Traditional Management Accounting Systems Research Articles

The Effects of the Strategy and Goal on Business Performance as Mediated by Management Accounting Systems

Previous research in the literature often investigated the associations between management accounting systems and the success of organizations. However, little has been done in regard to the association of business strategies, goals, and firms’ performance while having management accounting tools as mediators. Management accounting systems are classified as traditional and strategic management accounting themes. Each theme, of course, implements different accounting tools. This article explores the degree to which, as mediated by management accounting systems, the business strategies and business goals of large Thai manufacturing companies influence their financial and non-financial performance. To gather the data, a survey questionnaire was developed. Of the 1500 companies selected for inclusion in the survey, 205 provided completed and usable responses for a response rate of 13.67%. Structural equation modeling (SEM) was used to analyze the relationships among the variables. The findings shed some light on what the management of a firm could expect concerning organizational performance from their business strategies, business goals, and the implementation of specific management accounting systems. Corporate strategies and corporate goals had a statistical influence on both the financial and non-financial performance of the large corporations in Thailand when mediated via strategic management accounting systems, while there was no influence when mediated by traditional management accounting systems. A greater understanding of the relationships and effects of which mediators should have been employed in organizations to bring forth business strategies and business goals and generate productive results for organizational performance is provided by this research. Choosing the appropriate performance mediators can help achieve corporate strategies and goals.

ANALISIS PERANAN ACTIVITY BASED COSTING SYSTEM PADA PT. TIRTA MAHAKAM RESOURCES TBK. DI SAMARINDA

The purpose of this paper is to find out the magnitude of the results of the imposition of Factory Overhead Costs on each product by implementing the Activity Based Costing System. The calculation results show that the difference in the burden of factory overhead using the traditional management accounting system with Activity Based Costing System shows that there are differences in each product, Plywood, Sawmill and Fancywood absorb factory overhead costs with traditional management accounting systems lower than Activity Based methods. Costing System (ABC) with costs of Rp. 5,056,946,700, -, Rp. 955,958,600 and Rp. 1,311,464,900 respectively, while Blockboard and Coating products absorb factory overhead costs using the Activity Based Costing System (ABC) method more. lower than the traditional management accounting system method with costs of Rp. 4,994,382,200 and Rp. 2,315,936,800The results of the per M3 cost calculation using the traditional management accounting system with Activity Based Costing System for each type of product produced by PT. Tirta Mahakam Resources Tbk. For Plywood, Sawmill and Fancywood products the difference in cost of goods with traditional accounting systems is lower than the activitybased costing system, while Blockboard products and coatings have a difference in the cost of products with an Activity Based Costing System lower than traditional accounting systems. The results of the calculation of product cost of the five products with the imposition of factory overhead costs using Activity Based Costing System illustrate the pattern of consumption of factory overhead costs which better reflects the amount of costs absorbed by each product. This is due to the fact that the Activity Based Costing System has a more cost center, so that the use of resources can be followed carefully to the cost center that consumes it. Thus, it can be seen that the Activity Based Costing System results in the loading of factory overhead costs which better reflect the amount of costs absorbed by each product than the traditional management accounting system.

Top Manager Orientation, Management Accounting Systems and Strategy Implementation: Evidence from the Sri Lankan Manufacturing Sector

This paper examines how technically oriented top managers use Management Accounting Systems (MASs) for organizational strategy implementation in the Sri Lankan manufacturing sector. Based on the Upper Echelon Theory (UET), the researchers argue that technically oriented top managers use MASs more interactively than diagnostically and prefer the use of innovative to traditional MAS information. Further, the researchers argue that technically oriented top managers support the implementation of prospector strategy as a result of their innovativeness. In order to achieve the objectives of the study a quantitative based approach was adopted. The hypotheses were developed and tested in a survey among the technically oriented top managers in the manufacturing sector in Sri Lanka. The researchers conducted a few in-depth interviews as well. The findings of the study confirmed that the technically oriented top managers prefer the interactive style in the use of MASs and also prefer to use innovative MAS information. The results also confirmed that technically oriented top managers prefer to adopt the prospector strategy. Further, the findings confirmed that the interactive style of using MASs and innovative MAS information strongly supports the adoption of prospector strategy. The findings confirmed the applicability of UET in the Sri Lankan manufacturing sector. The findings will also aid business organizations in preparing MAS information to complement prospector strategy implementation. The paper contributes to the existing literature on UET and the role of MASs in supporting strategy implementation particularly in a South Asian, Sri Lankan setting.

Cost Control of the Civil Engineering Based on Activity-Based Costing

In order to solve the current problems of cost management in civil engineering industry by using traditional management accounting systems, an effective method of activity-based costing is presented. Activity-based costing has been suggested as the leading contender method to replace traditional cost accounting systems, since its capability can make the processes and activities performed in the organization more transparent and observable. The paper attempts to develop a cost accounting system based on the activity-based costing ideas. The proposed method can provide the useful information to manage total processes in civil engineering. Nine operations are suggested in the proposed method, such as processing, pre-processing, post-processing, moving, and so on. As seen from the result of the case, the proposed method is of efficiency and feasibility.

