Indonesia s An International Market Essay - 2997 Words

1 Indonesia contribution to international market Goods and services produced in a country and being sold outside is globally known as export (Mankiw, 2004:240). Suppose that a country do an International Trade and become an exporter of some goods, domestic producers will get more benefits, while local consumers will get loss because the local price is higher. However, government policy about the opening of international trade itself will be profitable for both concerned countries (Mankiw, 2006:221).For Indonesia, the activities of the export has been encouraged since 1983. In the same year, export was getting more attention in order to spur Indonesia economy growth. Indonesia slowly changes its strategy of industrialization, from the emphasis on import substitution industries to export promotion industries. Along with this new policy, the economy of Indonesia is getting better. It was proven in 2008 that the cumulative value of export reached USD 118,430million, in other words it increased by 26.92 percent, while for non oil and na tural gas sector reached USD 92,260million or increased by 21.63 percent. The other sector, for instance agricultural, industry, and mining had also increased, each by 34.65 percent, 21.04 percent, and 21.57 percent compared to the previous year. For the goods that Indonesia exports, there are 10 types of which contributes 58.8 percent to the total of non oil and natural gas export. They are vegetable animal oil and fat, mineral fuels, machine orShow MoreRelatedChina s World s Elite Currency1305 Words   |  6 Pages On Monday, November 31, 2015, The International Monetary Fund has approved China s yuan into its elite reserve currency. As this decision announced, it will impact China’s economy. 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The Effects Of Genetic Modification On The Environment And...

Although many oppose the genetic modification of crops, genetic modification also poses an opportunity to lower the price of crops and increase production, which could help solve world hunger. While it may seem like negative effects would be outweighed by the possibility of solving world hunger, an important issue, the conceivably detrimental effects on the health of the environment and the human race would outweigh the humanitarian goal of stopping world hunger. Genetic modification of crops is not the only possible solution to world hunger. There are other solutions that would not negatively harm the environment. The effects of genetic modification, good or bad, would affect everyone as this process is already wide spread. Although everyone has different opinions about the genetic modification of crops, it really comes down to whether solving world hunger is worth hurting the earth. Although the one possible way of addressing world hunger is the genetic modification of crops, the re are other methods and negative side effects such as the increase in allergies and the negative impacts on the environment. While the solution of world hunger that could possibly come from GMOs could change the world forever, the effects on the environment and the health of the human race could negatively affect the world, outweighing the solution to world hunger. As the genetic modification of crops is a controversial issue, there are many different opinions. Kathlyn Gay, in the bookShow MoreRelatedGenetic Modification Is The Transfer Of An Organism s Genes? Essay1335 Words   |  6 PagesThere are many challenges with genetic modification. Genetic modification is the transfer of an organism’s DNA from one organism to another using biological techniques. Along with the addition of new genes, it also requires the changing or replacing of an organism’s DNA. These are some of the techniques that scientists use to genetically modify an organism’s specific traits. Questions like â€Å"Are humans able to alter an organism’s genes?† or â€Å"How much will it cost?† will be asked. Most of theRead MoreWhat Would You Do If Your Baby Was Born With A Defect?1359 Words   |  6 Pagesto some, but to others the thought is terrifying. With gene modification techniques such as CRISPR-Cas9 spiraling around it is possible to change genes. Gene modification is defined as any alteration of genetic material of a human being. Gene modification should not be allowed because the disastrous effects such as it lacks diversity, creates a divide, goes against religious beliefs, produces overpopulation, and the unknown side effects. First of all, if CRISPR-Cas9 is cheap procedure it does notRead MoreHow Do We Feed The Growing Human Population Without Depleting The Environment1491 Words   |  6 Pages(Isaacson 2015). Unfortunately, agriculture is already putting a strain on our limited natural resources. Humanity, thus, has a dilemma to solve: how do we feed the growing human population without depleting the natural resources and destroying the environment? The answer: genetically modified crops. Since its conception, genetic modification (GM) technology has rapidly advanced, and now scientists can breed super crops that are resistant to pests, diseases, and extreme environmental conditions. As GM technologyRead MoreThe Use Of Pesticides And Their Rate Of Decay On Soil Rejuvenation944 Words   |  4 PagesAmerican culture currently accepts the adaptation of genetically modified foods without regard to its various effects. In fact according to the Organic Consumers Association,† It s estimated that 75 per cent of processed foods contain GMOs and 80 percent of all food consumed in the U.S. is processed.