Name Darshan Bhavsar

Student Id 21102433
Course Managerial Accounting (ACC209)
Assignment Assignment 1

Part 1:

Managerial accountancy allows an organizational manager to understand business

operations and helps them with data needed to make key decisions in their business
activities. Key influence of Managerial accountant on business value of an organization
mentioned below:

1. Planning:

 Strategy:
It can be classified in Core Values and Mission; Core Values are morals, employment
& compensation, environment awareness, etc. Lack of core values leads to Greed
and Profit-Making approach. Mission is vital in terms of purpose and direction of an
organization vision.

 Positioning:
It involves gathering of data and evaluating information to help organization achieve
its goals for short-term and long-term period. Example, Hewlett-Packard reduces
computer price to compete with Dell.

 Budgets:
There are three forms of Budget mainly Operating, Capital and Financing. Operating
budget is forecast of the income and expenses of the company over a set period of
time. Whereas, Capital focuses on long term goals and Financing are expected cash
in hand for day-to-day expenses of a company.

2. Directing:

 Costing:
There are two types of costing; Methods and Concepts. Method costing is jobs
provided to complete tasks, production and overhead cost of each item. Concepts
are specialized form of costing to analyze fixed and variable cost of a product.
  Production:
Costs are minimized and efficiency maximized, it is also known as “Lean” model.
Standard of quality is enhanced of a product.

 Analysis:
It provides models and calculation in order to take data driven decisions for effective
results. Some companies outsourced or give contract to other companies for Data
analysis of specific product or line of segment.

3. Controlling:
It is a process of keeping organizational activities on track to run smooth operation.
When company deviates from target objectives, Managers must take action to get
back on track. There are three ways of controlling- Monitor by Standard Cost,
Variances and Other tools. Maintaining reliability of process and getting proper
relevant certifications. Categorize performance metric to identify and improve
business function by Balance Scorecard.

Exercise of good judgement in planning, directing, and controlling provides effective

assistance in Decision Making capability of management.

Reference:
Video: Managerial Accounting's Role in Planning, Directing, and Controlling, by Larry
Walther, Url: https://www.youtube.com/watch?v=QpO1LmWAtws

Textbook: Managerial Accounting: Tools for Business Decision-Making, Canadian Edition  (5th
Edition). Pg 5

Part 2:

Total Quality Management

Definition:

TQM is a combined effort designed to achieve satisfying quality at every step of the
company.

It can be defined as a management approach that tries to accomplish and endure long term
organization success by encouraging employee feedback and participation, satisfying
customer needs and expectations, respecting societal values & opinions and following
government statutes and regulations.
Example:

Mahindra & Mahindra:

Mahindra & Mahindra followed the path of TQM to retain market leadership and grow further.
TQM journey at M&M was introduced in 3 phases - Introduction in 1990 to 1994, Second
Phase in 1995 till 1999 and final phase in 2000. Objective was Process improvement in
manufacturing at several factories for calibration of all operations as per worldwide
recognized guidelines.

Benefits derived from TQM were reduction in rework and refusal at all stages of operations
and introduction of 15 new models in three years.

Explanation:

Positive impact of TQM on business values:

 Good corporate culture:

Customer is a focal point of a business rather than a department. Therefore, quality
is transformed from an issue of the production department to a strategic business
entity to meet global challenges.

 Reviews from customers:

Clients and customers are highly satisfied with the performance as quality assurance
procedures, the products of a company will constantly meet requirements of a clients
and customers

 Performance from employees:

Training given to employees as a part of the program can be boost employee morale
at a workplace resulting in employee working hard to achieve goals of TQM

Reference:
Total Quality Management Second Edition by Poornima M. Charantimath
https://learning-oreilly-com.ezproxy.torontopubliclibrary.ca/library/view/total-quality-
management/9788131732625/xhtml/chapter003.xhtml#c3s2
(Access online by Toronto Public Library)
 Value Chain

Definition:

Value Chain is maximizing monetary resources and reducing waste by integrating data,
materials, logistics, employees and several others factors into timely responsiveness and
capacity managed resolutions.

Example:

Amazon is a prime example of a company that focuses on online sales over retail outlets by
focusing on vital factor of customer satisfaction in time management. Value chain linkages
among suppliers, manufacturers and distributors to reduced costing and improved resources
efficiency played pivotal role in success of a company.

Business Value:

 Resource Management:
Traditional approach focuses on managing material resources but multi-level value chain
integration make sure capacity restrictions are considered at all stages. Example,
constrained resource could be employee or equipment to perform task. Therefore,
scheduling system that can scrutinized both activities will emerge as vital component in
Value chain management.

 Timely Responsiveness:
Total cycle time measures are needed because they have become more vital than cost in
terms of competitive advantage in many scenarios. Strategic positioning requires delivering
customized product quicker than competitor even if product is not customized. Hence, it is
important to gauge cycle time from warehouse till delivering to consumer to enhance
consumer rollover.

Reference:
Encyclopedia of Management by Burton, Virgil L., III editor.
https://go-gale-com.ezproxy.torontopubliclibrary.ca/ps/i.do?p=GVRL&u=tplmain&id=GALE
%7C8OHV&v=2.1&it=etoc&sid=gale_marc
(Access online by Toronto Public Library)

Part 3:
a) Predetermined overhead rates = Estimated overhead cost / Estimated annual
operational activity
Department A (Direct labor cost) = $1,056,000 / $264,000 = 400%
Department B (Machine hours) = $840,000 / $84,000 = $10 per machine hour
b) Job 14
Manufacturing overhead applied = Actual activity base used * Predetermined overhead rate
Direct materials: $34,000
Direct labor cost: $24,000
Manufacturing overhead applied ($24,000 * 400%): $96,000
Total manufacturing costs: $154,000

Job 15

Manufacturing overhead applied = Actual activity base used * Predetermined overhead rate
Direct materials: $31,000
Direct labor cost: $25,500
Manufacturing overhead applied (4,000 hours * $10): $40,000
Total manufacturing costs: $96,500

c) The purpose of job cost accounting is to assign cost to each type of job or each batch of
goods. Accordingly, management can take decision on quantity of production, pricing,
and labor required to complete tasks.

Reference:

Textbook: Managerial Accounting: Tools for Business Decision-Making, Canadian Edition  (5th
Edition). Pg 72