In your role as head management accountant, you have been asked to prepare a report for your new junior colleagues in the organization who are new to accounting and have little management accounting experience. In your report you may decide to focus upon a broad range of issues relevant to the topic. Alternatively, you may decide to focus your report on one particular aspect of management accounting which you think is of crucial importance to the Olympics. In 2006 the Olympic committee has decided to dedicate £400 billion in order to establish a Cost Control system. This system is compounded of two core elements: a planning process and a responsibility accounting scheme. The planning process requires enumerating the Olympic committee plans of action, which are the construction of an Olympic Park, the improvement of the transports, the development of sustainable issues, the celebration of cultures and the organization of the security; all those plans must then be implemented and cost.
[...] Introduction I Costs Budget 1.1 Plans 1.2 Implementation 1.3 Costing System II Performance reports and Analysis 2.1 Cost Centers 2.2 Control Board: 2.3 Variance Analysis Conclusion Introduction On the 6th of July 2005, the Evaluation Commission of the Olympic Games elected London as the Host City of the Games of the XXX Olympiad in 2012. At those times, the estimated gross cost of the Games was £4,036 billion, comprising £2,992 billion core Olympic costs plus £1,044 billion for the infrastructures on the Olympic Park. [...]
[...] Conclusion By setting a cost budget and creating a responsibility accounting system, the Olympic committee will be able to ensure an effective Cost Control. However responsibility accounting is based on the controllability principle, which means that Management accountants should be held responsible only for the results they can control. In other words, it is suitable to charge to a responsibility center only the costs that can be influenced by the manager of that center. In the case of the Olympic Games, the impact of construction price inflation and the response of contractors to the Delivery Authority's invitation to tender are uncontrollable, and thus cannot be charged to the Olympic Committee. [...]
[...] They will then be able to start the transports enhancements, the installation of new water and energy systems (that will serve the Olympic Park), and the construction of the venues and the Olympic village. The committee expects to end those yards in 2011, or even earlier (2009) in the case of the water and energy fixings Costing System There are two basic types of costing systems an organization can adopt: the costing system” and process costing system”. The job costing system required in organizations where each unit or batch of output is unique”. [...]
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