†(5) Our country has developed a system in which the agricultural norm is to use genetic modifications in order to keep up with the demand for fast, good looking produce. As long as America is choosing the cheaperRead MoreGenetic Engineering: Good or Bad?899 Words   |  4 PagesIntroduction With the dawn of modern genetic technology, new problems and possibilities arise. The ability to modify the genes of living organisms is a very controversial subject, spawning many debates about its uses, ethics, and dangers. On one hand, the possibility of modifying livestock and plants to produce more food and useful products is tempting. Medical uses for genetic modification are also abundant, and can change medicine for the better. 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In today’s society more and more commercial farms and food manufacturers are starting to grow and use genetically modified their crops in their products, is this a good idea or is it a bad idea? Many Commercial farms are starting to transfer over to growing genetically Modified crops, because GM crops have a reduced susceptibility to disease, they also have improved drought resistance, and the overall cost of growing them is reduced. I think

Management of a World Class Company Toyota Free Essays

string(96) " link between management and on-site operations, instead of focusing exclusively on management\." Content I. Introduction of Toyota Motor Company II. Management of Toyota Motor Company 1. We will write a custom essay sample on Management of a World Class Company Toyota or any similar topic only for you Order Now Coprporate Governance of Toyota Motor Company 2. The Toyota Way 3. Toyota managerial problems III. Conclusion Management of World Class Company – Toyota Motor Company I. Introduction of Toyota Motor Company Toyota Motor Company or TMC is a Japanese automobile manufacturer and it is stationed in the city of Toyota in the Aichi prefecture. The relationship between the city and the company gave the name of the city which was previously known as Koromo. Toyota is the largest automobile manufacturer in Japan[1] and it is also the largest worldwide as of the first half of 2012[2] by volume of sold cars ahead of General Motors and Volkswagen AG. The company was created in 1937 by Kiichiro Toyoda as a spinoff to Toyota Industries to create automobiles. As of 2012, Toyota own several different brands as Lexus – luxury cars, Scion – brand only for North America, aimed towards the Generation Y and 51% in Daihatsu – the oldest car manufacturer in Japan. Akio Toyoda is the current CEO of Toyota, he is grandson of the creator Kiichiro Toyoda[3]. Toyota have produced more than 200 million cars all over the world with their biggest market in North America – 32%, followed by their home country Japan – 25%, Europe – 14% and Asia – 11%[4]. Toyota is publicly traded company of three of the major Stock Exchanges: New York Stock Exchange(NYSE), London Stock Exchange(LSE) and Tokyo Stock Exchange (TSE). In the end of 2009 and the beginning of 2010, Toyota recalled 9 million cars on various technical faults[5]. 5. 3 million of them was over a faulty â€Å"all-weather† floor mat, additional 2. 3 mil. For a faulty accelerator pedal and 1. 7 for both problems. On 14th of November 2012, Toyota announced that it will recall additional 2. 7 mil. cars over problems with the steering wheel and water pump system. This comes four weeks( 10th October) after another 7 mil. cars recalled over faulty electric windows mechanisms[6]. The 2010 recalls hit the company hard with huge financial loses, because of the recalls and stop of production for some time of the affected vehicles. Severe damage to the brand in the eyes of the public. An estimate of 1. 93 billion dollars were lost, because of missed sales, output and another recall related costs[7]. A 15% drop in shares was experienced by the company. Toyota is one of the leading manufacturers in pushing the hybrid electric vehicles. Their hybrid technologies make them the first company to mass produce such an automobile with the Toyota Prius in 1997. As of October 2012 the Prius around 3 mil. units[8] . 19 other Toyota branded vehicles are also available with the hybrid technology. So are models from the Lexus sub-brand. II. Management of Toyota Motor Company 1. Coprporate Governance of Toyota Motor Company Toyota Motor Company(TMC) is a public listed company, which means everybody can buy shares in it. This mean that the is a specific corporate structure and management operations. Toyota is with top-down centralized way of management. The company is headed by Fujio Cho, he is the chairman which in the Japanese system, that puts him in charge of the country’s and world’s largest automaker. He is only the second person to head Toyota and to not be from the Toyoda family after they stepped out in 1995. He joined Toyota in 1960 and previous titles include: Managing Director, Senior Managing Director, Vice President, President and Vice Chairman of the Board. He stepped in as a chairman in September 2006[9]. 960–1966, apprentice and training employee; 1966–1974, Production Control Division; 1974–1984, manager in Production Control Division; 1984–1986, manager in Logistics Administration and project manager in Production Control Division; 1986–1987, manager in Administration; 1987–1988, manager of Toyota North America Project and exe cutive vice president of Toyota Motor Manufacturing USA; 1988–1994, president of Toyota Motor Manufacturing USA; 1994–1996, managing director; 1996–1998, senior managing director; 1998–1999, executive vice president; 1999–, CEO and president[10]. The Vice Chairman of the Board is Takeshi Uchiyamada since April 2012 and also serve as Vice President of the Company. Mr. Uchiyamada served as Executive Vice President of Toyota Motor Corp. since June 2005, as the Chief Production Control Logistics Officer of Toyota Motor Corp. since 2004, as Senior Managing Director of Toyota Motor Corp. from 2003 to June 2005. He served as the Chief Vehicle Engineering Officer of Toyota since 2003 and joined