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Rakesh Managerial Task
Rakesh Managerial Task
Management Summary:
In this paper the implementation of the Activity based costing and the study related to the
activity based costing is evaluated. The activity based costing technique is popular technique in
the costing of the product and assist many organizations. The journals in this paper are related to
the activity based costing and the impact of the activity based costing in the organization. There
are many impacts on the company that are evaluated in this paper.
So for it the most popular accounting tool that is used in the managerial accounting for the
calculation of the product cost. The reason for this popularity is that Activity Based Costing is
deal with all complexity in the production process and also deal with the cost which are not
efficient. This is the reason for many corporate failure that they were unable to deal with the
profit and also not able to meet the expenses which are incurred in the production process.
Activity based costing method help the companies in the calculation of the product true cost and
the true profit so that decision are taken more efficiently and no decision is made on the false
profit.
The basic purpose of the activity based costing is to assist the company in understanding about
the cost and the relationship with the activity which are creating such cost. The cost in this
relationship is assigned to the product which is identified in this relationship. The activity based
costing method is a systematic approach of calculating the cost of the product. This systematic
approach assists the company in the identification of the indirect and the direct cost that is
associated with every product. This kind of approach is missing in the tradition costing method
so it failed to meet the requirement of each company.
There are many production processes in producing the product but Activity Based costing
method deal with all the productivity process due to its systematic approach. The reason for the
company’s failure is that they are not able to identify the cost which is associated to the product
and the true profit figure of the product which is earned from it. In the previous accounting
method they not able to identify the cost which is associated with single product. Usually there
are many costs which are incurred in the system and increase the cost of production and
decreasing the profit, activity based costing method assist the companies in identifying such cost
and eliminating such kind of cost [ CITATION Act15 \l 1033 ].
The method assist in the calculation as it assigned the cost to each product according to the usage
of the activity and the cost incurred during that activity. This seems to be logical and the cost of
the each product might be not false anymore. On the other hand, in decision making between the
two products, the most profit able product should be chosen as activity base provide best
technique, the companies now able to identify the product with maximum contribution earned.
There are many product which are not profitable the company now able to identify such product
and also able to eliminate from the production.
Basically the purpose of the Activity based costing is identifying the cost of the product,
assigning each cost to the product and eliminating the extra cost that is incurred and inefficient in
the profit maximization. On the other hand there are many other task which are associated with
the activity based costing method such as decision making and placing the labor which is
effective in the production department and also assist in the making the production department
more efficient.
Companies make profit and make money, the only reason they are running the business. For
making profit each company has its own mission and the objectives. Activity based costing
method assist the companies in effectiveness of such mission and the objectives. It also assists
the companies in implementation of the new strategies and introducing the effective production
plan. By using Activity based costing technique the company has the true figure of the cost
which is associated to the product so company can take effective decision and also take the
decisions which have more chance of success.
Corporate Strategies:
Strategies are made on the information available, if the information which are presented are true
the corporate strategies are also effective but on the other hand the organization having all false
information can make wrong decision. They chance of the failure in this way is low because the
information are true and no false data is introduced in the decision making process.
Company makes several strategies to survive in the market. ABC implementation can be
considered as one of the important and critical strategy in an organisation. The impact of the
wrong decision can make huge issue for the organisation. For such reason the company should
make right decision and effective decision which can make and assist the company in increasing
the productivity. Any wrong decision might lead toward failure. The data which is required in
making decision is right than this is effective and can assist in making strong decisions.
1) Measuring the efficiency by product group: Integrating Data envelopment analysis with ABC Mideast
large banks
2) The adoption of ABC and the improvement of performance: Study from the Morocco bank
In this journal the impact of the ABC and the DEA is also evaluated in combine and separate
manners and also evaluated that the result of the both shows different impact. But the result
evaluate that the implementation of the both ABC and the DEA can be produce the concrete
improvement on the evaluation process. Alone DEA show some kind of deficiency in the system
and can be proved as weak system [ CITATION Jef99 \l 1033 ].
In this paper many theories are presented and the results are evaluated. The data of the Central
Bank of the Morocco is evaluated and the impact of the ABC is evaluated. The result of the
company is then evaluated with the non ABC bank and evaluated that the firm with adopting
ABC are far better than the organisation not using ABC. The Activity based costing in the
organisation help in the non financial improvement as well. the activity-based costing method is
help in the improvement of leverage, ROI, ROA, improving the productivity cost cycle and the
quality as well. The result of the study concludes that Activity based costing method assist the
company in financial and non-financial manners [ CITATION Bes13 \l 1033 ].
Purpose and the objective of the Journal and Question in the journals:
The basic purpose of the two journals is show the impact of the activity based costing in the Banking
sector. The activity based costing is increasing in the popularity as it helps the organisation in making
profit in efficient manners. The journal assist in the adaptation of the Activity based accounting in the
Central bank and the large bank in the Middle East.
The basic questions which are asked in the activity based costing system are as follows:
From the first journal which is about the Measuring efficiency by product group the comparison of
DEA along with the ABC:
From the second journals in which adoption of ABC is aligned with the performance of the
company:
The second main difference is the Journal evaluates the result of the ABC with the DEA. While
the second journal only shows the result of the ABC in the banks.
Outcome from the selected Journals:
There are many outcomes of the journal which are very effective and important to know. These
are as follows:
The implication impact of the activity based costing method and the impact on the
company critical ratio improvement such as ROA, ROE and the leverage of the
organisation.
Full understanding of the Activity based costing and its impact on the financial and the
non financial performance of the banks, the reason of the increase and comparing the data
with actual also with the traditional costing method
The activity based costing and the impact of the DEA on the banking sector individual
and combined, the impact of the individual and the impact of the both is evaluated and
concluded that both shows great impact on the company performance.
The activity based costing result on the every branch and the bank of the country and data
is evaluated according to the branch.
Conclusion:
Activity based costing method is considered as the most important and the most critical part in
the costing method in any organisation. Activity based costing method is popular in the country
the reason for the popularity is its favorable impact. The implication of the activity-based costing
in the Australian industry will increase the productivity as well as the performance of the
organisation. From the journal it is concluded that the
Activity based costing method will help in the increase of the productivity of the
organisation as well as increase the company performance in term or ratios (ROA, ROE)
The results show that activity-based costing method showed the high profit as compare to
traditional costing method. So, implementation of the activity-based costing method will
increase the performance of the organisation in Australia.
The results are then evaluated in the combination of the research and evaluated that activity-
based costing method is improving the company results in positive manners. The research also
concludes that ABC helps every manufacturing organisation and produce results that are very
effective for the company.
Works Cited
ABC and impelmentation. (2017). Retrieved from Investopedia:
https://www.investopedia.com/terms/a/abc.asp
Activity based costing. (2017). Retrieved from Accounting Tools:
https://www.accountingtools.com/articles/2017/5/14/activity-based-costing
Activity based costing system. (2017). Retrieved from Business analysis: https://www.business-case-
analysis.com/activity-based-costing.html
Bescos, P.-L. (2013). THE ADOPTION OF ABC AND THE IMPROVEMENT OF PERFORMANCE:
THE CASE OF THE CENTRAL BANK OF MOROCCO, 4.
Jeffrey, K. (1999). Measuring efficiency by product group: Integrating DEA with activity-based
accounting in a large Mideast bank, 3. Retrieved from ProQuest:
https://search.proquest.com/openview/83577dac533cb44b23dd0df3293ddd91/1?pq-
origsite=gscholar&cbl=6197