Discuss about the Adacel Technologies Ltd Abc System Recommendation Report.
The following is a detailed recommendation report for Adacel Technologies Ltd on the need to incorporate ABC system as a management accounting tool to use by its management team. Given the complexity of this software and service company, the report is in devoured to give a vivid description of what ABC system entails its impact on Adacel’s seamless growth through alignment with its goals such as projection to outdo their competitors through continual development of hi-tech products and services. This ABC system recommendation report is geared at explaining the positive impact of ABC system on Adacel’s corporate strategies, how the system will align with company’s mission and objectives and how the order shall be a driving force to realizing Adacel’s company strategies.
Adacel is a software and services company, which produces high tech simulation and training solutions, speech recognition applications and operational traffic management systems. Globally its products and services have gained an excellent reputation through inherent devotion to technological leadership and customer support. It develops simulation and training systems for military and commercial use based on higher standards of deployment to the training environment. It is presumably a leading supplier of traffic control simulators (ATC) for both primary and advanced ATC training alongside research and modelling of air traffic procedures. It is made up of aviation phraseology proficiency training, automated ATC environments for flight simulator training and security operation training simulation systems (Kaplan and Anderson 2003). The company trains airport drivers and produces tactical voice applications used by police. Its systems are rapidly deployable systems, and they stretch from high definition simulators to smaller.
The company has pioneered the integration of speech recognition into simulation products, has patents on application to optimize speech processing, and has been involved in serious games and operational systems with many systems being available in many of Adacel’s systems and present for integration into third-party products using Adacel’s Lexix SDK and Lexix Dialogue Editor (Granof, Platt and Vaysman 2000). The company is also a world leader in real-time and satellite-based air traffic management automation solutions among other services like automated conflict detection, four D profile protection available through its Aurora capabilities. Adacel is renowned and recognized as the leader in its entire field evident by many top industries awards it has won for innovation and program excellence over the many years of its existence.
Activity-based costing (ABC) model can be described as a methodology that allocates overhead more precisely to the item that utilizes it. The system can be used to recognize the relationship between products, costs and various activities; and via this relationship, the system assigns ancillary values to products of choice in the more arbitrary manner than customary methods. The ABC system operates optimally in multifaceted environments, where various machines, products, and intertwined processes are hard to restructure (Karpov 2015). Consequently, the system is less applicable in the situation where methods of production are abridged. Activity-based costing can be best explained through the following chronological steps that form its process flow.
They include identifying costs. Here, we identify values that we would like to allocate. This is the right step in the whole process since no time should be wasted with ambiguously broad project scope; Loading of secondary cost pools. The step entails merely creating cost pools for costs incurred while providing other sections of the company with services, contrary to promoting company’s products or services directly. Secondary price includes typically administrative salaries, computer services and related costs; Loading of primary cost pools (Srinivasan 2012). Here, we create cost pools for expenses that are more closely related to the production of goods or services.
Consequently, other features are measuring of activity drivers. Using a data collection system, information about activity drivers is collected which is later used to allocate the costs in secondary cost pools and to primary cost pools, and then allocating primary cost pools to cost objects and Allocating costs in secondary pools to secondary pools. Here we use activity drivers to assign secondary cost pools costs to primary cost pools (Monroy, Nasiri and Peláez 2014). Charging of costs to cost objects. Activity driver is used to allocating contents of every central cost pool to cost objectives. Reports formulation. Results of an ABC system are converted into reports to aid management intake and make decisions.
Improvement on acquiring action on the information. Here the apparent management reaction to ABC model report is reducing the number of activity drivers utilized by each cost objects. As a result, reducing the number of overhead costs employed. The prime goal of ABC system is to determine how overhead is used (Tsai and Hsu 2010). Consequently, by having ABC system, you bring on board its three primary objectives, namely; Rectification of inaccurate cost information, Allocation of the overheads on the activity basis, to aid management take quality and timely decisions.