Toyota in 1969[11]. Akio Toyoda is the President and Chief executive officer of the company. He is also President of Toyota Finance Australia Ltd. , Toyota Motor North America, Inc. and Toyota Motor Credit Corporation since June 2009. Mr. Toyoda serves as Senior Adviser of Toyota Media Service Corporation. He has been the President of Hitachi Ltd and Honda Motor Co. since March 2009. He served as an Executive Vice President of Toyota Motor Corp. from January 21, 2005 to June 2009, Senior Managing Director and Chief of Asia China Operations Officer since 2003 and also served as its Division General Manager of Taiwan China Offices. He joined Toyota in 1984[12]. The company also have 7 Executive Vice Presidents,63 Directors, 7 Corporate Auditors, 18 Senior Managing Officers and 35 Managing Officers[13]. The company’s top management priority is to steadily increase corporate value over the long term. In order to achieve that, Toyota builds favorable relationships with all of its stakeholders, including shareholders, customers, business partners, local communities and employees. In house committees and councils are used for monitoring and discussing management of the company from the viewpoint of the stakeholders. In 2003 was introduced the current system of management in which Chief Officers, who are directors, serve as the highest authorities of their specific operational functions across the entire company, while non-board Managing Officers implement the actual operations[14]. Toyota’s philosophy of emphasizing developments on the site, the Chief Officers serve as the link between management and on-site operations, instead of focusing exclusively on management. You read "Management of a World Class Company Toyota" in category "Essay examples" The company have different divisions all over the world, United States of America, The United Kingdom. In the UK the division is headed by a General Manager – John Burton. He is responsible for two branches of the company, the office and shop floor. In the office part there is Assistant General Manager, Senior Manager, Section Manager, Specialist Engeneer – Senior, Specialist Engeneer, Lead Administrator and Administrator. For the Shopfloor we have the same structure till Section Manager with the adition of Group Leader- Senior, Grouo Leader, Team Leader and Team Member. As a publicly traded company Toyota have issued 3,447,997,492 shares and have 668,186 shareholders. 2. The Toyota Way The most important created in the managerial sphere by Toyota is the Toyota Way. The Toyota Way is a set of principles and behaviors that underline the Toyota Motor Corporation’s managerial approach and production system. Toyota first explained and summed up those philosophy, values and manufacturing ideals in 2001, calling it â€Å"The Toyota Way 2001. † It consists of principles in two key areas: continuous improvement, and respect for people[15]. The principles for a continuous improvement include establishing a long-term vision, working on challenges, continual innovation, and going to the source of the issues or problems. The rules relating to respect for people include ways of building it and teamwork. Toyota’s management philosophy has evolved from the company’s origins and has been used in the terms â€Å"Lean Manufacturing† and Just In Time Production, which it was very important in developing[16] Toyota’s managerial values and business methods which are known collectively as the Toyota Way. Toyota uses five principles for their operations: †¢ Challenge †¢ Kaizen (improvement) †¢ Genchi Genbutsu (go and see) †¢ Respect †¢ Teamwork[17] Another part of the Toyota Way is the Toyota Production System. The Toyota Production System (TPS) is an integrated socio-technical system, developed by Toyota, that Cover its management philosophy and practices. The TPS organizes manufacturing and logistics for the company, how it interacts with suppliers and customers. The system is a major predecessor of the â€Å"lean manufacturing. † Taiichi Ohno, Shigeo Shingo and Eiji Toyoda developed the system between 1948 and 1975. [18] Originally called â€Å"just-in-time production,† it develops on the approach created by the founder of Toyota, Sakichi Toyoda, his son Kiichiro Toyoda, and the engineer Taiichi Ohno. The principles of TPS are embodied in The Toyota Way. The main objectives of the TPS are to design out overburden (muri) and inconsistency (mura), and to eliminate waste (muda). The most significant effects on process value delivery are achieved by designing a process capable of delivering the required results smoothly; by designing out â€Å"mura† (inconsistency). It is also crucial to ensure that the process is as flexible as necessary without stress or â€Å"muri† (overburden) since this generates â€Å"muda† (waste). Finally the tactical improvements of waste reduction or the elimination of muda are very valuable. There are seven kinds of muda that are addressed in the TPS[19]: 1. Waste of over production (largest waste) 2. Waste of time on hand (waiting) 3. Waste of transportation 4. Waste of processing itself 5. Waste of stock at hand 6. Waste of movement 7. Waste of making defective products The system, is one of the biggest aspect of the company, it is responsible for having made Toyota the company it is today. For long time Toyota has been recognized as a leader in the automotive manufacturing. [20] It is a myth that â€Å"Toyota received their inspiration for the system, not from the American automotive industry (at that time the world’s largest by far), but from visiting a supermarket. † The idea of Just-in-time production was originated by Kiichiro Toyoda, founder of Toyota. [21] The question was how to implement TPS. When reading descriptions of American supermarkets, Ohno saw how the supermarket operated with the model he was trying to accomplish in the factory. A customer in a supermarket takes the desired amount of products off the shelf and buys them. The store restocks the given products with enough new ones to fill up the empty shelf spaces. Similarly, a work-center that needed parts would go to a ‘store shelf’ (the inventory storage point) for the particular part and ‘buy’ (withdraw) the quantity it needed, and the ‘shelf’ would be ‘restocked’ by the work-center that manufactured the part, making only enough to replace the inventory that had been withdrawn. 