Management Accounting Control System Essay Research Paper
Management Accounting Control System Essay, Research Paper
Week 10b? V Emerging Issues in Management Accounting
World category fabrication
World category fabrication can be taken to hold four cardinal elements.
? h The accomplishment of 100 % quality
? h Just-in-time fabrication
? H Pull offing people ( multi-skilling, teamwork, authorization )
? H Customer reactivity ( cognizing their demands, providing on clip and reacting to alterations in demands )
Dedicated cell production
? ? Cellular? ? fabricating involves a U-shaped flow along which are arranged a figure of different machines that are used to do merchandises with similar machining demands. The machines are operated by multi-skilled workers who can bore, proverb, pigment, or whatever, as required.
This attack combines the flexibleness of the functional layout ( general boring section, general sawing section and so on ) with the velocity and productiveness of product-based layouts, where each type of merchandise has its ain dedicated machines.
Dedicated cell production may assist to salvage costs in a figure of ways.
? Hs Lower stocks of finished goods, intending lower retention costs and chances for alternate utilizations of infinite
? H Rapid response to alterations in demand ( continuing good will )
? H Reduced material- and equipment-handling costs
? H Reduced staff Numberss and high motive
? H Reduced care costs ( multi-skilled workers can make it in idle minutes )
? H Less bit if linked to a training/TQM programme
Advanced fabrication engineering ( AMT )
AMT is an look encompassing, in general, the followers.
? h Computer-aided design ( CAD )
? h Computer-aided fabrication ( CAM )
? R Robots
? R Computer numerical control ( CNC ) machines
? R Automated guided vehicles ( AGV )
? R Automated storage and retrieval systems ( ASRS )
? H Flexible fabrication systems ( FMS )
? H Advances in production direction
? R Materials demand planning ( MRP I )
? R Manufacturing resource planning ( MRP II )
? Roentgen Optimised production engineering ( OPT )
? R Just-in-time ( JIT )
? H Entire quality direction ( TQM )
Organizing work flows
JIT is a technique for the administration of work flows to let rapid, high quality, flexible production whilst understating fabrication waste and stock degrees
? h Just-in-time production is production driven by demand for finished goods: each constituent is produced merely when needed for the following phase
? H Just-in-time buying is fiting reception of stuff closely with use
JIT and dedicated cell production go manus in manus: you might see these thoughts traveling jointly under the header? ? thin fabrication? ? .
The traditional EOQ attack to stock control efforts to find an optimum degree of stock taking into history demand ( 500 ) in the period, telling costs ( degree Celsius ) and stock retention costs ( H ) .
? h The EOQ expression is
EOQ = ? } 2cd
? H This attack assumes that some stock retention is inevitable, and that demand and retention costs are changeless and can be readily calculate
The JIT attack to stock control is rather different in that it aims non to keep stocks at all. Materials are purchased merely at the clip when they are needed. This requires short lead times ( that is, speedy bringing ) and first-class dealingss with providers.
EOQ V JIT
? H EOQ ( or a less complex traditional attack ) is most suited for concerns which need to be able to present their finished goods or services highly rapidly after an order is placed and which can non easy predict demand ( such as infirmaries and exigency services )
? H JIT would be peculiarly appropriate for, say, a jobbing house bring forthing specialised machines to order
? h Most concerns that do non necessitate to be able to present instanteneously should be able to run JIT to some extent, so long as dependable providers can be found
Benefits and costs of JIT
nefits should be get downing to sound familiar.
? H Flexibility? H Quick response to demand
? h Product assortment? h Stockless production
? H Empowerment? H Fast set-ups
? H Frees up infinite? h High quality/less bit
However, there are drawbacks.
? H Suppliers are likely to desire to bear down a premium monetary value for guaranteed quality and clip of bringing
? h The dependability of providers demands to be exhaustively checked
? H Production planning may be more hard ( and more expensive to administrate ) because it will necessitate to be more precise
? H Production rapidly grinds to a arrest if providers default
Deductions for MAIS
There will be no demand for an luxuriant cost accounting system of shops requisitions, stuffs transfer notes and so on.
? h A system to supply non-financial public presentation steps ( such as % of quality control rejects ) will be required
? h A system for EDI with clients and providers will be needed
? H Cost aggregation processs can be simplified ( for illustration, backflush accounting could be introduced )
? h Traditional discrepancy analysis will be unsuitable
? h Actual instead than standard cost will be stressed
Activity Based Costing
Activity Based Management
The purpose of modern fabrication attacks is to fit production resources with the demand for them so that there are no restraints ( bottleneck resources ) .
The throughput doctrine entails the designation and riddance of these bottleneck resources.
? H If it can non be eliminated ( by rearrangement of bing resources/buying in/new equipment ) , the constriction resource should be used to 100 % of its handiness
? H To avoid the build-up of WIP, production must be limited to the capacity of the constriction resource
Production precedence is given to the merchandises best able to bring forth throughput and hence it is given to those merchandises that maximise throughput per unit of constriction resource.
Merchandises should be ranked harmonizing to throughput accounting ( TA ) ratio = return per mill hr? I cost per mill hr where
gross revenues gross? V stuff cost
return per mill hr =
Time on cardinal ( or constriction ) resource
Entire Factory Costss ( TFC )
( all costs except stuff )
and cost per mill hr =
entire clip available on constriction resource
If the TA ratio is greater than 1, the merchandise is profitable.
Overhead ( TFC ) should be charged to a merchandise harmonizing to the merchandise? ? s use of the constriction resource.
venereal disease proceedingss ofbudgeted TFC
Overheadth/put ( usage ofper minute of
cost per unit=bottleneckxbottleneck
resource ) resource
Entire merchandise cost = stuff cost per unit + o/hd cost per unit
A merchandise which makes little or no usage of a constriction resource will hold small or no overhead attributed to it.
? H Criticisms
? R It is excessively short term as all costs other than direct stuff are regarded as fixed
? R It concentrates on direct stuff cost and does non command other costs
? H Advantages
? R It encourages an attitude of? ? acquiring it right first clip? ?
? R It is suited for an AMT environment as it focuses on stock list decrease and reduces response clip to client demand
In a JIT environment stock lists are likely to be low. The majority of fabrication costs should be costs of sale and so inventory rating can be simplified.
Backflush accounting is a simplified criterion bing system for apportioning costs between stocks and cost of goods sold. It attempts to extinguish elaborate accounting minutess.
? H There is no WIP history
? H? ? Gun trigger points? ? determine when entries are made in the accounting system
? R Completion of good units of finished merchandise
? R Sale of finished merchandise
? R Purchase of natural stuffs
? H It is? ? less accurate? ? than traditional bing systems, because the same grade of truth is non needed