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2
TASK 1.
Critically assess whether SMA may give an economic advantage by supporting Strategic
Roslenders (2003), defines strategic management accounting as" an approach to accounting for
strategic purpose, which is Cleary defined by an attempt by the firm to integrate insights from
management accounting is related to the provisions and use of accounting information by people
in the organization-organization such as the management and the managers, to make business
decisions that would allow them to have a competitive advantage and able to effectively control
Strategic management accounting is considered both financial and non-financial, and it is often
used for the purpose such as making of decisions, execution of judgments and controlling of
choices to ensure it does not go beyond the boundary of such decision. Specifically, the
globally by:
Small and medium-sized enterprises (SMEs) are said to be the most important sector of a
nation’s economy based on their perceived and actual contribution to economic growth and
national development.
SMEs provide and create jobs; they harness individual creative effort especially during the time
of economic recession, and they generate competition and are the seedbed for businesses of the
future, and they keep a nation on a financial advantage. They are also the source of business
It helps the managers to" ascertain the success or failure of the firm and also acts as an indicator
SMA plays a significant role in providing information to investors and other potential
entrepreneurs in the nation and hence influencing the economic advantage of the country.
This is through the introduction of the quotas and tariffs.This will work towards improving the
current accounts to surplus and hence will lead to the raising of the living standards of the
The managers in strategic management accounting predict the future and hence usually provides
for the advance in technology. This keeps the nation on a better side compared to countries
TASK 2
QUESTION A
The target cost and the cost gap that needs to be closed
Solutions
Product costs $
D.Material xxx
D.Labour xxx
Xxx
PRODUCT COST $
5
DIRECT MATERIAL
11.97
DIRECT LABOUR
Silk paper
3.50=100sheets
? =120 =4.2
Colours
Overhead calculation
II
Is; 21.88-20=1.88$
Question 2 B
"This method is used when no previous records of costs exist. It is a very specific method that
goes into the nitty-gritty of what constitutes a product in terms of how much material or how
much labour. From this, a suitable level of activity can be determined. The result of the direct
observation of Physical quantities is then converted into a cost estimate. This approach can be
lengthy and expensive."(Cadez, S. (2002). It assimilates the element of motion study from the
"scientific theory of management. This method is based on a detailed study of each operation
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where the careful specification is made for Materials, labour and equipment necessary to produce
a product. It involves identifying the level of Input required of activity in the form of raw
material and labour, while total cost is based on the cost of each Input. This approach is
applicable where no past data exists. The main setback of the approach is that it requires a
complex analysis of all the constituents of activity and the requirements of an Activity in terms
QUESTION 2(c)
The target costing method works "backwards" from traditional cost‐plus methods and begins
with a targeted sales price for a product. This price is set based on what the customer is willing to
pay. It considers not only the preferred current selling price but also the later life cycle pattern of
prices. This technique has critical managerial implications. Examples of industries successfully
Continuous Improvement and Involvement When using target costing, the entire supply chain is
seen as have considerably spread. Every single work on its activity to minimize its costs, and
hence end up reducing the total overall cost of the final product/commodity
QUESTION 3
QUESTION 3A
9
Explain why the Financial Controller is suggesting that the use of the current "full cost-
The objective of the full-cost pricing method is to cover expenses and to derive a pre-determined
percentage of profit.
Some of the advantages of the current full price plus method is that; it is very cheap/economical
for decision making, full-cost pricing is the best while dealing with uncertainty and ignorance,
there is very minimal loss in export trade because all costs are fully recovered. Still, the price for
data collection can be avoided because all the costs data required for the calculation is available
with the exporting firm and the full-cost pricing is very simple in the calculation of the export.
Shortcomings
1. The full cost pricing method ignores the marginal cost and hence uses average cost instead.
2. In the full cost pricing method cost is seen as the only main factor influencing the price of the
commodity.it does not provide for some other non-financial factors influencing the price. The
full cost pricing should provide for those for those non-financial factors for example the
government policies which turns to be the main factor and still the forces of demand and supply.
3. The full cost pricing method is based on circular reasoning. This means that price determines
the quantity demanded; price charged is dependent upon cost per unit and the cost and whereby it
4. Full cost pricing method does not fully reflect the forces of competition. This means that this
method does not include the fact that competition influences price greatly. Competition is one
This is because different investors incurs defend cost in their production compared to other
Question 3b
Prepare a briefing paper which demonstrates the impact on the group’s financial
performance (after tax) and considers the potential reaction of the divisional managers, if
the proposal to change to a” marginal cost plus a lump sum “transfer pricing approach, is
implemented
A company's pricing strategy is never permanent. Business managers must continuously evaluate
their pricing plan and make adjustments to changes in consumer wants, competitor actions and
The positive financial performance after tax impact of marginal cost plus can be termed as the
following:
By a firm attracting extremely price sensitive customers with occasionally offerings of low
This will lead to a firm indicating higher profits and hence end up attracting many investors in
This is in a non-existing market; marginal cost pricing can be used to gain an entry initially. This
Most of the price-sensitive buyers can be easily enticed into the firm
3. Marginal cost-plus assists in eliminating excess inventory. This is because minimal cost plus
brings many customers into the firm, and hence this many buyers will assist in clearing the
inventory fast. The firms attain highest sales during this method
4. Marginal cost plus there are smooth fluctuations of demand. This is because if the
requirements slow down, a company can temporarily reduce prices to attract bargain hunters.