22] While low inventory levels are a key outcome of the Toyota Production System, an important element of the philosophy behind its system is to work intelligently and eliminate waste so that only minimal inventory is needed. Many American businesses, having observed Toyota’s factories, set out to attack high inventory levels directly without understanding what made these reductions possible. The act of imitating without und erstanding the underlying concept or motivation may have led to the failure of those projects. In 2004 a professor from University of Michigan, Dr. Jeffrey Liker published a book â€Å"The Toyota Way† in which he called Toyota way â€Å"a system designed to provide the tools for people to continually improve their work†. [23] â€Å"Since Toyota’s founding we have adhered to the core principle of contributing to society through the practice of manufacturing high-quality products and services. Our business practices and activities based on this core principle created values, beliefs and business methods that over the years have become a source of competitive advantage. These are the managerial values and business methods that are known collectively as the Toyota Way. —Fujio Cho, President Toyota (from the Toyota Way document, 2001)[24] According to Liker in the Toyota Way the people are what bring the system to life, working, communicating, resolving issues, and growing together. The Toyota Way encourages, supports, and in fact demands employee involvement. It is a system designed to provide the tools for people to continually improve their work. Toyota Way means more dependence on people, not less. It is a culture, even more than a set of efficiency and improvement techniques. You depend upon the workers to reduce inventory, identify hidden problems, and fix them. The workers have a sense of urgency, purpose, and teamwork because if they don’t fix it there will be an inventory outage. On a daily basis, engineers, skilled workers, quality specialist, vendors, team leaders, and—most importantly—operators are all involved in continuous problem solving and improvement, which over time trains everyone to become better problem solvers. In it Liker summarized it in 14 principles. The principles are organized in four broad categories: 1) Long-Term Philosophy, 2) The Right Process Will Produce the Right Results (this utilizes many of the TPS tools), 3) Add Value to the Organization by Developing Your People, and 4) Continuously Solving Root Problems Drives Organizational Learning. [25] 1)Long-Term Philosophy 1. Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals. It is needed to replace the short term decision making with philosophical thinking of purpose. Understanding that the organization is bigger than money and that long term value for the customers and be responsible. )The Right Process Will Produce The Right Results 2. Create a continuous process flow to bring problems to the surface. Time management is very important, it must not be wasted. Creating good flow of the work with materials and people. 3. Use â€Å"pull† systems to avoid overproduction. Providing customers with everything they want when they wanted it. There is no need for costly overst ocking. There need to be flexibility with the day-by-day shifts in customer demand not convoluted forecasts. [26] 4. Level out the workload (heijunka). (Work like the tortoise, not the hare. ) People and machines must not be overused. There must be leveled out workload. 5. Build a culture of stopping to fix problems, to get quality right the first time. Quality for the customer drives the value proposition. Building equipment capable of detecting problems and stopping itself. Developing a visual system to alert team or project leaders that a machine or process needs assistance. Jidoka (machines with human intelligence) is the foundation for â€Å"building in† quality. Problems must be solved quickly. 6. Standardized tasks and processes are the foundation for continuous mprovement and employee empowerment. Capturing the accumulated learning about a process up to a point in time by standardizing today’s best practices. Allowing creative and individual expression to improve upon the standard; then using it into the new standard so that when a person moves on, to easily hand off the learning to the next person. 7. Use visual control so no problems are hidden. Use simple visual indicators to help people determine immediately whether there are problems. [27] 8. Use only reliable, thoroughly tested technology that serves your people and processes. Technology must be used for supporting the people not replacing them and it can lead to slow implementation. Tests can determine if it is viable to use new technologies. 3) Add Value to the Organization by Developing Your People 9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others. Creating leaders inside the company and not sourcing them outside of the company. Such leaders must be role-models. 10. Develop exceptional people and teams who follow your company’s philosophy. Creating a strong, stable culture in which company values and beliefs are widely shared and used over a period of many years. Corporate culture and teamwork must be adhered by the employees for exceptional results. [28] 11. Respect your extended network of partners and suppliers by challenging them and helping them improve. 