UoM Week 6 Managerial Accounting Discussion

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Link to chapters https://saylordotorg.github.io/text_managerial-acc…Based on the materials presented in Chapters 10 and 11, complete the following:1. Pick one concept from Chapter 10 and another concept from Chapter 11. Based on the two concepts you picked, produce a lecture video using Power Point. Explain the PowerPoint using your own voice. You lecture video should contain at least 10 slides. Provide numerical example(s) to support your explanations. This lecture video is your main post. 2. Review at least two of your classmates’ lecture videos. Write a critical analysis of the videos you reviewed. – Write Additional 3 response posts in atleast 150 words each ( I will be sending my classmates main post so you can repond to them)

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Week 6 Discussion Forum
Krishna Chathiri
Managerial Accounting
Campbellsville University
▪ When it comes to accounting, decentralized has become a popular
option for businesses of all sizes.
▪ Isolation-breaking decentralization has various branches and divisions
Decentralization
in order to help companies grow (Pollard, 2014).
▪ The vast majority of government agencies may rely on firms, who are
able to choose their own working methods, in order to clearly control
its devices.
▪ Instead of focusing on making decisions
Investigation of the
effectiveness of
decentralization
which can be stopped with authority, the
corporations have more obligations
distributed throughout their many levels
of management (Yew, 1995).
▪ It is possible for organisations to
decentralize with issues within project
components and individual contributions
to take on broader duties by spreading
those obligations out.
▪ Decision-making in a fast
▪ Expansions are straightforward.
Advantages of
Decentralization
▪ Controlling and supervising more
effectively (Pollard, 2014).
▪ Top executives will be relieved.
▪ Growth via a variety of means.
▪ Costlier because of the lack of collaboration.
Disadvantages of
Decentralization
▪ The absence of a commanding presence (Pollard, 2014).
▪ Depending on the subordinates’ ability
▪ Inability to make a choice Uniformity
▪ Cost centers are often used to
Cost Variance Analysis
analyze the variance analysis
costs. Such expenses may be
controlled by components of
an organisation, but not
revenues or investments.
▪ Examples include production,
accounting, and finance
departments.
Numerical
Example
▪ Everything is described in
the example in terms of
standard quantities, material
prices, and budget
variations.
▪ Recognizing problems with the
budget
▪ Issues with revenue or expenses
Advantages of
Variance
Analysis
▪ Needed major adjustments to
company plans (Yew,1995).
▪ Making a list of all the
management problems
▪ Making a list of potential
criminal offences
Disadvantages
of variance
analysis
▪ Delays in reporting behavioral issues in the workplace
▪ Assumed Obligation
▪ Problems with Performance
Yew, M. C. (1995). Decentralization, Management Accounting
System (Mas) Information Characteristics: A Singapore
Study. Journal of Business Finance & Accounting, 22(6),
811–830. https://doi.org/10.1111/j.14685957.1995.tb00390.
References
Pollard, W. B. (2014). An Active Learning Approach to Teaching
Variance Analysis to Accounting Students. E-Journal of
Business Education and Scholarship of Teaching, 8(2),
69–75.
Week 6 Discussion
By
Avinash Penumallu
Chapter 10: Cost Variance Analysis
• Cost Variance Analysis is one of the control system designed to
control, identify and detect the variances from expected levels.
• Variance Analysis helps in analyzing the difference between the actual
and planned numbers. It gives the variances of overall performance
under a particular time period.
Steps in Cost Variance Analysis
1. Identify and Calculate the difference between actual cost and
planed cost.
2. Identify the reasons for the difference between the cost levels.
3. Reporting the information to Management
4. Take necessary corrective actions on planned cost to make it closer
to actual cost
Approaches in Cost Variance Analysis
• Volume Variance: This is the type of variance identified when there is
a change in volume of services or goods.
• Price Variance: This is the type of variance identified when there is a
change in difference between the price between actual cost and
planned cost.
Cost Variance Analysis in Budgeting
• Cost Variance Analysis is an important aspect in Budgeting. This
Budgeting technique helps the all the financial analysts of the
management to plan the operations of the businesses on how much
budget allocation can be done to each operation of business.
• Cost Variance Analysis can be implemented in the business where
high price cost are raised constantly.
Conclusion on Variance Analysis
• There were different Variance analysis calculated during budgeting
like Materials Variance, Labor Variance and Fixed Overhead Variance.
All these Variance Analysis results will be reviewed by the
management and budgeting decisions will be taken.
• All the Variance helps the management to get details on company
performance, efficiency, price variance, Quantity Variance, Rate
