Role of Management Accountant

Topics: Management accounting, Management, Cost accounting Pages: 7 (2594 words) Published: February 19, 2012
Total words : 2480 words excluding sub headings and references (Total 8 pages)

Total words : 2480 words excluding sub headings and references (Total 8 pages)


Managers in Annovim Plc have to understand since the early 1980s a number of ‘innovative’ management accounting techniques have been developed such as activity-based techniques (costing, budgeting and management), strategic management accounting and the balanced scorecard. From the context of the assignment, each division is regarded as a profit centre, where the divisional managers of the three divisions i.e. candy bars, chews and other sweets will try to maximize profit in order to ensure that they obtain the minimum required profit margin to achieve their own goals of getting bonuses. So, managers of these divisions either mark-up their prices or improvements in financial performance by sacrificing investments in the materials used, on-time delivery or tweaking with the product mix. The other way, they will try to minimize costs either through reducing the direct and indirect costs relating to their divisions. There is a possibility that the marketing department may suffer from an overpriced product of candy bars, chews and other sweets since each division is a profit centre and tries to maximize their profit. As a result, organizational goals are ignored or overlooked. ROLES OF MANAGEMENT ACCOUNTANT

Over the years, it is believed that ‘new’ techniques have been introduced to overcome a claim that ‘outdated’ management accounting practices had provided misleading information for planning, controlling, decision making and communication. The managers in Annovim Plc will have implement cost determination to ensure proper accounting and that transfer pricing will not result in disfavourable figures to their own departments. Cost determination at Annovim Plc across the three processes including mixing, cooking and packaging is one of the functions of management accountant in understanding the processes within Annovim Plc. Then financial control of maintaining that Annovim is able to sell its products after having mark-ups of 25% in each division and the management accountant needs to identify if it is going to drain the profitability of the company. Next, the need for provision of information to carry out the duties of management planning and control. This is seen as a management activity but in a staff role. Usually, it involves staff (management) support to line management through the use of technologies such as decision analysis and responsibility accounting. The management controls are oriented towards manufacturing and internal administration in Annovim. This is to ensure that Annovim’s divisions do not over produce or under produce to the market demands. Over productions of candy bars, chews and other sweets will result in increase cost of storage and warehousing. While, under-production of the 3 products may result in losing out market share to competitors in fulfilling the demands of the market place. Purchasing managers of the three divisions will also need to ensure that raw material purchases are forecasted ideally to meet the production requirements. Any excess purchase of raw materials will incur additional storage cost and preferably ‘just-in-time’ production strategy should be practiced i.e. ordering and delivering of raw materials aims at reducing in process inventory and associated carrying cost. This process, of course, need to be carefully planned if one of the raw materials like sugar that may be in short supply. Then, warehousing and storage of such raw materials may be necessary to allow a smooth flow in production. Furthermore, as the senior management accountant, there is a need to understand the production processes involving mixing, cooking and packaging of the wide variety of differently Annovim’s products. By having a detailed and comprehensive knowledge of the business...
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