4) Continuously Solving Root Problems Drives Organizational Learning 12. Go and see for yourself to thoroughly understand the situation (genchi genbutsu). Personal observation and data gathering for the problems that are encountered. Verification of information first hand. 13. Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly (nemawashi). Straightforwardness must not be accepted, alternative solutions must be taken into account. Also using other people for gathering information and helping with the decision is needed. 14. Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen). Using improvement tools to determine the cause of inefficiencies and apply effective countermeasures. Once waste is exposed, having employees use a continuous improvement process (kaizen) to eliminate it. Using hansei (reflection) at key milestones and after you finish a project to openly identify all the shortcomings of the project. Develop countermeasures to avoid the same mistakes again. [29] By using TPS Toyota reduced time consumption and money, while it improved quality. This helped the company become the biggest company by 2007 and be very profitable. But in recent years it looks that the TPS is not working so well or it is abandoned altogether. The recent technical problems of Toyota showed to some that maybe the TPS is not so good, but if it wasn’t good or it can’t be used anymore, Toyota would have not be able to go back to the top in such short time. The problems maybe are not part of the TPS, but rather other factors. Too big growth of the company in the 21st century. The central lead management don’t allow flexibility in tackling problems. Another issue it that problems become much more obvious with the increase of quantity and this will result in much more negative situation which can’t be handled or will be exploited by competitors. The complexity of cars is attributing factor to have more problems and this can’t be solved by the managers. Of course TPS can be blamed in some way. It support standardization in task and processes and when there is problem with one thing, that problem translate everywhere where standardization is used. And finally a problem experienced by almost all big companies all over the world – slow response to problems, because of the amount of bureaucracy that comes with complex management in big organizations. 3. Toyota managerial problems The management of Toyota today are not very successful, after the big vehicle recalls there was a serious lack of admittance by Toyota CEO Akio Toyoda that something is wrong at that was most prominently seen in his press conference about that matter where he stated: â€Å"Believe me, Toyota’s car is safety. But we will try to make our product better. † Another big problem for the management is the dysfunctional organization structure and a secretive culture. After a problem experienced in Europe and this problem could have affected North America there was absolute no communication between the different branches of the company. [30] Instead of admitting that there is a problem Toyota denied that there are any problems with their cars. III. Conclusion As of mid 2012 Toyota is once again the leader in the automotive world. Although the problems that plagued the company for 2 years reduced their output, profits decreased substantially and the company image was severely damaged which led to the company losing a big sum of money and trust with their consumers, they managed to get out of the problem with relative ease. The company also realized some important things from all this: 1. They could not want to be a global leader and keep all the power in the hands of the headquarters in Japan. Even though they claimed that they are delegating management to other parts of the company around the world the crisis showed something different. When a lot of the production is happening outside Japan they couldn’t afford to still maintain all the power in Japan. 2. They must create friends in order to advance even if they have millions of customers. The crisis left them with no real allies and protection. 3. Toyota learned that it must maintain its reputation every minute. Claiming that they are the best don’t help. Consumers want to see and experience that in the real world not just through ads and statistics. ———————– [1] Wikipedia, Toyota [2] Tim Higgins – Jul 26, 2012, Bloomberg, http://www. bloomberg. om/news/2012-07-25/toyota-extends-global-sales-lead-over-general-motors-vw. html [3] Wikipedia, Akio Toyoda [4] Wikipedia, Toyota [5] Christian Science Monitor, http://www. csmonitor. com/USA/2010/0129/Toyota-recall-update-dealers-face-full-lots-anxious-customers [6] BBC, http://www. bbc. co. uk/news/business-20321594 [7] BBC, http://news. bbc. co . uk/2/hi/business/8493414. stm [8] Mike Milikin 8 Nov. 2012, Green Car Congress, http://www. greencarcongress. com/2012/11/tmchybrids-20121108. html [9] Wikipedia, Fujio Cho [10] Reference for business, http://www. referenceforbusiness. om/biography/A-E/Cho-Fujio-1937. html [11] Bloomberg Business Week, http://investing. businessweek. com/research/stocks/people/person. asp? personId=646436ticker=TM [12] Bloomberg Business Week, http://investing. businessweek. com/research/stocks/people/person. asp? personId=1828739ticker=TM [13] Toyota Global [14] Toyota Global [15] â€Å"Environmental Social Report 2003†. Toyota Motor. p. 80. [16] Strategos-International. Toyota Production System and Lean Manufacturing. [17] Toyota internal document, â€Å"The Toyota Way 2001,† April 2001 [18] Strategos-International. Toyota Production System and Lean Manufacturing. [19] Ohno, Taiichi (March 1998), Toyota Production System: Beyond Large-Scale Production, Productivity Press [20] Brian Bremner, B. and C. Dawson (November 17, 2003). â€Å"Can Anything Stop Toyota? : An inside look at how it’s reinventing the auto industry† [21] Ohno, Taiichi (March 1988), Just-In-Time For Today and Tommorrow, Productivity Press, [22] Magee, David (November 2007), How Toyota Became #1 – Leadership Lessons from the World’s Greatest Car Company, Portfolio Hardcover, [23] Liker, Jeffrey (2004). The 14 Principles of the Toyota Way: An Executive Summary of the Culture Behind TPS†. University of Michigan. p. 36 [24] Liker, Jeffrey(2004). The 14 Principles of the Toyota Way: An Executive Summary of the Culture Behind TPS†. 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The Case Study about KASE Manufacturing Company Costing

