool for Better Management, Research Journal of Finance and Accounting, https://core.ac.uk/download/pdf/234630512.pdf

Ensign, P., C., (2001), Value chain analysis and competitive advantage, Journal of general management, https://journals.sagepub.com/doi/10.1177/030630700102700102

Crain, D.W., (2008), Using value chain analysis to discover customer’s strategic needs, https://www.emerald.com/insight/content/doi/10.1108/10878570810888759/full/html

Zucchi, K., (2020), Value Chain Analysis, https://www.investopedia.com/articles/investing/111014/basics-value-chain-analysis.asp

Tarver, E., (2021), When is Managerial accounting appropriate? https://www.investopedia.com/ask/answers/062315/what-are-common-scenarios-which-managerial-accounting-appropriate.asp

Kenton, W., (2020), Activity Based Costing, https://www.investopedia.com/terms/a/abc.asp