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Strategic Management Accounting: the reasons for the lower than expected profits of Manac Plc - Essay Example

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Strategic Management Accounting: the reasons for the lower than expected profits of Manac Plc

With regard to this particular decision, it could be stated that the condition relating to the nature of the information which encourages the vital decisions that contributes towards the long-term success of an organisation could be stated to be the function of SMA. The vital decisions entail the implementation of costing information which is activity-based with the objective of offering data associated with the product mix and the introduction as well as rejection of decisions. It has been also stated that the methods related to strategic accounting were structured to provide encouragement to the competitive strategy related to an organisation on the whole. In this study, the reasons for the lower than expected profits of Manac Plc would analysed with the help of models and concepts affecting pricing decisions (Drury, 2007).
Standard Costing & Absorption Costing
Standard costing has been referred to be a tool of management which is put to use by the organisations for enhancing numerous chief management processes. The chief processes related to management include comprehending and ascertaining the unit costs for products, determining the costs as well as prices, accounting incomes, anticipated earnings or inputs and costs, preparing a structure for resource contributions like direct labour and direct materials and managing the discrepancies related to performance. There are various steps involved in the process of standard costing. The process initially ascertains the standard unit costs. This is attained with the help of evaluating extensively the contributions and the methods that are considered to be necessary for the production of a single unit (Vallely, 2011). Standard costing even aids in ascertaining the sales price for each individual unit. It assists in setting up financial plans for usually a year and these plans are then generally divided into further shorter plans. This helps in managing the financial plans efficiently. It takes into concern the real expenditures and the earnings for every individual management cycle for the short-term. It structures a statement related to the operations which merges the real and the planned expenses or incomes for each year. The identified differences are then reported to be variances. After the identification of the variances, the causes triggering the incidence of noteworthy variances are being assessed. This facilitates in recognising and finding a solution for management behaviours considered necessary for the rectification of the unfavourable variances and at the same time heighten the positive variances. After this endeavours are made for the reason of applying and checking the consequences related to the management behaviours (Vallely, 2011). Absorption Costing is based on the fact ...Show more

Summary

For quite several years, the concept of SMA was supported to be a prospective field of growth which was capable of improving the upcoming contribution towards the management accounting. SMA was defined to be the condition of factual information for the reason of encouraging strategic decisions taken in an organisation (Collier, 2003)…
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