Managerial Accounting Assignment: A Reflective Journal On Costing Systems Within Organizations
Question
Task:
Managerial Accounting Assignment Task:
1. Reflections on any topics covered in the unit that interests you the most. Why was it interesting and what did you learn from it?
2. Reflections on what you learned from the individual assignment, including the relevance of your chosen costing system to businesses. What insights did you gain and what had you learnt from it?
3. Reflections on your overall research experience from the individual assignment (e.g. looking for journal articles, reading and reviewing the literature etc.) What was enjoyable, what was difficult, and any challenges you experience?
Answer
Executive Summary
An organization that adopts the most efficient costing system is likely to succeed faster than its peers. This managerial accounting assignment is about the reflections on the review carried out about the costing systems pertaining to organizations. The management demands and customer demands have to be met efficiently due to which the costing and financial reporting systems have to be aligned with the overall strategic management of the company. The reflective is written about the success rate of the costing system in the selected organization and also my personal views and opinion about the same.
Introduction
As technology develops, the accounting and costing systems also change. There are changes in customer tastes and preferences due to which the systems have to be updated. This assignment is about how I have reviewed the various costing systems and their practical working in a business environment. Different types of costing systems are used by different organizations and the rate of success depends upon the nature and size of the business. I have hence picked up an organization that has implemented the job costing and process costing system and evaluated the pros and cons of the same in the light of the current situation.
1. Reflections on the topics covered in the unit
There are different types of costing systems ranging from the traditional costing system to the job costing and process costing and also the activity-based costing systems. This assignment has helped me obtain a clear understanding of each of these systems.
The traditional costing system is more aligned with financial reporting and focuses on turnover and profitability. As time passed by, there was a necessity for the introduction of an advanced system. Thus job costing and process costing was introduced which resulted in the segmentation of the various orders, jobs, and processes to facilitate inventory management (Pollard 2018).
Activity-based costing is another development in the costing systems that have provided a reasonable measure to allocate the overhead expenses (Mansor, Tayles & Pike 2012).
Out of all the costing systems discussed and analyzed above, I find activity-based costing the most interesting as it is for the first time indirect or overhead expenses are being logically allocated to the activities involved in the production of goods or rendering of services. I have learned that the calculation of the profitability of the organization depends upon a variety of factors that are given significance by this system.
It has provided a practical understanding of the various strategic decisions taken at the managerial level.
2. Reflections on what you learned from this assignment
This assignment has taught me that irrespective of the number of costing systems available, an organization selects only such a system that suits its requirements and can provide the required information. The nature of the business, type of customers, and the product mix involved are all the factors that need to be evaluated before finalizing the costing system to be implemented.
The relevance of the chosen costing system in business
The article I have selected for peer review explains the implementation of job costing and process costing in the selected organization.
Job costing involves the accumulation of the costs that are attributable to the production of specific units or groups. There are different projects in the company and the job-costing method views every project as a unit. It involves breaking down the costs of materials, labor, and overheads related to the specific project or the job and use it for analysis (Baldwin 2010).
Process costing is implemented by organizations that have a lengthy production run comprising of various processes. The costs attributable to each process are worked out. These costs are accumulated and then assigned to the specific products that are produced by the processes.
I have learned that while the job costing method is more suitable for health-care providers, accountancy firms, building contractors, restaurants, and music studios where each unit is distinguishable and identifiable as a customer.
Process costing is more suitable where the production volume is huge and undergoes a series of processes (Horngren 2011). The output is consumed by a large number of individuals and they are not necessarily identified by the manufacturer. Examples of industries using the process costing system are medical equipment manufacturers, soft-drinks manufacturers, and so on.
Thus I can gain an understanding of the pricing policies of the organizations, reasons why some of the products are discontinued, and also business diversification takes place due to the results and analysis provided by these costing systems.
3. Reflections on the overall research experience were it enjoyable or difficult and challenges experienced
Initially, I had faced difficulty in the selection of an appropriate article that is apt for the review. After browsing quite a few articles, as I could select one, the research became enjoyable as I could relate the same with the practical happenings around me. The challenge was to identify a suitable system for any organization as every costing system comes with its own set of pros and cons. Also upon implementation of a new system, the staff and managers have to be educated about using the same failing which the full benefits of the system cannot be realized by the organization. Thus the process involves a lot of time and effort (Vanderbeck 2013).
Conclusion
The assignment has helped in understanding the practical difficulties in the implementation and gets the systems operational. Due to technological advancement, the software should also be aligned to capture the appropriate data. The failure of any costing system is not necessarily as the system is flawed; it could also be due to the lack of sufficient knowledge and poor implementation. In the present day, the pressure on businesses to outperform their peers is huge. Thus the competition leads to the evolution of newer systems and allows the business to make more meaningful decisions that will help them achieve market competencies and increased profitability.
References
Baldwin, A.A. 2010, ‘Cost Accounting: A Managerial Emphasis’, Issues in Accounting Education, vol. 25, no. 4, pp. 789-790.
Horngren, C 2011, Cost accounting, Frenchs Forest, N.S.W.: Pearson Australia.
Mansor, N.N.A., Tayles, M. & Pike, R. 2012, ‘Information Usefulness and Usage in Business Decision-Making: An Activity-Based Costing (ABC) Perspective’, managerial accounting assignment International Journal of Management, vol. 29, no. 1, pp. 19-32.
Pollard, W.B., PhD. 2018, ‘An Active Learning Approach to Teaching Job-Order Costing’, Management Accounting Quarterly, vol. 19, no. 4, pp. 10-19.
Vanderbeck, E J 2013, Principles of Cost Accounting, Oxford university press
