SWA - Chapt 4

Louisiana State University **We aren't endorsed by this school
ACCT 620
Oct 15, 2023
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Annie Lee ACCT 620-50 SWA - Chapter 4 The first topic that can be recapped is activity-based management. There are a lot of benefits that come with activity-based management systems such as keeping pace with the technological changes, decrease costs that are associated with bad decisions, and taking advantage of reduced cost. As it represents a dynamic method of enhancing the efficacy and efficiency of an organization's operations, it is strongly tied to management accounting. ABM is used to locate, assess, and manage activities within an organization using data produced by management accounting systems. Activity based management supports management in making well-informed decisions regarding resource allocation, process optimization, and strategic planning by allocating costs to certain activities and comprehending their connections to products, services, or processes. This strategy is critical because it enables companies to identify areas of waste, reduce procedures, and concentrate resources on tasks that add the most value to the organization. In the end, ABM helps management accountants and decision-makers to match financial data with operational performance, enabling better decision-making, cost control, and overall competitiveness in today's changing company environment. As it comes to how this relates to Human Resources and my field, it is related because of its ability to enhance HR's strategic role within an organization. Activity based management enables HR professionals to analyze, allocate, and optimize human resource activities effectively. By identifying the activities that consume the most HR resources and understanding their impact on organizational objectives, HR can make data-driven decisions regarding
recruitment, training, and resource allocation. ABM also aids in evaluating the cost-effectiveness of HR initiatives, fostering better workforce planning, and aligning HR strategies with the overall goals of the organization. Additionally, it facilitates the measurement of employee engagement, satisfaction, and performance, allowing HR to create a more productive and engaged workforce. In essence, ABM empowers HR to be a strategic partner in achieving organizational success by optimizing the utilization of human resources and ensuring they are aligned with the broader business strategy. The second topic I would like to recap has to do with unallocated costs and what it is. Unallocated costs, also known as indirect costs or overhead expenses, are expenses incurred by a company that cannot be explicitly linked to a particular project, product, department, or activity. These expenditures include a variety of operational costs that are necessary for the operation of the company as a whole but are difficult to categorize into one cost center, such as rent, utilities, administrative wages, and general office supplies. Unallocated expenses are significant because they affect profitability analysis, decision-making within an organization, and the precise computation of product or service costs. Businesses can more accurately comprehend their cost structure, determine the profitability of different product lines or initiatives, and efficiently manage their resources by correctly identifying and distributing these costs. Businesses can improve their overall efficiency and competitiveness by accurately identifying and allocating these costs so that they can better understand their cost structure, set fair prices, assess the profitability of various product lines or projects, and manage their resources.
The last topic I would like to recap is the cost management system. An efficient way for firms to plan, manage, and track their spending is through the use of a cost management system. This system includes a number of processes, such as cost allocation, cost analysis, and performance measurement. In order to ensure that resources are spent efficiently and in line with strategic objectives, it helps organizations to track and manage their expenses across many departments, projects, or products. Cost management is essential because it aids organizations in maintaining profitability, maximizing resource utilization, finding cost-cutting options, and making wise choices regarding pricing, product development, and resource use. Additionally, it offers useful insights into cost patterns and cost drivers, enabling businesses to adjust to shifting market conditions and maintain competitiveness in their specific markets. In the end, a properly executed cost management system is crucial to many organizations.
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