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HI5017 Managerial Accounting Assignment Sample

Assignment Brief

Purpose of the assessment (with ULO Mapping)

Students are required to develop their understanding of the types of management accounting information that assists managers in organizational planning and control purposes. You are to critically evaluate the literature (using journal articles) to analyses the practical use of management accounting information by contemporary organizations, and their relevance to decision- making by managers and achievement of business goals. (ULO 1 & 4)

Weight - 30% of the total assessments
Total Marks - 30

Word limit Not more than 3,000 words. Please use "word count" and include it in the assignment.

Adapted Harvard Referencing

Submission Guidelines for assignment help

• All work must be submitted on Blackboard by the due date, along with a completed Assignment Cover Page.

• The assignment must be in MS Word format, with no spacing, 12-pt Arial font and 2 cm margins on all four sides of your page with appropriate section headings and page numbers.

• Reference sources must be cited in the assignment's text and listed appropriately at the end in a reference list using Adapted Harvard referencing style.

• It is the student's responsibility to submit the work to ensure that the work is her/his work. Incorporating another's work or ideas into one's work without appropriate acknowledgement is an academic offence. Students should submit all assignments for plagiarism checking on Blackboard before final submission in the subject. For further details, please refer to the Unit Outline and Student Handbook. 

Individual Assignment Specifications

Assignment Task: You are required to conduct a literature search for this assignment, cite your source(s) and provide a full reference list (as per the Holmes Adapted Harvard Referencing guidelines on pg. 1-2).

Part A (15 marks)

Management Accountants are seen as the "value-creators" amongst the accountants. They are much more interested in forward looking and taking decisions that will affect the future of the organization, than in the historical recording and compliance (scorekeeping) aspects of the profession (Institute of Certified Management Accountants, 2017).

a) Discuss the pros and cons of the above statement. (4 marks)
b) Explain the relevance of the value chain concept to management accountants today. (3 marks)
c) Assume you are the management accountant of BHP Group, a leading mining company in Australia. Provide examples of how you can create value for the company to support the manager make:

i) strategic decisions (2 examples); and
ii) operational decisions (2 examples). (8 marks)

"Maximum 1500 words."

Part B (12 marks)

a) What distinguishes the successful implementations of ABC costing method from those that have not succeeded? Include real-life examples from the literature to support your answer. (10 marks)

b) Based on your literature findings in (a), state two key lessons that stood out for you, about the ABC costing method as a planning and decision-making tool that would benefit contemporary organizations. (2 marks) "Maximum 1500 words."

Assignment Structure:

The assignment should include the following components:

a. Assignment cover page clearly stating your name and student number
b. Abstract (one paragraph)
c. Table of contents
d. A brief introduction or overview of what the assignment is about.
e. Body of the assignment with appropriate section headings
f. Conclusion
g. List of References (follow the Holmes Adapted Harvard Referencing guidelines.



Present study is based on management accounting information that helps managers in taking planning and controlling decisions. It contained critical analysis of the practical application of management accounting information by the modern organizations, and their significance in decision making and achievement of business objectives. Apart from this, discussion of the ABC costing method is also given and how it uses as a planning and decision-making technique that provide benefit to the company.


Part A

Answer a)

According to the Institute of Certified Management Accountants, management accountants are considered as value creators amongst the accountant as they are significantly involved in forward looking and taking decision that create impact on the future performance of company as compared to the historical recording and compliance elements of the company. Considering this, pros and cons of above statement are as follows –

Pros of management accountants:

Better decision making: Management accountant provide support in effective decision making for entities. It is because, they help in supplying of all information in the form of tables, forecasting, and charts, which leads towards detailed analysis and better decision making. Additionally, management accountants also apply scientific tools and techniques for evaluation of performance of business and consequently identify deviations and issues. In order to remove such deviations and issues, management accountants take actions accordingly (Mahdavikhou, 2018, p. 245(2)). Therefore, it can be said that, primary aim of management accountants is to mend the overall efficiency of the organization.