Question: Discuss the Case Study about KASE Manufacturing Company Costing ? Answer: Introduction: Costing is a method or a technique that is uses by companies to assign, classified, allocate and arrange the cost to each resource driver and each element of costing and overheads in a manufacturing company. Costing technique must be effective as an effective and significant costing technique offers which offers the required data, fact sheet and information to the managers and the company for managing the orders, reducing the waste and minimizing the cost. Costing techniques are always used by every production house to enhance the profits and minimize the losses to achieve the goals and enhance the worth of the production house. This report has been prepared to analyze the trading costing method and activity costing method. This report depicts about the deficiencies of both the techniques. Further the case study has been used as a proof to support the arguments. This report also depict about the factors of management accounting which are used by a firm to analyze the right technique according to the nature of the firm. More, benefits, limitation etc has been analyzed of activity based costing to understand the costing concept easily. Case study Summary: The given case study depict about the KASE manufacturing company which offers a various range of cheese to its customers. Case study depicts that before 15 years company used to produce only 3 types of cheese but currently it is manufacturing various products. Due to extra production, company has faced many issues such as extra machinery charges, low maintenance and reduction of profitability of the production house. The head manager of the company depicted that the sales increment is the only option to enhance the profit. The production manager has identified that due to traditional costing system, they are not able to get the exact data and thus the bas decisions are making an impact over the overall profitability of the company. Through this case study it has been identified that the company must make the change into the costing technique to analyze the impact of new costing technique over the profitability of the company. So activity based costing technique has been analyzed over the figures and data of the company. Traditional costing system: Traditional costing system is oldest technique among all the techniques of cost accounting. This technique is used by the production house and companies to assign allocate and classify the cost to each cost driver and element of cost accounting. This technique does not take a look over the depth information of the production house. It assigns all the cost to the cost center according to the average rate of overhead. This method suggests the company to draw all the indirect overhead and other overhead cost into the production department. This method only uses one cost driver to apply all the cost equally to every product. Deficiencies: The main crisis with this technique is its method of assigning. It assigns the entire indirect cost under the production head and it makes an impact over the cost of production by increasing it. This technique influences the decision of the managers regarding the cost (Garrison et al, 2010). In ABC technique, firstly entire cost is assigned to cost centers and then it assigns to the products. Through analyzing the case study of KAVE manufacturing company, it has been identified that the traditional costing system is not in favor of the company. Due to this costing method, company has faced many issues such as reduction in profits, low maintenance and other issues. It has been found that this technique do not provide the accurate figures to the managers and so that the decision of the company get manipulated. Activity based costing system: Activity based costing is newest technique of costing. It resolves all the manufacture houses actions related with the industrialized and manufacturing of a product. This technique consigns the overhead cost to each cost center and activity according to the operations and nature of cost and the other elements. It establishes the correct cost of the manufacture house and cost per unit. This technique is used by the production houses to diminish and supervise the inaccuracy in transferring the cost to each and every cost center and element. Through this technique, entire costs are firstly assigned to cost centers and after that the products or services (Rasiah, 2011). The transmission system of ABC technique is totally different from traditional costing. Deficiencies: The main crisis with this technique is the complexity while assigning the cost to each cost center. It assigns the cost with depth information and according to the nature of the cost and it are quite more time and cost consuming. It makes an impact over the cost of the company. This technique influences the decision of the managers regarding the cost and profit (Garrison et al, 2010). In traditional costing technique, the entire cost is assigned according to the average cost. In case of KAVE manufacturing company it has been analyzed that the technique is quite more time consuming but at the same time it is