HI5017 Managerial Accounting Reflective Journal Online Tutoring

Introduction

Any academic course is a journey where the goal is not just completing the course, but learning from it as I think learning as a journey is not unidimensional and involves several experiences. I think that writing a reflective journal can help the student summaries the learning and for the teacher to understand what must be done to enhance the learning.

In this reflective journal, I reflect upon my learning of the course of ‘Managerial Accounting’. Before taking this course I used to consider the course to be important for managers to make key business decisions, however during the course, I realized that the importance of this course is much more than I initially considered, as discussed below.

Topics

There were several topics that were covered in the unit and I learnt a lot from each topic. The first topic that I learnt was Product Costing System. The most important learning from the topic is that there are several costing methods, however, identifying the appropriate costing method can be tricky as different methods have their own advantages and disadvantages. So, I have learnt that the decision to implement a system should focus on three aspects- correctness, convenience, and implementation cost.  These aspects can be applied to deciding between job costing and process costing in an organization. In terms of correctness, I learnt that if production is done only against special orders, then job costing is a better alternative, however, if several production stages are involved then process costing must be used. In terms of convenience, job costing is preferred for specific orders that are different from one another and process-based costing is preferred for standardized orders. The underlying cause is that a new approach would be needed every time in case of specific orders, and the same approach can be applied to process-based orders. In terms of implementation cost, I learnt that in terms of job costing it is difficult to reduce costs as each order may be different from earlier orders, whereas costs can be easily reduced in process costing as due to the standardized processes, inefficiencies can be easily identified.

I also learnt about overhead costing that is concerned with how indirect costs can be associated with direct costs. I learnt about the traditional overhead costing and Activity Based costing. I learnt that while traditional costing is focused on allocating indirect cost on products and services, Activity-based costing is focused on allocating indirect cost on the activity. The reason Activity-based costing is used by organizations is to identify unprofitable products, improve the efficiency of the production process, and price products more effectively.

Individual Online Tutoring

I undertook the individual assignment on Activity-Based Costing. The rationale behind selecting Activity-based costing is that while conventionally the costs are allocated based on machine hours, whereas Activity Based Costing allocates the overheads on the activity. I analyzed Activity-Based Costing in the medical services setting in the UK and for two Australian companies. The analysis found that Activity Based Costing benefitted in all the cases- medical services and Australian companies, as discussed next.

I learnt that Activity-based costing improves the costing cycle in multiple ways: First, the quantity of cost pools for collecting overhead expenses is extended. Second, since the costs are pooled by the activity and not by aggregating all expenses in a single far-reaching pool, the cost allocation process is enhanced that improves the quality of cost dependent pricing decision. Third, new bases for allocation of overhead expenses are created that distribute the cost on the activity and not on the volume measure. Fourth, aberrant costs (including utilities and wages) can be assigned to the activities.

However, I learnt that there are certain drawbacks with Activity-Based Costing as well. First, it moves the overhead expenses from high-volume products to low-volume products, thereby increasing the unit cost of low-volume items. Second, it considers fixed expenses as if they are variable, that might present a wrong picture, thereby leading to wrong choices. Third, there are expenses like management compensation that cannot be allocated to items or clients as there is no defined technique to allocate them to an activity. Instead, these items are met by a commitment from each product as these expenses are termed as business sustaining expenses.

Overall Research Experience

Usually, I enjoy undertaking research projects as I consider them to be an opportunity to apply the theoretical learning from a unit. The same is true for this research project as well. In my opinion, effectively reviewing the literature is dependent on two factors: Frist, being able to identify the relevant literature and second, interpreting the literature. While I am comfortable with the latter, however, I faced issues with the former as discussed next.

At the end of the unit, I feel that I could have done a much better job of searching for the relevant literature. I had all the necessary tools at my disposal, however, I could not utilize them as much as I should have. I did not have this realization while working on the assignment, instead, while I was discussing with my classmates, I realized I could have done much better work. I feel that I have not used academic literature as much as I should have. Also, the literature to which I referred to can be considered to be old (both of the journal articles were published in 2005). Although, I am not sure if using more recent articles would have made any significant difference in terms of learning as I think that the topic has not changed much in the last decade.  However, I think it is a good practice to use recent literature.

I faced no issues in interpreting the literature which I consider to be one of my strengths.

Conclusion

This reflective journal presents my learning of ‘Managerial Accounting’.  I knew the significance of the topic even before I started studying the topic. Over the course of this unit, my learning increased significantly which I am hopeful of helping me in my professional life.