Division of the total cost into two, i.e. fixed and the variable value was providing vital to quality information provision to designing sustainable cost system in a manufacturing case. Making of proper distinction between patterns of cost behaviors (Mohammed 2011). The designs of the cost behavior are diversity-related, events related, time-related and volume related. To find the overhead effect of a product, identification of appropriate cost driver made, the cost drivers dictate cost behavior patterns.
The company is endeavored to apply the knowledge of their customers and the expertise. Their main aim is to make the company choice for advanced air traffic systems and training products. Through ABC system, the profitability of the customers will be enhanced. The system will help sort through additional overhead components incurred by individual customers, which in turn could help determine customers who help you make realizable profits. Adacel is determined to combine its core competencies with innovative technologies to drive growth in new public safety domains (Salem and Mazhar 2010). ABC system can be used to identify products margins of various product lines, products and subsidiaries provided the system be allocated with proper overhead aiding in making the useful decision of where company resources can be positioned to gunner more significant margins.
Adacel is resolute to understanding the importance of its products and the direct impact their use has ion public safety, responsibility reflected in the quality of everything they do. Using ABC system, Adacel will solve the riddle of make or buy preferring the latter, which looks forward to the in-house manufacture of their products eliminating the cost of items outsourced. Adacel envisages challenging the status quo and offering industry-redefining products in the market where they can know the can be successful (Terungwa 2012). Distribution cost. Using ABC system, decisions can be made to counter channels of distribution that the company uses to sell its products (e.g. distributors, mail order catalogues etc.) or even do away with nonprofit able channels.
Lastly, Adacel dedication to every customer’s success to act with integrity, consistency and honesty embracing their cultural diversity and working as a unit. Using ABC system, you can track the cost of activities and thus decide whether the values align with the industry projected standards. If not, ABC through its feedback mechanism will help measure the ongoing cost of various specific services as management team project to reducing cost (Terzioglu 2012). Corporate strategies entail a clear long-term vision set by organizations aiming to establish corporate value and rejuvenate the labor force to implement the proper steps and actions to achieving customer satisfaction. Based on a continuous process, which commands constant effort to engage potential investors entrusting the company with their financial power hence increasing the company’s equity.
Adacel corporate strategies broadly fall between these two primary corporative strategies; Cost leadership. Two major policy implemented by organizations by providing their products or services at a low cost as much as consumers are willing to pay thereby exercising competition and realizing vast of sales which allows them to top in the industry (Testa, Iraldo, Frey and O’Connor 2011). ABC system is a good determiner of which overhead costs ought to be included in minimum expenses depending upon the circumstances under which a product has to be solved. Product differentiation. Adacel understands the importance of its products and the direct impact their product use has on the public hence it has made an effort to distinguish its products from any similar products through its responsibilities reflected in the quality in everything they do as clearly state in their company mission.
The following are the Adacel corporate strategies through which their implementation has a competitive edge. Through Application of experts to their team and customer knowledge. Through its accounting managerial expertise with the help of the ABC system, they can see and project where vital costs occur and what leads to their achievement. Adacel technologies strategy to work as a team through effective communication, trust and respect for each other in conjunction of ABC system, they can identify the weak product lines and accurate costs, where ABC plays the role of increasing their organizational efficiency and profitability
Basing on the fact that Adacel Technology Limited is a complex industry and deals with diverse products ABC system is necessary go for the system for a rapidly growing firm like it. ABC system is a powerful tool for decision-making purposes; it can be recommended based on the following grounds: ABC will increase the operational performance by allocating overhead costs basing on the actual consumption of Adacel products and services by each activity as self-advertised by the company. ABC system shall help the top management team, i.e. CEO and senior managers to reckon where the most significant costs occur as well as what provides them hence prompting them to make sound financial decisions pertaining their company (Torres 2014). ABC being a management accounting tool, through its implementation the system shall oversee decisions about improving pricing, product designing, marketing and product diversification can be implemented more efficiently. ABC system could be highly recommended for Adacel company as it will help it marketers in three ways. The tool shall result in cost estimations to use in pricing. It will guide industrial marketers to adjust in negotiations. As a result, yielding realizable cost reductions. Indicating areas for dire need for change in operations to pave room for cost reductions that will help the company to satisfy their customers’ wishes better (Elhamma and Zhang 2013).
