Case Study Lending And Returning Processes -Myassignmenthelp.Com

Question: Discuss About The Case Study Lending And Returning Processes? Answer: Introducation The concept of Cost Accounting is considered as a major aspect for the manufacturing business organizations. In the process of cost accounting, accounts use to record, classify, analyze, summarize, allocate and evaluate all possible courses of actions for controlling production costs that contributes to higher profitability (Drury 2013). Over the years, two major costing system used by the companies are Activity based Costing (ABC) and Traditional costing. However, in the recent years, companies have become more interest in the adoption of a new costing system that is Time Driven Activity Based Costing (TDABC). In the recent years, companies are facing various difficulties while using the most popular costing system, tradition costing. Thus, for avoiding the setbacks of traditional costing and ABC, Robert S. Kaplan and Steven R. Anderson introduces the process of TDABC in the year 2004. This report aims to analyze and evaluate different aspects of TDABC in order to establish its suit ability in one an Australian manufacturing organization (Christ and Burritt 2015). For this reason, Australian Paper Pty Ltd is selected. Different parts of this report analyze the importance aspects of TDABC like its decryption, features, its differences with traditional costing and ABC and its suitability in the selected organization. Client Firms Description Australian Paper Pty Ltd make commenced their business organization in year of 1938. Australian Paper Pty Ltd is a vertically integrated manufacturing organization. The main operation of the company is the production of pulp, paper, envelope and stationary products. In addition, Australian Paper Pty Ltd also involves in the manufacture of office and printing papers, sack, bag, lightweight packaging and industry paper, Kraft linerboard and cardboard cartoon. As per the providing situation, the CEO of Australian Paper Pty Ltd wants to know the suitability of TDABC in their manufacturing operation (australianpaper.com.au 2018). Time Driven Activity Based Costing (TDABC) As per the earlier discussion, the development of TDABC has been done for overcoming the difficulties of traditional costing and ABC. In the operation process of TDABC, organizational managers use to directly assign the cost of resources with the cost objects and it is done with the help of two sets of estimates; they are cost per time unit for the resource supply capacity to the activities of cost and required time unit estimation for performing the production activities. After that, organizational managers are required to follow six specific steps for the computation of various cost activities under TDABC (Christ and Burritt 2015). In the first step, the identification of the services and the activities is done. In the second step, managers are required to do the estimation of total cost of each resource group. The third step involves in the estimation of practical time capacity for each group of resource. In the fourth step, the calculation of unit cost is done for each resource g roup. The fifth step is to determine the estimated time for each activity. The last step managers need to multiply the unit cost of each resource group by the estimated time of the activities (Porter and Lee 2013). Features TDABC has some major features in the cost accounting and all they are discussed below: The process of TDABC makes it easier in assigning the cost of different manufacturing activities of the organizational accountants. It is because TDABC takes less time in working than other costing approaches. Organizational managers can easily do the integration of TDABC with the existing Enterprise Resource Planning (ERP) system of the organizations that has a positive impact on the manufacturing process (Emblemsvg and Bras 2012). The implementation of TDABC assists the production managers in the easy and accurate generation of month production report. Under TDABC, the organizational managers become in full utilization of the production or manufacturing capacity of the companies and it makes TDABC more efficient than other costing system. With the implementation of TDABC in the organizations, managers become to forecast the demand of resources in an effective manner (Raeesi and Amini 2013). Managers can bring positive changes in the existing costing model with the help of TDABC and it does not require large expenditure. In the presence of TDABC, organizational managers become able to possess small but crucial information for solving different kinds of manufacturing related problems in the companies. Most importantly, the implementation process of TDABC in the manufacturing firms needs complying with simple steps. IN addition, TDABC can be implemented in any kind of organization irrespective of size of the companies. These are the major features of TDABC (Kaplan et al. 2014). Differences Many differences can be seen between TDABC with ABC and traditional costing method. The following discussion shows the difference of TDABC with other two major costing methods: Differences between TDABC and ABC The incorporation of ABC was done as a reply of American accounting standards inaccurate method of cost accounting. The main area that ABC deals with is related with what the organizational managers have done in cost accounting rather that what they have spent (Tsai et al. 2012). At the same time, the technique of TDABC involves in the identification of each departments production capacity and for making the allocation of these costs of resource group for the achievement of cost objectives based on the time required for performing each cost activity. Under the techniques of TDABC, one can identify a number of cost drivers and cost pool in the production process. Cost pool refers to the total cost associated with a particular production activity and cost driver refers to a feature of ABC affecting the performance and cost of the production activities (Langmaak et al. 2013). In case of the decline in the demand of work in any production department, the strategies of TDABC assists the o rganizational managers in the estimation of required quality of the resources released. Thus, with the help of time equation, TDABC has the ability to capture the characteristics of cost activities. The processes of TDABC helps in the managers to assign the indirect costs with various cost activities and cost objectives. At the same time, cost drivers provide assistance in the allocation of indirect resource expenses among the organizational cost activities. Moreover, different techniques of TDABC provide help in cost and time assignment according to the objectives of each activity. Apart from this, TDABC and ABC follows different six steps for