How To Rejuvenate A Mature Bus :: essays research papers

The last two decades has seen a rotation in heed news report theory and practice due to the challenges of the free-enterprise(a) surround in the 1980s. Kaplan and Johnson (1987) identified the failings and obsolescence of existing cost and performance meter systems which led to re-examination of traditional cost news report and management control systems. effected financial and management accounting methods have developed primarily as a result of corporate legislation in the 1930s forcing companies to grant externally published financial accounts. Management accounting is primarily pore as a decision making tool for running a business, hence they require more(prenominal) flexibility. According to Kaplan management accounts have break a subset of financial accounts and that they reflect more on the external quite an than inborn requirements of the company. Most of the managerial decision-making and control systems in use in the late 1980s were described by Johnson and Ka plan as stagnant. As a result, they went onto research in new accounting systems raising the profile of internal accounting systems by use of financial and non-financial measures although their work was seen as moot by Drury but is now considered of key importance to manufacturing industries aiming to become knowledge base class. This essay aims to discuss the ways in which new management accounting techniques can bring life into mature businesses, in particular those employ non-financial measures.Most companies still use the same cost accounting and management control systems that were developed decades ago in a competitive environment drastically different from today. These systems have major drawbacks described belowh They distort point of intersection be i.e. absorption of production overheads into product costs for the purpose of stock valuation. The external financial reporting process was stringently driving this allocation of overheads for stock valuation. h They do no t provoke the key non-financial data required for effective and efficacious operations, hence they are of little help to operating managers seeking to reduce costs and ameliorate productivity. h The data produced reflected on external reporting requirements far more than the reality of the new manufacturing environment.h Failure to provide accurate product costs as they were distributed by simplistic and arbitrary measures usually ship labour based.h The short term profit pressures led to a decline in long term investment. These poorly designed or outdated systems can distort the realities of manufacturing performance. As companies become more efficient by using new technologies, labour costs are accounting for a smaller proportion of a companys general cost, hence the allocation of overheads to labour hours will become irrelevant and counter-productive to the companys operations.