The Implications Of Management Accounting - 2362 Words

1987, Johnson and Kaplan studied the evolution of management accounting and how it has lost relevance today. In the world of technology, competitive environment many issues have escalated, therefore management accounting methods aren’t relevant. Management accounting systems used by the firms before do not apply to organisations today. Hence the reason why the two academics explored reasons why organisations need to develop the methods in which they measure their performance and costs. This essay will explore the implications of management accounting identified by Johnson and Kaplan, further suggesting two developments and whether this has addressed the issues raised of management accounting. Direct labour To begin with, lost relevance in the way people assign costs. Johnson and Kaplan (1987, p.188) identified problems of assigning direct labour to overhead costs, as to diminish overheads and ameliorate profitability in the organisations, cost centre managers wholly focused on reducing direct labour. Instead of overhead accounts, where costs are actually escalating, since little influence is made on gaining competitive advantage when reducing direct labour cost. Managers realised that any process consisting of mainly labour-intensive is expensive. In order to lessen this cost they subcontracted, as discarding direct labour cost on the suppliers is the easiest way. Leaving out significant information such as factory overhead, which isn’t driven by direct labour, thereforeShow MoreRelatedThe Issue of Accounting Entity Definition in Regards to Noms in the Area of a Public Company in the Uk1368 Words   |  6 Pages In this paper we take a specific look at the National Offender Man agement Service (NOMS) from an accounting perspective to shed light on the influence and changes involved of defining something as an accounting entity. We will look closer at and critically evaluate the issues involved in the representation of NOMS as an accounting entity. Furthermore, we will analyze the implications of the representation of NOMS as an accounting entity on definitions of organizational accountability. ThereforeRead MoreResearching Topics Of Interest Is A Key Starting Point For The Research Effort1538 Words   |  7 Pagesareas of interest for my doctoral level research. 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