Assignment #4

Implementing activity-based management in the banking industry is an article by McGuire, Brian

L, Kocakulah, Mehmet C, Wagers, Leonard G in which the writers explain the steps in which

Activity Based Costing can be successfully implemented in banking sector. They illustrated their

point with the specific example of MBI (Midwest banking, Inc). According to the writers, there

are some procedures adopted by MBI while implementing Activity Based Costing. The amounts

of bills to subsidiaries appear in main three accounts of general ledger. This entry has to be made

at bank level. This information is filled into a work sheet. After this, a software is employed to

calculate the respective profitability amounts of respective branches and they are, in turn,

allocated fees basing on the results of profitability analysis.

The illustration of the concept in this article shows the role which Activity Based Accounting can

play in the banking industry. Writers are successful in advocating the point that Activity Based

Accounting, if employed in banking sector, is able to provide timely and worthwhile information

which is needed by it in day to day business. However, the process of implementation may not be

that simple as writers have shown it to be. These are not easy steps which can be followed by any

bank without planning. The implementation of Activity Based Accounting is a major structural

change task which has to be planned very deliberately and money, time and effort have to be

utilized when doing so. In nutshell, article has rightly advocated that Activity Based Accounting

can play revolutionary role in banking sector.

Article: Implementing activity-based management in the banking industry; The Journal of

Bank Cost & Management Accounting , 1998 by McGuire, Brian L, Kocakulah, Mehmet C,

Wagers, Leonard G
Assignment #5

In this article, the writer explains the role of Just In Time production in the oil prices. According

to the writer, the refineries have reduced the storage of finished oil products in tanks. Rather,

they have adopted the strategy of keeping these products on the move, for example, in pipes or

trucks. This was planned keeping in view the fact that this will reduce the expenditures and will

reduce the oil prices. However, this has not happened and the main argument of the article is that

regional prices would have been more stable if there were some storage in shape of tank

reservoirs in the region. The major evidence which is brought in favor of this argument by the

writer is that the rise in prices is because of law of supply and demand. In the Just in time

manufacturing or production, the supply is reduced and resultantly, the prices go up. On the other

hand, if there is storage in the shape of tanks, the supply is stable which keeps the prices at level

also.

The writer has chosen the right example to bring out the major weakness of JIT (just in time)

production. However, two issues were not settled in the paper. First, the regional prices are

affected by number of factors not only tight supply due to less storage but also less number of

suppliers. Second, the global prices are reduced by JIT irrespective of regional prices and this

was not discussed by the writer. Overall, oil sector is an interesting area for discussion on

mechanism of JIT production.

Article: All in the timing, "Just-in-time" production and reformulated gas may synergize into higher prices at the
pump.By Sara Bongiorni, Business Report ,2004