Strategic Management Accounting System Essay Example | Topics and Well Written Essays - 2000 words

Strategic Management Accounting System - Essay Example It further explains the control procedures expected at the three levels of management control (strategic, tactical and operational) and provides a discussion of how control is exercised and information required at each management level, relates to Highline Co. Ltd. The traditional management accounting systems are of minimal use in the preparation of the strategic plans, monitoring of achievement process of predetermined objectives of the organization and performance evaluation of the employees. The failure of traditional accounting systems have triggered the process of research in order to find out the suitable methods which can eke the changing business techniques in order to achieve the organisational objectives in today's global business environment (Ittner & Larker, 1998). According to the evaluation of the manufacturing data in different companies it has been found that the manufacturing has been transformed. Labour cost is no more considered as the significant cost of manufacturing, it has been replaced by the overhead cost which has become a significant cost of manufacturing process. This change has reduced the usefulness of the traditional accounting techniques. By undertaking the examination of the material cost and labour cost data the validity and generality of these claims can be tested. Moreover, the extent to which manufacturing has changed over time and the nature of these changes can also be examined. This can help the management of the company in designing an effective and up to date management accounting system according to the current needs of the company. The changing products and management styles have reduced the usefulness of cost accounting and management control systems in the modern age of information technology which were previo usly used in many organizations. Decline in Direct Labour: The automation of the machinery assembling plant in the company has reduced the number of labour used in the production process. Labour cost constitutes a small portion of the manufacturing costs and the overhead costs have become the major constituent of the manufacturing cost. The changing trend has also raised the level of manufacturing overhead which represents 33% of the total manufacturing cost in the company. Due to the changing pattern of manufacturing process the traditional cost systems also tend to fail in the true valuation of cost. It has been noted that the management has taken inaccurate decisions and adopted strategies which have restrain the manufacturing process. In order to confirm the above assertions the management can gather data to analyze two important issues: 1. The production labour has declined as a percentage of total manufacturing costs. 2. The ratio of the total wage expenditures to production wages has been increased for all, most, or some manufacturing companies over time. (Boer and