the cost computation (zkan and Karaibrahimo?lu 2013). Thus, the above discussion indicates towards the existence of major differences between TDABC and ABC. Differences between TDABC and Traditional Costing Approach One of the major differences between TDABC and traditional costing is the lack of simplicity. The costing approach of traditional costing is easy and simple where TDABC operates in a complex way. Under the approach of traditional costing, a requirement of cost objective and used up resources can be seen for the purpose to evaluate different cost activities (Weygandt, Kimmel and Kieso 2015). However, the situation is different in case of TDABC as different cost activities have dependency on used activities for achieving the cost objective. It has been seen that the companies with large amount of overheads and large number of miscellaneous products have the tendency of the adoption of TDABC and it is adopted out of the requirement of effective and accurate method for managing the production costs. Under the techniques of traditional costing method, organizational managers use to use single overhead pools and they are unable for the accurate and true calculation of manufacturing costs ( Laudon and Laudon 2016). Moreover, under the techniques of traditional costing, managers use to allocate cost objectives on random basis based machine hours or labor hours and this aspect differs in TDABC. TDABC wants the inclusion of identifiable products; but traditional costing requires the inclusion of different expenses like salaries, depreciation and many others. Under traditional costing approach, managers calculate the total cost of production after the ending of the whole production process. However, in case of TDABC, feedbacks of the customers are used for the determination of total cost of production. Most importantly, it has been seen that the implementation of TDABC helps the organizational managers in the reduction of cost of production so that profitability can be maximized (Cooper 2017). Hence, the above discussion is the evidence that there are clear differences between TDABC and traditional costing approach. Analysis of the Suitability of TDABC in Client Firm The above discussion shades light on different factors of TDABC like features, definitions and differences. Now, it is required to determine whether Australian Paper Pty Ltd should adopt TDABC in their production process or not. The following discussion shows the reasons for suitability of TDABC in the company: The implementation of TDABC in the companies helps the managers in creating proper insight about various cost activities of the firms. It needs to be mentioned that this acquired information about the cost activities has essential part to play in the process of strategic decision- making process of the companies in order to bets run the manufacturing process. Moreover, the absence of TDABC make the managers unable to analyze the impact of individual activities on the profitability of the companies (McLaughlin et al. 2014). The implementation of TDABC in the manufacturing organizations makes the distinction possible between uses capacity and supplied capacity. The management of the companies can get effective insight about cost management with the process to calculate required time for continuing different activities and the process of connecting them with cost calculation. It helps in the effective use unused capacity. In addition, TDABC provides the companies with the idea about the places requiring additional workload (ker and Ad?gzel 2016). The functions of TDABC takes into consideration all the areas of enterprise resource planning that leads to the effective following of accurate costs from the order transactions. With the implementation of TDABC, managers can get effective insight about the processes of cost distribution to the customers so that profitability analysis relationship can be empowered (Akhavan, Ward and Bozic 2016). The implementation of TDABC plays an important role in right decision-making process of the organizations as TDABC makes it possible for the managers to identify complex business processes. The presence of TDABC plays an integral part for the opportunity cost identification so that the efficiency of the whole production process can be increased. Moreover, production capacity can be increased with the assistance of TDABC. In TDABC, it is possible for the update of the whole cost management model based on the company requirement. It can be observed from above that TDABC provides companies with many advantages. In case of Australian Paper Pty Ltd, the implementation of TDABC will increase the output from the production process as it will reduce the overall production cost. Moreover, TDABC will be majorly responsible for increasing the efficiency of the overall production process of Australian Paper Pty Ltd. Apart from this, in the presence of TDABC, the management of the company will be able to acquire effective insight regarding the nature of cost of the production process. The managers of Australian Paper Pty Ltd can integrate TDABC with other processes like ERP and others (Siguenza-Guzman et al. 2014). Conclusion As per the above discussion, it can be observed that the modern form of cost accounting is TDABC. Some of the important features of TDABC are the easy nature for assigning different cost activities, the easy integration with existing models like ERP and others. The above discussion highlights towards the difference of TDABC from traditional costing approach and ABC. The analysis proves the superiority of TDABC over ABC due to its flexibility to implement in any companies and companies having large amount of overheads and products. In addition, efficiency of TDABC can be seen over traditional costing approach in the allocation of total cost among the cost activities. The above discussion shows that TDABC helps the management of the companies in the strategic decision-making process and provides the managers with proper insight about various cost activities. Most importantly, the implementation of TDABC helps the managers in the reduction of overall production cost so that overall prof itability of the companies can be increases. Hence, based on the whole study, it can be concluded that the implementation of TDABC in Australian Paper Pty Ltd will be suitable for the production operation of the company. References Akhavan, S., Ward, L. and Bozic, K.J., 2016. Time-driven activity-based costing more accurately reflects costs in arthroplasty surgery.Clinical Orthopaedics and Related Research,474(1), pp.8-15. Australian Paper. (2018).What we do - Australian Paper. [online] Available at: https://www.australianpaper.com.au/about-us/what-we-do/ [Accessed 21 Jan. 2018]. Christ, K.L. and Burritt, R.L., 2015. 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