Performance reports provide feedback information and should highlight those

Performance reports provide feedback information and

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Performance reports provide feedback information and should highlight those activities that do not conform to plans, so that managers can devote their limited time to focusing mainly on these items. This process represents the application of management by exception. Impact of changing business environment on management accounting . Global competition = Globalization has enabled competitors to gain access to domestic markets throughout the world. Organizations have to compete against the best companies in the world. This increases the demand for information relating to quality and customer satisfaction and cost information relating to cost management and profitability analysis by product/service lines and geographical locations. Changing product life cycles = Now companies need to speed up rate in which they introduce new products to markets. Continuous development of product. In many industries a large fraction of a product’s life cycle costs are determined by decisions made early in its life cycle. This has created a need for management accounting to place greater emphasis on providing information at the design stage because many of the costs are committed or locked in at this time. Advances in manufacturing technology = Need excellence in manufacturing, must have the flexibility to cope with short product life cycles, demands for greater product variety from more discriminating customers and increasing international competition. Companies have responded to this by replacing traditional production systems with lean manufacturing systems that seek to reduce waste by implementing just-in-time (JIT) production systems, focusing on quality, simplifying processes and investing in advanced manufacturing technologies (AMTs). Impact of information technology (IT) = The development of electronic business communication technologies known as e-business, e-commerce or internet commerce have had a major impact. The proficient use of e-commerce has given many companies a competitive advantage. Management
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accountants have become more involved in interpreting the information generated from the accounting system and providing business support for managers. Environmental and sustainability issues = Increasing attention is now being given to making companies accountable for ethical, social and environmental issues and the need for organizations to be managed in a sustainable way. There is now a general recognition that environmental resources are limited and should be preserved for future generations. Environmental accounting important in many organizations, because: First, environmental costs can be large for some industrial sectors. Second, regulatory requirements involving huge fines for non-compliance have increased significantly over the past decade. Therefore, selecting the least costly method of compliance has become a major objective. Third, society is demanding that companies focus on being more environmentally friendly.
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