Thesis

Changes in the management accounting process from traditional business environment

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Course
Management accounting (ACCTING7014)

Institution
Cambridge University (CAM)

In the traditional business environment, management accounting process and the role of the management accountants therein emphasized on cost control and cost reduction. However, in the era of globalization where companies have to compete for survival in the global market environment, management acc...

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Uploaded on June 15, 2021
Number of pages 12
Written in 2019/2020
Type Thesis
Supervisor(s) Professor george
Year Unknown

management accounting
changes
role of management
accountants
modern
global business
environment
traditional
examine
cost control
cost
reduction
company
globalization

Institution
Cambridge University (CAM)
Education
accounting
Course
Management accounting (ACCTING7014)

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MANAGEMENT ACCOUNTING PROCESS 1

Changes in the Management Accounting Process from Traditional Business Environment to

Modern Era

Student’s Name

Institutional Affiliation

, MANAGEMENT ACCOUNTING PROCESS 2

Introduction

Towards the end of the 20th century and the onset of 21th century, there have been

tremendous changes in the corporate environment which has seen the development of new cost

accounting methods with the purpose of providing more information about management

concerning the effectiveness of specific activities, products, customers and projects. While

traditional cost accounting was due to the need for automation of production in the mid-20th

century and focused on manufacturing costs and management of manufacturing cost allocation

on both products and services, technological innovation, change in consumer preference and

global competition challenged businesses to find means of survival in the global market. This,

therefore, diminished the need for traditional cost accounting and as a result bore modern cost

accounting methods directed towards cost reduction and rationalization for companies to impact

market prices and also their costs, hence focusing on total costs in the entire product life cycle.

The paper will, therefore, therefore explain modern management accounting in the context of

cost accounting. It will discuss the digital economy and globalization and their effect on

management accounting while evaluating how the role of management accountants has changed

to adapt to the modern global business environment.

Traditional Cost Management and Theories

Costs of manufacture in the traditional costing systems were allotted to cost items

arbitrarily thus affecting the determination of product profitability. However, due to deficiencies

in the system, Activity Based Costing (ABC) was established with its primary objective being

providing accurate cost allocation and subsequent evaluation of product profitability

(Zimmerman & Yahya-Zadeh, 2011). ABC system took two main phases, with the first being

allocation of indirect costs to activity cost pools and the second phase is assigning indirect costs

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