Accounting for Managers Reduced Business Process

Question: Describe about the Accounting for Managers for Reduced Business Process. Answer: Problem 1 Faster processes and reduced process times to help companies to be more competitive Better and faster production process in the manufacturing companies requires new and improved technologies. With the continuous increase in the market competition, it is important to develop the processing time in the areas of engineering and administration. In such cases, many companies adopt business re-engineering in recent years that improves the business functions (Stark 2015). It incorporates the structural change in technology and manufacturing areas considering the products of the organizations. Process of business re- engineering involves fundamental rethinking and radical redesign of business process is conducted to improve the speed of the production of goods by maintaining the quality. It requires preparation of business structures according to the measured set of activities in engineering and administering departments by adopting the updated techniques (Dinu 2015). The timing of process is a concerned area that can be reduced by involving the upgraded techniques of production in the areas of engineering. It can done by involving the skilled and experienced employees in the business administrative areas to operate the business functions. Additionally, the organizations can involve online activities that assist in providing accurate and faster business functions (Page et al. 2015). Importance of improved quality To maintain the competitiveness, it is important to produce the faster work by reducing the time of process as well as by maintaining the quality. Since, customers are concerned for the product quality therefore the companies are required to maintain as well as enhance the process of production. For example, Woolworths Limited is best known for maintaining the high quality product and developed structures in the business organization with respect to the supermarket chain (Zott and Amit 2015). It is one of the largest companies in Australia based in the retailing industry by distributing the near perfect quality products. Many organizations are considering the concept of six- sigma in the production procedures to produce the products with 99.99% perfection. Such improvement to the near perfection is important to create competitiveness and marketability to maximize the profitability and sustainability of the companies and stakeholders (Sommer et al. 2015). iii. Potential problems may arise from the increased speed of processes Increase in the speed of processes in the business enterprise manipulates various factors in the production and distribution to form potential dilemmas. Increased speed of processes may affect the product quality at the time of designing and developing the products. The problem associated with the increase in processing speed is maintaining the quantity if the manufacturing of goods takes place in the batch system (Nyantakyi 2016). However, if the speed of processing the products is increased then the quantity set under the normal production may be affected and accordingly affect the performance of the business. Additionally, the processing speed if increased then it may affect the flow of communication among the organizational members as the relevant information. It also create the problem in terms of generating the root cause that harms the development of the production process and administration process. Increased speed of processes provides faster manufacturing of the goods but i t also affects the competitiveness in the market industry (Burger, Kaufman and Atkinson 2015). Problem 2 In the given situation, operating activities of XYZ Limited have two branches in Brisbane and Adelaide presented the changes in financial statements. According to the financial result on business operation in the branch of Brisbane disclosed increased net profit and value of inventory. On the other hand, branch of Adelaide represents nil value as net profit but decreased value in the finished goods inventory. It may be noted that the decline in value of inventory reflects the cost reduction for the goods sold while the increased value of inventory reflects the decreased value of net profit before tax (Jansen, van Lier and van Witteloostuijn 2015). In case of Brisbane branch, amount of net profit during the year increased even though the value of inventory shows an increased balance. Such results reflect the efficient performance of Brisbane factory over Adelaide because it did not earn any profit even after the reduction in inventory. Accordingly, the managerial bonus should be offered to the Brisbane factory manager yet it might create situations of conflict as it was provided based on net profit generated by the individual factories. The primary conflicts in the present circumstances may arise is the risk of long- term period because generation of net profit depends on several factors. Further, it would affect the motivation of the managers since decrease in inventory balance affects the reduction in cost of goods and vice- versa. Another conflict that may arise on the managerial bonus if it is based on the net profit is harmonization of diverse interest on the performance of the business activities (Veldman and Gaalman 2015). Problem 3 Variances in a manufacturing industry include material variances, labor variances and other several variances that indicate the efficiency of the cost and units of the production. Variances are determined by considering the actual cost and units engaged by the organization by comparing the standard cost and units as set by the organizational management. Accordingly, the result indicates favorable and unfavorable variances stating the efficiency of the organizational performance. In case the material variance reflects favorable variance, it indicates the efficient utilization of raw material resources and allocation of production costs (Fulton and Pohler 2015). On the contrary, unfavorable material variance reflects the actual utilization of costs and units more that the standard rates. However, labor variance mentions the capacity of optimum utilization of labor hours in the production of products on comparing the actual and standard data. Analysis of cost of production and variances in a period states the significant information to the management for efficient production. It reflects the changes in the market price level, product quality according to the standard data anticipated by the management. It provides improved negotiation in price to employ the efficient workers for manufacturing process as well as implementation of several discounts. It provides the bargaining power information with respect to the suppliers and buyers at minimum cost for production. Variances and production costs provide information on the potential profit an organization expects to earn in the financial year (Shan et al. 2016). Problem 4 Variable cost per unit Variable cost per unit is measured by taking the total variable expenses divided by the total units produced. Hence, the determination of variable cost per unit for budget A and B is computed in the books of Always Right, manufacturing company: Particulars Budget A Budget A Sales Units 20,000.00 30,000.00 Variable Expenses $: Direct materials 260,000.00 360,000.00 Direct Labor 40,000.00 60,000.00 Variable Overhead 60,000.00 75,000.00 Variable selling and administrative expense 60,000.00 60,000.00 Total variable expenses 420,000.00 555,000.00 Variable cost per unit: (Total variable cost/ total sales units) $21.00 $18.50 Table 1: Variable cost per unit (Sources: Created by author) Analysis of costs and sales forecast in the budget A According to the given information, lower and middle management prepared budget A and the senior management prepared budget B considering the sales forecasts 20,000 and 30,000 units respectively. It may be noted that the budget A has been prepared by the conservative and bottom- up approach as it is prepared by the lower and middle management (Ferry and Eckersley 2015). However, budget B is prepared by the senior management therefore it was prepared by using the high value of sales and low value of costs. Further, lack of awareness on proper information of production costs and other details of manufacturing process required the preparation of budget A at conservative approach (Allard et al. 2015). iii. Analysis of costs and sales forecast in the budget B Since the budget B has been prepared by senior management it has been prepared by using the top- down approach that is reported for the entire organization including the lower level management. Therefore, the sales forecast used in the budget are at high value than the value used in budget A (Carafa, Frisari and Vidican 2016). On the contrary, fixed cost used in preparing the budget is lower that does not change with the change in the quantity of production. The behavioral proposition of top- down approach is systematic planning, dysfunctional behavior and communication behavior. It also provides the impact on the structural and cultural changes to improve the business performance (Burger, Kaufman and Atkinson 2015). Consensus on the budget and advantages of the approach The given situation on preparation of budget A and B provides certain advantages on using the different budget approach. Concerning the consensus on the preparation of the budget, higher management and lower level management groups should prepare a detailed schedule for the manufacturing costs and administrative expenses (Reynolds et al. 2015). Both the teams need to recognize the business functions and the cost pools along with the cost drivers to ascertain the correct results. 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