Production Management for Manufacturing Based on Activity-Based Costing

In order to solve the current problems of cost management in manufacturing industry by using traditional management accounting systems, two-stage approach analytical method of activity-based costing is presented. The proposed method allocates indirect costs to products based on cost drivers of various levels. There are many advantages of the proposed method, it can make the production processes more transparent, help to identify production efficiencies, encourages managers to introduce corrective actions, allow the evaluation of corrective actions to be undertaken, reduce costs, and enhance competitiveness of enterprises. A case is analyzed, it is seem that the peoposed method is of efficiency and feasibility.

Activity‐based cost management in financial services industry

The rapid advancement of enormously expanding information technologies and vigorous global competition have caused the irrelevance of conventional management accounting systems (MAS) in providing useful information to assist management’s decision making, planning and control in both service and manufacturing organizations. The shortcomings of traditional MAS, in terms of validity, accuracy, completeness, consistency, understanding and relevance, increase the need for modern MAS, like activity‐based costing (ABC). In growing inadequacies of traditional MAS, ABC can be used as a tool for planning, control and decision making in service management. ABC traces costs to activities rather than products, which provides a more accurate and correct picture of the cost consumption. Furthermore, ABC uses a larger number of cost drivers instead of one or two volume‐based cost drivers in a traditional cost management. However, activity based management (ABM) helps management to make decisions and formulate plans to provide new services, improve existing services and measure performances in order to achieve overall competitive strategies advantages of organizations. Thus, this study attempts to demonstrate the shortcomings of traditional MAS, and the usefulness of ABC and ABM in making decisions on product profitability and performance measurement in services with a particular reference to the financial industry.

Barriers to customer‐oriented management accounting in financial services

In the retail financial sector competitive pressure seems to challenge traditional management accounting systems, which often do not allow the identification of profitable customer relationships. Drawing on a stage model and data from management accountants, branch managers and frontline employees in Danish financial service companies, this article investigates barriers to the implementation of customer‐oriented management accounting. The article documents how financial institutions are increasingly integrating management accounting systems with customer‐related activities thus enabling customer profitability analyses. However, several barriers related to organization structure, resources and attitudes hamper further customer‐oriented changes. Data gathered at the branch level strongly indicate problems of ownership and project sponsoring, and it is argued that new accounting systems may be less important to customer orientation than empowerment and goal‐oriented participation of the frontline employees.

Linking organizational effectiveness, key success factors and performance measures: an analytical framework

A number of academics, consultants and practitioners have pointed out the need to link management accounting and strategy more tightly, thus implying a more prominent role for accountants in the process of strategy assessment, control and revision. Strategic management accounting, strategic cost management and non-financial performance measurement are approaches that have been recently proposed as means of overcoming the limitations of traditional management accounting systems in dealing with strategic matters. This article aims to contribute to this integration between management accounting and strategy. More precisely the objective of this article is to propose a fuzzy linguistic framework to link a company's organizational effectiveness, in terms of successful strategic goals accomplishment, key success factors and performance measures. Such a framework can support managers in their planning and control functions.

The impact of technological change on management accounting

This paper studies the impact of changes in manufacturing technology on management accounting. More specifically it focuses on the impact of technological change on investment justification and on costing systems. For each of these subjects we describe how and why traditional management accounting systems have been shown to be no longer appropriate. In addition, we give an overview of the ways companies adapt their management accounting systems to the changes in the technological environment. Some observed changes are a paradigm shift in investment decision-making, more emphasis on throughput control, less emphasis on direct labour measuring, more emphasis on maintenance and tool cost management, and increased use of machine hour overhead rates.

Total Quality Management and the Choice of Information and Reward Systems

This paper examines the association between the use of advanced manufacturing practices and the choice of information and reward systems, and explores the impact of these choices on organizational performance. Although advanced manufacturing practices such as total quality management (TQMI) have been widely adopted over the past decade, surveys indicate that most of these initiatives have not yielded significant economic benefits (e.g., Mathews and Katel [1992] and The Economist [1992]). Many accounting researchers charge that the poor performance of many new manufacturing initiatives is due in part to continued reliance on traditional management accounting systems that do not provide appropriate problem-solving data, performance measures, and reward systems.1 We conduct an exploratory analysis of these claims using a

Modeling the Profitability of Customer Relationships: Development and Impact of Barclays de Zoete Wedd’s BEATRICE

Abstract:Traditional management accounting systems are limited in their ability to provide profitability information relevant to management decisions. The problems of inadequate profitability measurement are intensified in today’s business environments, where changing margins due to deregulation and new entrants, new products with unknown costs, and customer sophistication in locating low-cost providers often combine to leave unprepared firms with growing numbers of loss-making client relationships. In response, firms in a number of service and manufacturing industries are experimenting with new methods for measuring performance, and are implementing these techniques using information systems. The collection and analysis of information on the profitability of customer relationships enables managers to identify and defend their most attractive market segments, and to turn loss-making accounts into profitable ones. The London-based securities house, BZW, developed BEATRICE, an innovative information system ...