HI5017 Managerial Accounting
This report will be based upon the activity-based costing. In this report, two research studies will be selected. Those research studies will be studied and analyzed for the fulfilment of different criteria. The report will briefly discuss the activity-based costing and different features of this costing model. The different reasons for selecting this management accounting topic will be discussed. The purpose and research questions of the two selected research studies will be identified. After that, the similarities between the two research studies will be discussed.
This costing method helps in accurate allocation of both indirect and direct costs of an organization. In this report, two journal articles will be selected. The two selected journal articles or research studies are Maturity of Cost Management Systems in Organisations and A Framework for Auditing Management Control Systems and its Application in a Public Organisation. The justification for selecting activity-based costing will be given. The purpose and the research question of these journal articles will be described. .
Activity-based costing is that method of cost, which has been implemented long back in some of the industry but some industry, is in still in the early stage of implementation of activity-based costing. Another reason for choosing this topic is that both indirect and direct cost can be assigned by using this method of costing. Therefore, the benefit of this costing is high for any type of organization allocation of cost. There are some of the other benefits of this costing method like identifications of inefficient work processes.
This is beneficial for the increasing the quality of information in an organization. Another feature is the identification of different cost behaviour pattern. This can be beneficial for analysing the overall resource allocation of an organisation. There is also another feature of identification of cost drivers.
Description of the research case studies
The first case study named Maturity of Cost Management Systems in Organisations is a research-based upon cost management and its method like activity-based costing. In this research, the researcher had analyzed the use of the cost management in other industries excluding the manufacturing industry. The research study consists of different type of techniques used in the cost accountancy, the different level of maturity of an organization in use of this technique and the scale of operation in the organization and its influence and effect in cost accounting. At last, in the conclusion, the researcher also identified different flaws in the current organization like lack of awareness, low motivation, less motivation and many other factors like these for restricting the accurate cost accounting management of an organization (Patil & Kshatriya, (2018).
In another research named Implementation of the Activity-Based Costing Model for a Farm: An Australian Case. The researcher had developed the activity-based costing model in a particular farm in the state of Victoria, Australia. There is difficulty in the cost allocation of the farm total cost into different products of the firm. The researcher had suggested the use of heuristics for accurate implementation of the ABC model.
Purpose and the research question of the journal articles
Hence the purpose of the research study in journal article named Implementation of the Activity-Based Costing Model for a Farm: An Australian Case to understand the how the ABC model can be implemented on a farm. Since the main research question of this research study was related to finding the relationship between different factors in developing a compatible model for a particular farm situated state of Victoria. In addition, another research question is how to implement the ABC model in a farm structure(Lu &Sridharan, & Tse, M. S., 2016).
In addition, the current progress of the activity-based costing in the different organization. The main research question of the research study is that how significant is that Activity-Based Costing (ABC) and Activity Based Management (ABM) in the current competitive market (Patil & Kshatriya, (2018).
Similarities in the findings of the two studies
The biggest similarity between the two studies is the emphasis on the importance of the efficient communication system for successful implementation of activity-based costing in any organization. Another similarity between the two research studies is approval of activity-based costing model over the traditional way of allocation of cost in their respective selected industry chosen in the study. There is also the similarity of identification of the ABC model in the proper allocation of cost in their respective industry.
Dissimilarities in the findings of the two studies
The biggest dissimilarity in the two studies is the areas or the industries based on whom the research studies are based. The research study named Implementation of the Activity-Based Costing Model for a Farm.
Whereas, another selected study is more generic in nature focusing on costing of all manufacturing firm.
In the study named Implementation of the Activity-Based Costing Model for a Farm: An Australian Case, the research had credited the introduction of new accounting standard named International Accounting Standard (IAS) 41 for more research of accounting application in the agricultural industry. There is no mention of environmental factors in the other research study in this report. This is another difference between the two research studies. There is no such mention in the other research study. This is a difference between the two research studies.
Therefore, this is another difference between the two research studies.
Provide four (4) specific outcomes or lessons learned from the two studies’ research findings that will be useful for management accountants in Australian companies and the justification of the outcomes
Therefore one of the outcomes is the high importance of the use of heuristics in a farm costing allocation. Another is it is important to have a smooth communication among the staff of the farm and the developer of the activity-based costing for successful implementation of activity-based costing in a farm (Lu &Sridharan, & Tse, M. S., 2016).
This can cause the problem of proper allocation of cost to different accounting year. Therefore, the researcher had found the use of heuristics in a farm costing allocation beneficial.
Therefore two outcomes from the research study called Implementation of the Maturity of Cost Management Systems in Organisations are identified. The first outcome is that high significance of proper implementation of activity-based costing model in the success of the strategic planning of an organization. Hence the second outcome is that lack of adequate measuring and controlling of cost efforts proportionate to the increase of technology advancement in the current service industry (Patil & Kshatriya, (2018).
First outcome’s justification is that team planning should have accurate knowledge about the different work processes efficiency in an organization. Therefore, the research had found the high significance of the proper implementation of activity-based costing model in an organization.
The purpose and research questions of the two selected journal articles were provided.
List of references
Christian, D. (2018). Building Cost Management: Case Study Using Costing Methods. IJAME.
Lu, C., Sridharan, V. G., & Tse, M. S. (2016). Implementation of the activity-based costing model for a farm: an Australian case. Journal of Applied Management Accounting Research, 14(2).
Patil, R., & Kshatriya, A. (2018). Maturity of Cost Management Systems in Organisations. Retrieved from https://www.questia.com/library/journal/1P3-4308097021/maturity-of-cost-management-systems-in-organisations