Enhancement in performance: Management accountant helps in increasing the profitability of the organization. It is because; they are mainly involved in taking decisions that affects future performance of the organization. They give emphasis on reduction in extra expenses of business activities by application of capital budgeting analysis and budgetary control measures (Ibrahim, El Sibai, and El Din, 2021, p. 53(1)). It enables the organizations to decrease cost of production and generate better returns.

Cons of management accountants:

Lack of specific process: It should be noted that, management accountant does not comply with any particular rules and regulations. Therefore, in the absence of any norms, they may provide inaccurate information.

Dependency: In this aspect, management accountant mainly obtains information from the financial and cost accounting for numerous data. Therefore, the reliability of the information offered by management accountants are primarily depends on the accuracy of records maintained through cost and financial accounting (Omar Fikrat, and Ozyapici, 2019, p. 82(3)). additionally, management accountants provides information and planning for the future activities of the company, as there is no certainty that in the future period activities may take place as per management accountant’s opinion and due to this, they may not provide effective outcomes.

Answer b)

Value chain analysis is a business model that explains the whole extent of activities required to create goods or services. For entities that are engaged in manufacturing of goods, value chain activities are comprised with bringing goods from conception to distribution, as well as each and every element in between like producing raw material, marketing, manufacturing activities. It should be noted that, value chain plays important role for the management accountants as it provides a number of important information like it helps in understanding of points in the value chain and connection between distinct points. By conducting value chain analysis, management accountant could identify elements that build or hinder cost efficiency in the business activities (Brouard et al. 2017, p. 235(1)). In addition to this, in the present environment, there is significant competition in the industries in the context of unbeatable prices, unique goods, and consumer loyalty; therefore it is essential for the management accountant to evaluate the value they build by which competitive advantages can be obtained. In this aspect, value chain analysis provide support to management accountant to discern areas of its organization that are unproductive, and consequently implement strategies and planning that would leads towards optimization of its process for maximum profitability and efficiency as well. The same aspect can be observed in the Nestle Cocoa Plan, in which company has implemented value chain analysis for identification of the areas of significant opportunity for joint value optimization with community, which helps the company to obtain competitive benefits (Value chain analysis, 2013).

On the basis of this, it can be said that, value chain analysis provides significant information to the management accountant and it is highly relevant as it supports in enhancement in business efficiency by which companies could offer the maximum value for the probable cost.

Answer c)

i) Role of management accountant of BHP Group for creation of value for the company to help managers make strategic decision

Management accountants involved in taking management decision, arrangement of plans to performance management system, and offering expertise in financial controlling and reporting for creation and implementation of the organizational strategies. Notably, management accountants observe at a number of aspects that occur within and in relation to business at the time of taking into account the requirements of business (Egan, and Tweedie, 2018, p. 1750(2)). After the completion of data and estimation surface, such estimates and data bring by cost accountant into knowledge that ultimately applied as guidelines of the decision making. In addition to this, in the managerial accounting, collected information is used by the management accountants to obtain better understanding of information prior any decisions are implemented within organization. Subsequent to the formulation of strategies and planning, the main task of management accountant is to confirm that all plans are implemented as per pre-determined strategies and in case of any requirement, such plans should be modified. It is regarded as one of the most critical task of management. It can be said that, managerial accountant engaged in offering essential information to the entities by the manner of offering decision assessment for the near term, application of appropriate combination of product, ascertainment of make or buy decision, termination of products, and many more (Christoph, and Rouven, 2020, p. 322(2)). For example, management accountant could provide support in that five forces analysis model should be related to the strategies of company and does not get out of the track. They could audit the accessibility and use of data within the risk management activities of the company. They could also approve that; there should be involvement of resources of risk mitigation. Furthermore, management accountant by the provision of financial analysis helps in strategies decision making (Mack, and Goretzki, 2017, p. 325(2)). For example, management accountant help is strategies risk management process for identification, assessment, and management of risk and uncertainties that can inhibit the ability of company to reach its strategic objectives. By considering the enhanced expectations of shareholders of BHP, regulators, and other stakeholders, strategic risk management could prove to be one of the essential aspect for creation and protection of value. By all such aspects, it can be said that, management accountant can create value by providing support in strategic decision in effective manner.