variance and management will focus on improving the company
efficiency with help of Variance Analysis.
Chapter 11: Decentralized Organizations
• Decentralization plays an important part in every business.
Decentralization approach is a process of delegating decisions
regarding operations by top management to middle and lower-level
managers and team members.
• Decentralized helps in making the decision process quicker and
effective. Decentralization approach helps businesses to improve
efficiency of the operations.
Decentralized Organization
• The main goal behind Decentralized Organization is to give
responsibility to those who have best knowledge on all operations of
business and close to key stakeholders in taking decisions.
• In Decentralized organization, lower and middle level mangers have
power to make decisions and authority, or power is given to those
who are close to key stakeholders in business and decentralized
process is faster and improve efficiency and more creativity.
Advantages of Decentralized Organization
• Organizations can work independently without the top management
when the top management took vacation or when they away from
work.
• This improves innovative skills since team members will be part of
decision-making and create new ideas through this process.
• This approach helps in strengthening Leadership skills. This allows
middle and lower-level managers to make key decisions regarding
business operations.
Decentralized Organizational Structure
To be successful in the Market, businesses need to adapt to changes
occurring in the outside of the organization and make company
adaptable to new changes in innovation and this approach helps to
adapt to changes quickly.
In decentralized approach, it’s a little bit easier for the company to
adopt to new changes in the operational business of the organization
and in making employees to adapt to these changes quickly which
helps to improve the product efficiency and profits to the organization
Characteristics of Decentralized Organization
• Decentralized is known as bottom-up approach process. The decisions
taken are detail and democratic oriented and every decision taken
was keenly discussed and reviewed before taking it.
• There is low risk to product and process since each step-in product
and process are reviewed in all stages and there by producing good
and effective products releasing into the Market.
References
• Accounting Tools. (2021). Cost variance analysis definition. Retrieved
from https://www.accountingtools.com/articles/what-is-costvariance-analysis.html
• CFI. (2022). Variance Analysis. Retrieved from
https://corporatefinanceinstitute.com/resources/knowledge/accounti
ng/variance-analysis/
References
• Wooll, M. (2021). What are decentralized organizations? Retrieved
from https://www.betterup.com/blog/decentralization-inmanagement
• Griffin, D. (2021). Decentralized Organizational Structure.
Retrieved from
https://smallbusiness.chron.com/decentralizedorganizational-structure-3802.html
ACC60180G421
Managerial Accounting
Cynthia Chintha
Campbellsville University
Performance
evaluation in
Decentralized
Organizations
What’s the difference
between centralized
and decentralized
organizations?
For a decentralized
organization, there
are three distinct
areas of responsibility
Cost Center
Profit Center
Investment Center
Segmented income
Different
methods to
evaluate
performance
• Return on Investment (ROI)
• Residual Income (RI)
• Economic Value Added (EVA)
Return on
Investment
(ROI) for
evaluating
performance
• When it comes to calculating ROI, what is it
and how do you achieve it?
• Return on Investment (ROI):Average
Operating Assets as Measured by Operating
Income.
• The drawbacks of a return on investment.
• How ROI is Calculated:
• The Net Book Value (NBV)Using the Gross
Book Value as a measure of quality
Residual
Income (RI)
for
evaluating
performance
• What is RI and how do you calculate it?
• Cons of RI
Economic
Value Added
(EVA) for
evaluating
performance
• When it comes to calculating EVA, how do
you go about it?
• EVA and RI have two key differences when it
comes to calculating EVA:
• Adjusted gross profit margin.
• Average operational assets as though they
had been adjusted
Statement of
Cash Flows
• What is a cash flow statement?
• What is the purpose of a cash flow
statement?
• Increased the amount of cash flow
information available to management?
Types of cash
flow
activities
• There are three different types of cash flow
activities:
• Investing activities
• Financing activities
• Operating activities
References
1. Saylor Academy. (2012). Chapter 11 How do Managers evaluate performance in
decentralized organizations? How Do Managers Evaluate Performance in Decentralized
Organizations? Retrieved September 10, 2021, from
https://saylordotorg.github.io/text_managerial-accounting/s15-how-do-managersevaluate-perfo.html.
2. Saylor Academy. (2012). Chapter 12 How is the statement of cash Flows prepared and
used? How Is the Statement of Cash Flows Prepared and Used? Retrieved September
10, 2021, from https://saylordotorg.github.io/text_managerial-accounting/s16-how-isthe-statement-of-cash-f.html.

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