5. Stay price-competitive in the short-term. This is one of the crucial tools, mostly when
competitors lower their prices in an attempt to gain market share. The firm flexibility with cost
6. Marginal cost-plus method increase accessory sales. In very many cases, a company can sell a
product at a lower price and still earn more profits; this is mostly achieved by a company selling
The marginal cost-plus method cannot be sustainable for the long term. Company has to sell
enough products at sufficient price points to cover fixed expenses and produce a profit at some
1. If the marginal cost plus persist can be difficult to raise prices later .this is because the
consumers can come to expect lower prices and resist raising prices at alter date.
3. It is strictly based on variable costs and hence marginal cost pricing not considering
4. Marginal cost-plus sues not to build customer loyalty. This is because those customers
who take advantage of marginal cost prices are usually price-sensitive and will not
5. Marginal cost-plus may shift higher-paying customers; customers who used to paying
normal prices shift to the discounted price market and become reluctant to regular prices.
QUESTION 3C
Suggest an appropriate transfer price for googles to be used in the five future if the South
Korean division receives an order from a customer from outside the group for 1000 units at
Initial capital employed +annual unit’s purchased + maximum capacity-the total cost (variable
The appropriate transfer price=total costs-current transfer price initial capital employed
3450
QUESTION 4(A)
1) The concept of the multi-dimensional performance measurement model, but not limited
2) An explanation of the benefit and the problems, for sandcastle Diaries Ltd specifically,
Rising awareness about the shortcomings of measuring organizational achievement, mostly with
financial factors, has raised interest in many performance measurements and managerial systems
such as the balanced scorecard of the company. Moreso, the increasing strategic importance of
the surrounding and the social dimensions as well as the related performance metrics have
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raised great debates about further extensions, mostly referred to as the sustainability balanced
scorecard (SBSC). In the Gianni and Rosa manufacturing company much-related knowledge is
widely spread among the firm, we conduct very crucial research on the sustainability of the
balanced scorecard using both background information and firm analysis.gianna, and Rosa firms
should be highly driven by the profit they are gaining from the firm, the care they are to take for
the successfulness of the firm and set a good organization role for the success of the firm and a
better stand in the market. This will enhance the firm's defence against any firm threat mostly
been the competitors, accommodation in the society and the probation before its proper growth
Defence.
This is one of the greatest achievement of the firm adopting the balanced scorecard .the balanced
scorecard prevent the firm against all the externalities or any substantial threat it protects the firm
on the environmental integration .the environmental integration is mostly associated on the social
objectives of the firm for example by performing common social responsibility (CSR). It also
safeguards the firms on energy efficiency and the human resources generation
Accommodative.
A balanced scorecard becomes so accommodative in the society and even in the competitive
environment .it accommodates the advances in the technological environment easily. This makes
it sustainable and easy to provide in the market. The balanced scorecards necessitate the firms
and companies to breakeven very fast. Its efficiency in its operation leads to improvement in firm
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operations. In many advanced approaches, the balanced scorecard has integrated into social
Static
The balanced scorecard is more static and hence not providing room for any advancement to take
place.
Possible Limitations
Profit-driven
hence has no sense of the social welfare of the people. The flame or picture as societal unfriendly
because the main aim was profit UT would not work towards the good of the community and the
society.
The unfriendliness with the organization leads to improper treatment of the organization such as
environmental pollution through disposing of the waste gas in the air. The firm is only interested
in the breakeven of the firm and no other factors that may inhibit societal advancement.
not always linear and one-way, but are commonly a fuzzy mess of interactions and
interdependencies (Brignall 2002). These advocates also state that "companies aiming at higher
ambition levels of sustainability, particularly when sustainability becomes part of the product-
market mix, are overly constrained by the strict hierarchical architecture (van de Woerd and van
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den Brink 2004). Proponents of the care driven value system thus suggest a semi-hierarchical
architecture, where the top financial perspective is replaced either by a broader triple bottom line
perspective or by multiple top-level perspectives (e.g. a separate social/ environmental view next
to the economic outlook; -Systemic-driven (no hierarchy/network. "This end up to creating red
4B
ASSETS
NON-CURRENT ASSETSS135
RECEIVABLES 129
INVENTORY 142
INTEREST RECEIVABLE 45
PAYABLES 145
INTEREST PAYABLE -3
SHARE CAPITAL 19
REFERENCES
Bromwich, M. (1990). The case for strategic management accounting: The role of accounting
OrganizationsOrganizations, Society,
Bromwich, M., & Bhimani, A. (1989). Management accounting: Evolution not revolution.
of Management Accountants
Cinquini, L., & Tenucci, A. (2010). Strategic management accounting and business strategy: A
P. M. Hirsch, R. Friedman, and M. P. Koza, “Collaboration or paradigm shift? caveat emptor and
the risk of romance with economic models for strategy and policy research,”
E. H. Bowman and D. Hurry, “Strategy through the option lens: an integrated view of resource
vol. 18,