ii) Role of management accountant of BHP Group for creation of value for the company to help managers make operational decision

Operational decisions are those which are made for short term process in order to accomplish the task of strategic decisions or long term process. Management accountant of the company helps in directing and controlling the process which results in the transformation of final product. There are various decisions under this operational activity such as decision regarding to the inventory, sales management, employment management, customer engagement and logistic decisions. These all decisions are narrow in nature as they are made weekly or daily basis in order to accomplish the task planned under strategic management process (Dada, 2018). Management accountants are usually engaged in relevant cost analysis for ascertainment of the existing expenses as well as provide advice for the future activities. For example, the motive of the company is to increase its profitability by making increment in the sales, then in such case, management accountant can provide suggestion of 30% of discount in the form of barcodes, promo codes, online coupons which could be used by the customer on shops as well as while online shopping, and the customer could use these coupons several times for a specific period. From this there would be an increase demand the product on sale for that certain period of time, so the purpose of increasing sale for short term period could be fulfilled. Along with this, management accountants use operational information to build sense of the situations rapidly (Pasch, 2019, p. 214(2)). For example, they could apply budgetary techniques to take short term operational decisions. The role of management accountant in this is to evaluate earlier activities and avail opportunities for the further activities.

Overall, it can be said that, data precision as well as accuracy plays significant role in the success of companies. Without any informative data, it becomes very typical to analyse the present state of affairs or planning for future business. In such type of situation, role of management accountant is vital as it helps in taking operational decisions, which is intended to increment in the operational efficiency of company.

Part B

Answer a)

Activity-based-costing method could be used to determine or examine various aspects of the organizational activities such as it explain the profit margins clearly of those activity whose profitability cannot be easily determined, to examine the costing system of unrealistically levels of pricing, low prices offerings from the suppliers etc.

Benefits of the successful implementations of ABC costing method to the entities from those that have not succeeded in its implementation are:

Improvement in performance: ABC method helps for improvement in the productivity, efficiency and the overall performance of the organization by providing them accurate cost information. It helps the firm to eliminate the unnecessary cost from the production and also helps in the implementation of various performance improvement techniques which are to be applied by the organization such as TQM (total quality management), Business process reengineering (BPR), lean methodology. ABC method provide management with the expenditures of each activity and helps to compare it with their value addition, the activity which exceeds its expenditure firm its value that must be eliminated immediately by the firms to reduce their unnecessary cost and increase their efficiency by focusing on the activity which are more profitable instead of the activities whose value addition is less than its expenditure. Other costing methods only believes in following the accounting rules and regulation based on traditional practices, they do not help in the reduction of the unnecessary cost but only ABC methods helps the firm to reduce its cost or eliminate the unnecessary one (Balstad, and Berg, 2020, p. 378(1)).

Downsizing and cost management: ABC method clearly define each and every activity which further helps in making a right decision that which activity is to be eliminated or on which activity one must focus the most or it can be said that it helps management to identify the most profitable and least profitable activity of the firm. If the company is not satisfied with its financial position it must follow this method to clearly identify the weakness and the available opportunities where it could reduce the cost of activity and improve the overall financial position of the firm in the market (Lepistö, and Eeva 2018, p. 108(3)). At last it can be said that, this method provides useful information about the cost of every activity and helps in making a right decision or can say a productive decision. However the traditional costing method or other costing methods focuses more on the volume information that is volume of production instead of identifying the highly productive activity based on its cost which must be focused more (Adams, and Larrinaga, 2019, p. 2385(1)).

Clear allocation of various costs: ABC method helps an organisation with the identification of various cost other than manufacturing cost, as now the non- manufacturing cost cannot be neglected anymore they too play a crucial role in the determination of pricing process of a product such as advertisement cost, marketing cost etc. These costs could be quickly identified by this method, which means through this method management can clearly classify the various costs incurred by the company while performing the activity and through that they can easily determine the cost of final product or service (Tarzibashi, and Ozyapici, 2019, p. 85(1)). But the other costing methods which are volume based does not helps to identify these costs and also could not be applied on the firm which is non-volume based, whereas the ABC method could be applied in any type of the organisation.