ABC is one of the management accounting tools there are some other management accounting tools, which are techniques, or practices that qualifies accountant’s use in producing sensible and well-structured information (Wood 2004). A model such as Balance Scorecard (BSC) can be used to measure the performance of Adacel Technologies Ltd as the model is aimed at ensuring financial and non-financial goals are considered to prevent management in engaging in suboptimal practices that may negatively affect the organization in the long term.
Conclusion
Generally, it is evident that accounting management tools such as Balance Scorecard (BSC), BCG matrix, ABC system among others can be used to achieve company’s accounting goals and helps solve overhead technicalities that may befall a complex company like Adacel. To be more specific, ABC model stands out as the best model for Adacel technologies evident by its vas advantages such as aiding sales managers to project actions that yield profits to the company and activities that optimally cultivate those actions; among many other elaborated alignments of the ABC system to company goals, mission and objectives. ABC system implementation follows easy chronological steps with each step accomplishing essential milestones by the company’s management culture or vision. ABC system has clearly defined objectives, and it is easy to deduce the trail in which the order shall lead Adacel Technologies when critical business decisions are discussed and envisaged by the relevant authorities. (I.e. CEO and senior managers).Lastly, the ABC system stands out among many known models for Adacel as in the mission of the company; they are determined to produce status-quo products for the success of their customers, a pillar greatly supported by the ABC model as discussed.
Reference
Elhamma, A. and Zhang, Y.I., 2013. The relationship between activities based costing, business strategy and performance in Moroccan enterprises. Accounting and Management Information Systems, 12(1), p.22.
Granof, M.H., Platt, D.E. and Vaysman, I., 2000. Using activity-based costing to manage more effectively. PricewaterhouseCoopers Endowment for the Business of Government.
Kaplan, R. and Anderson, S., 2003. Time-driven activity-based costing. PricewaterhouseCoopers Endowment for the Business of Government.
Karpov, S., 2015. ABC-model for interpretation of internal quantum efficiency and its droop in III-nitride LEDs: a review. Optical and Quantum Electronics, 47(6), pp.1293-1303.
Mohammed, I.A., 2011. The Practicability of Activity Based-Costing in Nigeria: A Case of GOFCECON Limited.
Monroy, C.R., Nasiri, A. and Peláez, M.Á., 2014. Activity Based Costing, Time-Driven Activity-Based Costing and Lean Accounting: Differences among three accounting systems’ approach to manufacturing. In Annals of Industrial Engineering 2012 (pp. 11-17). Springer, London.
Salem, M.S.E. and Mazhar, S., 2010. The Benefits of the Application of Activity Based Cost System-Field Study on Manufacturing Companies Operating In Allahabad City–India. OSR Journal of Business and Management, 16(11).
Srinivasan, M.M., 2012. Building lean supply chains with the theory of constraints. New York, NY: McGraw-Hill.
Terungwa, A., 2012. Time-driven activity-based costing and effective business management: evidence from benue state, Nigeria. The Business & Management Review, 3(1), p.292.
Terzioglu, B., 2012. Intricacies of overhead cost allocations and distortion in costing: A synthesis of the literature. ASIA-PACIFIC MANAGEMENT ACCOUNTING.
Testa, F., Iraldo, F., Frey, M. and O’Connor, R., 2011. Life cycle costing, a view of potential applications: from cost management tool to eco-efficiency measurement. In Supply chain management. InTech.
Torres, R., 2014. The effect of current activity-based costing (ABC) implementation in Eskom’s finance field (Doctoral dissertation, University of the Free State).
Tsai, W.H. and Hsu, W., 2010. A novel hybrid model based on DEMATEL and ANP for selecting cost of quality model development. Total Quality Management, 21(4), pp.439-456.
Wood, A., 2004. High-tech sims enter real, of air traffic controller training. Aviation International News.
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download