¶ … competing cost accounting approaches and explores best practices implemented in different countries. The essay examines traditional cost accounting (CA), activity-based costing (ABC), Grenzplankostenrechnung (GPK), throughput accounting (TA) and resource consumption accounting (RCA).
Tradeoffs Between Cost Accounting Systems
Comparing traditional costs systems and ABC shows that there are tradeoffs between cost and usability. The traditional cost system is typically both easy and inexpensive to implement; however, the information obtained from the system may be too raw to be analytically useful. ABC provides useful information, but by comparison is expensive and time-consuming to implement (Abdallah & Li, 2008).
The use of a given accounting system involves tradeoffs which may make it better suited for some companies than others. Companies using a Six Sigma/theory of constraints (TOC) may benefit more from the throughput accounting (TA) approach. TA emphasizes variable costs, with the objective of increasing throughput while simultaneously decreasing inventories and operating expenses. TA thereby leads to optimal decision making. Using a (TOC) framework, TA measurements can be more effectively used for various optimization decisions than cost-based systems that treat all areas of production as equally important (Aghili, 2011).
TA metrics provide advantages over traditional CA and ABC systems which do not address Voice of Customer issues as required by Six Sigma. ABC and traditional accounting tend to encourage inventory production over and above what is needed for customers' orders. TA, on the other hand, is more likely to be compatible with cutting-edge operation improvement methodologies. TA does better at helping an organization to align its financial systems with its throughput capacity. One drawback of TA, however, is that its reporting does not comply with generally accepted accounting principles (GAAP) (Aghili, 2011).
There are additional tradeoffs in comparing TOC and ABC as well, especially as shown by profitability analysis of environmental costs. ABC works well for understanding how environmental spending affects product cost, but does not facilitate product mix decisions aimed at profit maximization. ABC, when used to prioritize production, is valuable for its ability to trace the costs of activities to products. However TOC is...
Accounting standards and IFRS adoption in Cambodia and Thailand The significance of accounting standards Accounting may be considered as a business language through which the statistical results can be acquired which help in analyzing how well the firm is functioning. They give out timely statements of these statistics and help the stakeholders get all the information they need. Accounting is like a separate language which has its own grammar and these outlines
Long-Term Relationship You owner/CEO a large business idea concept phase full production, a short window due robotics machinery department Contract Financing Contract is a form of payment; or rather it is an unauthorized government distribution of funding to a contractor before accepting supply of goods or services offered by the government. Contract financing excludes debit payments, payments for incomplete acceptance or charter or rental payments. This is because payments of invoices on
76). As automation increasingly assumes the more mundane and routine aspects of work of all types, Drucker was visionary in his assessment of how decisions would be made in the years to come. "In the future," said Drucker, "it was possible that all employment would be managerial in nature, and we would then have progressed from a society of labor to a society of management" (Witzel, p. 76). The
Significance of the Study This study is significant because it sheds light on a very important contributor to local and international trade. Trade fairs have a long history in providing a meeting place for buyers and sellers. They are an important channel of communication for B2B buyers and sellers. This is a significant area for study because there are limited channels of communication between B2B buyers and sellers. The previous sections
Results from the study by Petersen, Ragatz and Monczka show that effective collaborative planning depends on information quality, and the trust level firms share. The authors purport: "Collaborative planning activities between supply chain partners are expected to lead to better performing supply chains" (Petersen, Ragatz & Monczka, Introduction section ¶ 1). In addition, numerous other researchers have also explored the perception relating to supplier alliances, that enhanced collaborative planning
Good researchers tend to pull methods out of a tool kit as they are needed" (2006, p. 54). Notwithstanding these criticisms and constraints, though, most social researchers seem to agree that classification by some type of research paradigm is a useful approach based on the need to determine which approach is best suited for a given research enterprise. In this regard, Corby concludes that, "The contested nature of research
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now