Pricing of the product and services: It provides relevant information of the cost of the product furthermore identifies and helps in implementation of effective pricing policy. Additionally, it also helps the organisation to achieve its desired profit goals stated at the planning level by setting an appropriate pricing for the product and services (Jansen, 2018, p. 1505(3)). While the other methods like traditional costing methods does not provide such information in their analyse process they only identifies the cost for the volume of production and rest of the key pointers are ignored which in turn causes difficulty for the firm to identify where they are losing their profit or where they could achieve some more.

Make or buy decision: This is the decision under which the company has to decide whether it will conduct the activity itself or hired some other agency which is subcontractors to perform the activity. The decision of giving the activity to subcontractor depends on the cost incurred; if the cost incurred by the firm is more than that of subcontractor then the company should get the activity done by them and vice versa. But under other costing methods, they do not allow to the company to let the activity done by some outsiders, it performs all of its activity on their own, even if the cost incurred by them is high, which results in the high cost generation by the firm (Jeong, 2016, p. 1638(1)).

Transfer pricing: There are various departments in an organisation so when the activity of department A is completed it transfers it to the department B. As ABC method provide is with the information of the cost incurred by every activity in the organisation, so this helps us to determine the performance of both the departments by providing relevant information of the cost of each activity performed by them individually and collectively (Christoph, and Rouven, 2020, p. 328(1)). While the other costing methods does not provide the deep analysis of each department rather it focuses on the overall cost incurred by the firm to produce the product or service at the end of the process when the finished goods are ready.

Distribution channel: ABC costing is a significant competitive advantage of even analyzing the most appropriate and profitable distribution channel for company which is to be selected. The ABC costing methods determines the cost incurred by each distributing channel, and the performance of these alternative channels. Through this the firm could easily analyse its most profitable channel which incurred the less cost and perform better in the market. While the other methods do not provide you these analyses for the distribution channels (Patten, and Shin, 2019, p. 28(2)).

NESTLE is real life example for the above literature which implemented the ABC costing method. Nestle deals with two types of product that are custom products and standard product. It more focuses on the production of standard product as compare to the custom product. ABC helps nestle to assign its overhead activity cost of the firm to the product it produces or delivers (Smyth, 2019). According to nestle the ABC method is much better than the traditional costing method as it focus more on the relation between the product and its cost and overhead activities. Another example is COCA COLA which uses the ABC method. Coca- Cola deals in various product lines and involves the usage of huge amount of inventory. In order to keep a check on its each and every operation and to determine its speciality or it can be said that the most profitable sector, the company decided to use this method of costing (Real life example for ABC method 2019).

Answer b)

Activity based costing method helps an organisation to reduce its cost, combine various production activities to reduce the time and helps in better decision making process. It is not only used for the purpose of profit maximization or reduce cost, but also for managing proper time and completion of the activity in less time by combining various production activities together.

ABC method is a useful tool for the planning and decision making process as:

1. It is used for making strategic decisions of an organization, by identifying the financial and non – financial activities or which activities are to be reduced in order to reduce the cost of production, which activities are to be combined in order to reduce the time of production of products and services.

2. ABC technique provides us with the accurate information of the expenses and the cost incurred by each and every activity which in turn helps to identify and prioritise the activities which are more beneficial for the company. It also helps management to focus on that activity or product or customer which is more profitable for entity.


Above analysis reflects that, although, management accountants are value creator of companies as they help in better decision making and increment in profitability, but there are also some loopholes in their workings such as they are dependent on data of financial and cost accountants and does not comply with any particular rules and guidelines. Activity- based- costing method is an efficient tool for the planning and decision making process of an organisation, as it helps in the planning process by evaluating all the information and analyzing them, at last making a successful decision that what has to be reduced or focused on more.


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