BUS103 Accounting for Managers-The Management System of Plant

Big Business Tobacco (BBT) is a large Australian producer of tobacco products including a market-leader brand of cigarettes. With the continuing development of Asian countries such as China and its move to a market-based economy, the company has made the decision to sell its cigarettes in this large market from the beginning of next month. The cigarettes will be sold in packs of 40.

Mary Bender, the marketing manager, is discussing the design of the cigarette packet for the Asian market with Randall Hedges, the company’s public relations manager. Having agreed on the basic design of the pack, Hedges raised the issue of whether to include the normal health warning on the pack, which has to be displayed under Australian law. He emphasised recent medical findings which predicted many hundreds of thousands of deaths from cigarette smoking in the next few years, particularly in the developing countries.

Mary Bender was strongly opposed to including a ‘health hazard’ warning on the packs destined for parts of the Asian market. She explained: ‘In this business, it is the bottom line (i.e. profits) which matters — we have to think of our shareholders. BBT stands to lose a considerable market share to competitors if it includes such a warning. Besides,it is not a legal requirement in many Asian countries to display a health warning on cigarette packs. If Asian law is subsequently amended, then we will be one of the first to comply. Besides, the managing director supports me on this one.’ Hedges expressed a final opinion: ‘The company could be better off in the long term by being seen to be acting with corporate responsibility, and demonstrating some concern for its consumers. Besides, such warnings have not been detrimental to the company’s performance in Australia, where health warnings have been common for many years.’

Required:
A. Who are the major stakeholders in the debate on the health warnings on cigarette packs
B. What are the main ethical issues involved in the debate
C. If you were Randall Hedges, what would you do

Financial accounting statements tend to reflect past events. In view of this, how can they help a user make a decision when decisions, by their very nature, can only be made about future actions? Give an example to justify/support your answer.

A. As a new management accountant, reply to this comment by a plant manager: ‘No “bean counter” knows enough about my responsibilities to be of any use to me. As I see it, our accountants may be needed to keep records for shareholders and the Australian Tax Office, but I don’t want them sticking their noses in my day-to-day operations.’ (Word limit: 500 words)
B. ‘Knowledge of technical issues such as computer technology is a necessary but not a sufficient condition to becoming a successful management accountant.’ Do you agree Explain your answer. (Word limit: 250 words)

The following information is available for James Bond Ltd for years 2010 to 2015.
2010 2011 2012 2013 2014 2015

Cash $ 5,200 (3) $ 5,800 $4,200 $1,700 $3,000
Accounts receivable 1,600 100 (5) 4,200 7,600 2,200
Inventory 2,800 7,300 8,400 9,900 (11) 8,700
Prepayments 300 2,000 8,500 (8) 8,100 2,600
Total current assets $9,900 (4) (6) (9) (12) $16,500

Accounts payable $1,800 $8,500 $5,800 $4,700 $8,900 (14)
Accrued liabilities 2,000 2,000 3,400 5,700 1,600 4,000
Wages payable 1,500 5,200 2,200 5,600 9,100 7,900
Total current liabilities $5,300 $15,700 $11,400 $16,000 $19,600 (15)

Current ratio (1) 1.07 (7) 1.76 1.09 (16)
Quick ratio (2) 0.48 1.31 (10) (13) 0.26

Required
A. Find all the missing amounts/ratios. Provide all workings. 
B. Write a short memo (max 2050 words) analysis the two ratios identified above summarising the reasons why these ratios have changed and whether the management of James Bond Ltd should be concerned about any possible adverse consequences. 

The new management must reply to the comment of the plant manager with regard to the responsibilities related to the operations and functions of the plant manager.  The reply must consider the following points:

 The plant manager needs to make a variety of decisions that will prove to be resource and not burden and thus, the manager has to have an effective process of decision making progress. The manager is also responsible in saving and using the time and resources in an optimum manner. The plant manager along with the accountants needs to view the plant and record the day to day operations and activities for efficiency and effectiveness in the management system.

As a plant manager one needs to attain and have a good knowledge and awareness about the technical related aspects and features of the plant and the overall system. The background keeping is required to be done and the same will require the involvement of more time being spend on the recording of the operations (Kaplan 2015).  

The plant manager must include the activities in efficient and effective manner that include the following:

• Preparation of budgets and other forecasting data of the operations and functions
• The situations and scenarios must be analyzed and evaluated to know the problems and the various aspects related to the financial and non financial factors of the problems
• The requests of the capital budgets must also be submitted and the same must be reviewed in short intervals (Simons 2013)

Being a plant manager, the manager must also check that the reports prepared by the accountants and other heads on the basis of the records passed by the plant manager is true and fair in reporting. The manager must include the variety of skills like the following:

• The skills of interpersonal nature that is the ability to communicate and connect with the employees, managers of the department and the senior management.
• The plant managers also have to be efficient in the leadership skills that will help in the motivation of the employees and in keeping the operations and functions apt towards running in a smooth and effective manner.
• As a plant managers, there must be ascertainment in a fast pace for the ascertainment of the situations for solving and taking the decisions. The defects and the other problems must be determined in the line of production for effectiveness in the overall system of production and management.
• The deadline of the managers must be managed along with the dates of departure or shipping and must have a proper management and in an appropriate manner.

Every manager at every level need to report and maintain the records in an effective manner hence, the contention of the plant manager is incorrect. He has to keep account unlike other accountants and has to keep the reporting updated. He has to face every questions and queries related to the operations and the functions of the department and thus, he can’t say that one cannot stick their noses in the day to day operations (Ward 2013).

The management has to be competitive and updated and they have to embrace the knowledge and awareness about the required information. The allocation of the process must be done and the success must be done in strategic manner.  The process must include the capturing, dissemination of the information, coding, attaining of latest competencies and the same can be done through proper development and having a re-engineering within the processes of the business organization and enterprise. The modern day trends require the realization of the potential worth and knowledge of the technological aspects that may lead to a exploitation of the overall process in the system of the company (Bodie 2013).

The knowledge management systems have been incorporated in the companies and the same can allow the prevention of the problems and the improvement in the working of the daily operations and functions in the enterprise. The enterprise must work on the improvement on the manual and technical skills equally as the mental capability and proficiency is must. The technical aspects in an organization can face failures abruptly and of undue nature but the mental and physical aspects can never be affected by any harmful competitive and other forces and pressure (Parker  2012).

Thus based on the above analysis it can be evaluated and said that the knowledge is being displaced and replaced with the resources of the nature, capital, and edges of competition and learning capacities. Even though the same has been replaced, there is a requirement of being updated mentally too along with the technological expertise.

References

Bodie, Z., 2013. Investments. McGraw-Hill.

Fullerton, R.R., Kennedy, F.A. and Widener, S.K., 2013. Management accounting and control practices in a lean manufacturing environment. Accounting, Organizations and Society, 38(1), pp.50-71.

Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.

Parker, L.D., 2012. Qualitative management accounting research: Assessing deliverables and relevance. Critical perspectives on accounting, 23(1), pp.54-70.

Simons, R., 2013. Performance Measurement and Control Systems for Implementing Strategy Text and Cases: Pearson New International Edition. Pearson Higher Ed.

Ward, K., 2012. Strategic management accounting. Routledge.