required for the company to make better decisions about the production. This costing technique totally suits the nature and operations of the company. Factors of management accounting: As discussed above the KAVE manufacturing company must consider the following points to analyze that whether company must adopt the ABC system or should use the traditional costing system continuously. For taking this decision company must consider the following points: Nature: Nature of the company is the main element to identify before analyzing about the costing technique of the company. Nature of the company depicts that which technique would be appropriate for the company to allocate and assign the cost. In KAVE manufacturing, the nature of the company is totally manufacturing which depict that the company must choose the activity based costing as the traditional costing system would not be appropriate to meet all the requirement of the company and thus it would manipulate the decision about the production of the company (Weygandt, Kimmel Kieso, 2015). Amount: The costing technique also depends over the total costing amount of the company. If the amount is not bigger than management is suggested to go for traditional accounting system but if the amount is bigger than company must go for ABC technique. In KAVE manufacturing, the costing amount of the company is quite bigger so the company must choose the activity based costing as the traditional costing system would not be appropriate to meet all the requirement of the company and thus it would manipulate the decision about the production of the company (Rasiah, 2011). Rigidness of employees: As KAVE manufacturing limited is using the traditional costing method from last 15 years. So it becomes difficult for the employees to understand the new technique and work according to the new technique suddenly. So the management must have a discussion with the employees of the company and make changes over the techniques accordingly (Kaplan Anderson, 2013). Number of products: The costing technique also depends over the total number of products and the units of the company. If the number of products is not bigger than management is suggested to go for traditional accounting system but if the number of products is bigger than company must go for ABC technique. In KAVE manufacturing, the total number of products of the company is quite bigger so the company must choose the activity based costing as the traditional costing system would not be appropriate to meet all the requirement of the company and thus it would manipulate the decision about the production of the company (Hopper, Northcott Scapens, 2007). Thus it could be concluded that the company must go for activity based costing as the resulted data of ABC costing is quite better then the result form traditional costing system. The benefits, limitations of ABC are as follows: Benefit: This ABC technique helps the company and management to classify the cost as per product or service. This ABC technique is quite effortless to recognize, appreciate and concern about the practical life. This technique is quite less time consuming and cost consuming technique than the traditional costing technique (Weygandt, Kimmel Kieso, 2015). It makes differentiation among the services or products of manufacturing house according to the obligatory resources and nature. This ABC technique enhances the prosperity and profit of a production house. It resolves about the productive as well as non productive activities of the company (Hansen, Mowen Madison, 2010). Cost: The calculations of the company depict that there are huge difference between the amount depicted by traditional costing method and activity based method. It depicts that the activity based costing is the best technique for the company as it would help the company to resolve all the issues and the profitability of the company would enhanced due to this technique (Silvi, Bartolini Hines, 2007). Limitation: This ABC technique might give negative or inappropriate result. This ABC technique has many errors. This ABC technique uses depth information to analyze the data (Weygandt, Kimmel Kieso, 2015). Manipulates the decision. Challenging technique Summary: Through the above calculations and analysis, it has been found that the Kase Company is a manufacturing company of Cheese. Earlier company just used to 3 types of cheese but currently it is manufacturing various products. Due to extra production, company has faced many issues such as extra machinery charges, low maintenance and reduction of profitability of the production house. Through this case study it has been identified that the company must make the change into the costing technique to analyze the impact of new costing technique over the profitability of the company (DRURY, 2013). So activity based costing technique has been analyzed over the figures and data of the company. Traditional costing system technique is used by the production house and companies to assign allocate and classify the cost to each cost driver and element of cost accounting. This technique does not take a look over the depth information of the production house. It assigns all the cost to the cost center according to the average rate of overhead whereas Activity based costing resolves all the manufacture houses actions related with the industrialized and manufacturing of a product (Hansen, Mowen Guan, 2007). This technique consigns the overhead cost to each cost center and activity according to the operations and nature of cost and the other elements. It establishes the correct cost of the manufacture house and cost per unit. Through analyzing the data and figures of the company, it has been analyzed that if company would consider the traditional costing rather than ABC technique than the assignment of cost to the cost