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Compose a 1250 words essay on Management Accounting. Needs to be plagiarism free!Download file to see previous pages... Cost is the most important factor which influences the management decision. The
Compose a 1250 words essay on Management Accounting. Needs to be plagiarism free!Download file to see previous pages...
Cost is the most important factor which influences the management decision. The management needs to maximize its cost by different policies such as just in time, target costing etc but should not compromise on the products quality (Straus, 1989).. Target Costing: Target costing is one of the new costing techniques used by managers to minimize its cost effectively. Target costing is cost based pricing. Target costing enable the managers to manage the business most effectively in a competitive market place. It enables the managers to plan and manage the cost in the early stages of design and development cycle. Hence maximize the profit with no compromise on product. Target cost is selling price less desired profit. As in target costing the cost limit is specified first which may lead to omission of essential costs leading to loss. It can also be expected that the calculation of target cost is not accurate leading to mismanagement and increasing the risk of failure. This strategy requires exclusive coordination and cooperation. This may reduce the quality of the products due to cheap components whose quality maybe inferior (Carlsson-Wall, 2011). .. Total Quality Management: Total quality management is a policy to continually improve the quality of products and processes. It is the management of organization’s all resources both human and material in most effective manner to achieve the objectives of the organization. In this the management uses the strategy of involving all the employees in the improvement of the quality of products and processes focusing on customer needs and their satisfaction. Customers are willing to pay high prices also for good quality products which the competitors are not providing them. The quality of processes can be improved by eliminating unnecessary steps resulting in efficiency of the processes and reducing the time wastage. All these improvements attract the customers towards our products and making the organization more profitable by increased sales and good market share and repute (European Society For Organisational Excellence, 1990). .. The cost of introducing the concept of total quality management is high and staff needs to be trained without disrupting the process of production which may lead the organization to face loss by increasing the expense. The improvements process is continual which may not be maintained for many years. The employees maybe resistant to change leading to demotivation. Throughput Accounting: Throughput Accounting is a management approach. It provides managers with support for decision making for improving the organizations profitability. It is a process of identification of constraints for an organization in meeting their goals. Throughput focuses on generating more output unlike typical cost accounting approaches of cutting costs for maximizing the profit.