Managerial accounting Management Term Paper Research (Term Paper Sample)

Managerial Accounting
Name of the student
Name of the university
Abstract
Activity based costing system is a method under which the overhead costs are assigned to particular products or services which are rendered. ABC costing system differentiates between manufacturing cost, overhead cost and indirect costs. The two Australian companies for which Activity based costing is suitable are Orica and Orora. Orica is a chemical manufacturing company and Orora is a pulp and paper product manufacturing. Orica is the biggest provider of quarrying oil and mining services. There are lot of uses of cost information in decision making to the managers. It plays an irreplaceable role in the decision making process of each and every organisation. The organisation which is chosen for the analysis ABC analysis is RBTS (Regional Blood Transfusion Service). The idea of implementing activity based cost structure in RBTS came into the mind of managers in the year 1993. RBTS satisfies all the features of ABC. RBTS have implemented ABC system very effectively. RBTS costing system provides a better understanding of cost. Cost information is useful to both external as well as internal users. The focus here is on the usefulness of cost information to the internal users of the company. This study was very useful to understand the practical use of the chosen costing system and provided with a lot of lessons that can be suggested to the organisations.
Contents TOC \o "1-3" \h \z \u Abstract PAGEREF _Toc51065622 \h 2Introduction PAGEREF _Toc51065623 \h 4PART – A PAGEREF _Toc51065624 \h 4Question 1 – features of ABC costing PAGEREF _Toc51065625 \h 4Question 2 – suitability of ABC PAGEREF _Toc51065626 \h 5Question 3 – use of cost information for decision making PAGEREF _Toc51065627 \h 5PART- B PAGEREF _Toc51065628 \h 6Question 1- Designing and implementation of the costing system PAGEREF _Toc51065629 \h 6Question 2 – satisfaction of feature PAGEREF _Toc51065630 \h 7Question 3 – usefulness of the cost information PAGEREF _Toc51065631 \h 7Question 4 – practical use of ABC PAGEREF _Toc51065632 \h 8Conclusion PAGEREF _Toc51065633 \h 8References PAGEREF _Toc51065634 \h 9
Introduction
Activity based Costing is one of the methods of costing. ABC costing system differentiates between manufacturing cost, overhead cost and indirect costs. Sometimes it becomes difficult to assign and allocate costs to particular heads. In this study two Australian companies Orora and Orica are selected to find out the amount of suitability of activity based costing in the organisation. Orica is a chemical manufacturing company and Orora is a pulp and paper product manufacturing. Orica is the biggest provider of quarrying oil and mining services. The organisation which is chosen for the analysis of activity based costing is RBTS (Regional Blood Transfusion Service). They deal in manufacturing of clinical products, collecting and testing blood. The report contains a detailed study of the way in which RBTS designs implements and uses the information provided by ABC.
This system first sets cost for different activities and then assigns them to different products. Activity based costing follows the principle that products are end results of activities and for conducting activities there is need of resources.
PART – A