centers would be different. It has been found that if the cost would be assigned to the cost centers according to the ABC costing method than the wages, building cost, depreciation, consumables, energy and other cost would be assign to the cost center according to their nature whereas in traditional costing method, the cost is allocated to the centers according to a common proportion. Through the calculation of activity and resource drivers, it has been identified that the expenses of production activities of the company would be assigned to the activities of the company to identify the cost of each activity. For it, traditional costing system depict entire expenses could be assigned to the activities according to a common rate whereas the activity based costing technique depict that the expenses must be assigned according to the nature and operations of the company. With the help of calculations, it has been analyzed that expenses has been assigned to the activities according to the labor time and floor areas used by the particular process or activity. Further, it has been depicted that the cost per unit through both the techniques are quite different from each other. The reason behind being the different result is the different techniques and method (Marshall, McManus Viele, 2011). Traditional costing method is the old technique which do not uses depth information about the activities and assigns the cost according to the common overhead rate whereas the activity based costing analyzes every activity, their nature and their processing system to assign the cost and thus the cost per unit is different in both the techniques. More, the Cheddars activity and its activity drivers have been analyzed to understand the ABC costing more. It has been analyzed through this study that every activity of cheddar process is different and thus the cost of the production has been allocated to those activities according to their structure, nature, time, machinery uses, labor hours, and electricity uses etc (Langfield-Smith, 2008). It helps the production department to understand that which activity is more cost consuming and what could be done to control over that cost. It has been found that if the same procedure has been followed by the traditional costing system then the result would be different and the calculation will not be that much complex as well as the provided result would also be complex (Bhimani, Horngren, Datar Foster, 2008). Further, the same procedure has been done with Mascarpone cheese to understand the difference between ABC and traditional costing system. It has been analyzed through this study that every activity of Mascarpone process is different and thus the cost of the production has been allocated to those activities according to their structure, nature, time, machinery uses, labor hours, and electricity uses etc (Horngren, 2009). It helps the production department to understand that which activity is more cost consuming and what could be done to control over that cost. It has been found that if the same procedure has been followed by the traditional costing system then the result would be different and the calculation will not be that much complex as well as the provided result would also be complex. Thus it could be concluded that KAVE Manufacturing Company must implement ABC technique to settle every issue faced by the company. This technique must be carried by the company according to the requirement of production and nature of the operations. Conclusion: Both the techniques of costing system i.e. traditional costing system and activity based costing system are essential for a business to investigate entire cost of each cost center and element. ABC technique is the best method for KAVE manufacturing company. It has been initiated that there was huge issues in traditional technique, so ABC is suggested to KAVE to make changes. These costing techniques help the company and manager of the company to make decisions in a better way regarding the production, cost of each costing element, cost per unit, etc. Thus it could be concluded that KAVE Manufacturing Company must implement ABC technique to settle every issue faced by the company. This technique must be carried by the company according to the requirement of production and nature of the operations. References: Bhimani, A., Horngren, C. T., Datar, S. M., Foster, G. (2008).Management and cost accounting(Vol. 1). Pearson Education. DRURY, C. M. (2013).Management and cost accounting. Springer. Garrison, R. H., Noreen, E. W., Brewer, P. C., McGowan, A. (2010). Managerial accounting.Issues in Accounting Education,25(4), 792-793. Hansen, D. R., Mowen, M. M., Madison, T. (2010). Cornerstones of cost accounting.Issues in Accounting Education,25(4), 790-791. Hansen, D., Mowen, M., Guan, L. (2007).Cost management: accounting and control. Cengage Learning. Hopper, T., Northcott, D., Scapens, R. (2007).Issues in management accounting. Pearson education. Horngren, C. T. (2009).Cost accounting: A managerial emphasis, 13/e. Pearson Education India. Kaplan, R., Anderson, S. R. (2013).Time-driven activity-based costing: a simpler and more powerful path to higher profits. Harvard business press. Langfield-Smith, K. (2008). Strategic management accounting: how far have we come in 25 years?. Accounting, Auditing Accountability Journal, 21(2), 204-228. Marshall, D. H., McManus, W. W., Viele, D. F. (2011).Accounting. McGraw-Hill Irwin,. Rasiah, D. (2011). Why Activity Based Costing (ABC) is still tagging behind the traditional costing in Malaysia?.Journal of Applied Finance and Banking,1(1), 83. Silvi, R., Bartolini, M., Hines, P. (2007). Strategic cost management and lean thinking: A framework for management accounting. Weygandt, J. J., Kimmel, P. D., Kieso, D. E. (2015).Financial Managerial Accounting. John Wiley Sons.