Overview of Bank of Queensland
Discuss About The Every Company Management Accounting Tool.
The report is prepared with the motive to talk about one of the effective tools of management accounting. Bank of Queensland Australia includes the accountant who manages the accounting of the bank. Now, the board of directors of the bank has appointed an accountant who can provide them all the details related to the suitable accounting method for the company. The report includes the details related to the Activity-based costing and its features. Along with this, it includes the talks about the objective of the bank. These objectives are fulfilled by the bank with the use of effective strategies. The appointed accountant has provided the details in which he has discussed the effective use of the ABC and how this system supports the strategies of the company.
Bank of Queensland is one of the leading well-known regional banks. BOQ is mostly run by the local managers of the branches and this shows that this is a small business due to which they have known the value of the personalizing a customer (Bank of Queensland, 2018). BOQ performs the activities with the motive to deliver the excellent customer service by forming the long-term relationship with the customers. BOQ has more than 190 branches in Australia due to which due to which the brand is known in the market. The bank of Queensland is offering its service since the year 1874 (Bank of Queensland, 2018). The company is in the list of the top 100 Australian companies ranked by the market capitalization on the ASX and due to which it is regulated by the Australian Prudential Regulation Authority (Bank of Queensland, 2018).
Activity-based costing method is often recognized with the name ABC approach or model. This is the method with the help of which the organization can organize and allocate the cost that indulges in the business activities such as production, operations, and other activities. This simply means that the company decreases the indirect cost by calculating the cost that is associated with one particular activity and along with this it allocates that much amount to it (Lombardo, 2018). The ABC model is implemented by numerous businesses across the world with the objective to eliminate the cost that is associated with the activities of the business. There are many companies who implement this model with the objective to correct the incorrect cost statistics, to help the managers in making the timely decisions and to assign the overheads on the basis of activities basis (Accounting Learning, 2018). ABC model provides an accurate allocation of the cost of the different products which leads to the effective pricing policy.
- Bring improvement in overall processes: – While applying the activity-based costing method, the company will get an opportunity under which they can look into depth. After a short period of time, they can find the improvement in all the processes of the company (Accounting Learning, 2018).
- Identification of the waste: An Overhead cost of every activity includes few wasteful products that can be identified with the help of the accounting method of ABC. This waste can be reduced from all the activities of the business. ABC supports the company to manage the cost associated with the activity more effectively.
- Price is better organized: – This method of costing accounting helps the company in determining the cost that is linked with producing a single unit of their product. The reduction in the cost of every activity helps the company in developing the effective strategy for the pricing of the products. It includes the price on which the company will sell the product. This model also allows the company to perform the marketing of the product efficiently (Sherman, 2018).
- ABC model makes the differentiation among the cost behavior pattern. These cost patterns are linked with the activities of the business operations.
- The cost behavior pattern that is distinction includes the cost behavior diversity-related, volume related, events related and time-related (Oseifuah, 2018).
- ABC model supports the effective tracking of the overhead cost of the product.
- This is the fact that the cost is divided between fixed and variable which is essential to offer the quality information that is essential to design a suitable costing system.
- ABC identifies the unit cost driver rates which are essential for the company when they take the step to bring the development in the product line or for the introduction of the new product (Nagasaka and Lee, 2017).
Activity-based costing model
Mission: – The mission of the company is to be Australian most loved bank with the four pillars of the strategies, customer in charge can grow in the right way. Moreover, the company is looking to spread the loved like no other. The 4 major values of the company are collaboration, impact, integrity, and passion (Bank of Queensland, 2018).
Objectives: – The major objective of the company is to form an effective relationship with its customers. The bank of Queensland is working effectively for the customer’s satisfaction only which is not possible without the strong relationship with the customers and the bank. Therefore, the company believes in forming the good relationship (Bank of Queensland, 2018). Another most important objective of the company is customer satisfaction which is possible with the trust and reliance of the customers on a bank. Moreover, the objective of the company is to bring the growth in the operations as this is the only way through which they can achieve the mission of the bank (Marketing, 2016).
The company makes use of the different strategies so that they can achieve the objectives and the vision. Bank tries to bring the new positioning strategy in which the company is looking to generate the awareness about the fact that why the customers would believe the company. This strategy of the company can be achieved with the effective use of the marketing of the services.
Along with this, the company started focusing on the niche segments of the people available in the market where the customer value the more intimate banking relationship. In other words, it can be said that the company is willing to add value to the services that the company delivers to their customers (Bank of Queensland, 2018).
The strategy of the company is to bring the improvement in the credit quality and also in the lending policies that are implemented by the Bank. BOQ strategy is to broaden the distribution channel of the business. The effective distribution channel will help the bank in improving the quality of services. One of the strategies of the bank is to bring the improvement in the capabilities of the process and to create a culture that leads to the competitive advantage.
Activity-based costing model of management accounting provides the support to the strategies of the bank of Queensland.
The marketing of the services is one of the effective strategies through which they can make the people aware of the services that they offer to their customers. BOQ will spend the cost of the marketing of the products which can be reduced by the company with the support of the activity-based costing model of the company. ABC model will help in analyzing the indirect cost that is associated with the marketing activities of the company (Foroughi, et al, 2017). This is the way through which they can eliminate the indirect cost and get effective results.
Features of the activity-based costing model
BOQ is willing to provide the effective services to their customers which are possible when they will add value to the services. ABC model will help the company in analyzing the cost allocated with the activities and according to that the proper allocation of the resources can be done by the company with the help of ABC (Dale and Plunkett, 2017). This proper allocation of the resources is one of the ways through which the company can add additional value effectively.
The distribution channel of the services can be improved with the activity-based costing model of the company. This model supports while distributing the services in the market. Initially, the method will analyze the cost that is linked to each activity that is conducted for the distribution of the services in the market. After analyzing the indirect cost linked to the services the BOQ reduce the cost and make the activity effective (Christopher, 2016). Along with this, the company can form the tie-ups with more distributors as this is the way through which they can broaden the distributors. The company needs to make use of the ABC through which they can effectively allocate the resources.
The above analysis reflects that the activity-based costing model is effective for the company and the implementation of the ABC model will help the company improving the services or activities of the business. ABC model is useful and effective for the big companies like BOQ. The implementation of this model in small business is not useful.
It is recommended to the company to hire an accountant or expert who can support the implementation of the ABC model. This is the fact that the implementation of the ABC model is one of the difficult models. Therefore, the company needs to hire the accountant who can implement the ABC model effectively. The effective implementation of the ABC model supports the working of the model and helps them in reducing the cost.
It is suggested to the company to take the approval from the top managers before implementing the activity-based costing model in the organization. The support of the top level management is essential for the company because without the permission of the board of directors it is not possible for the managers to make use of this method in the business.
Apart from the ABC model, the model that has been suggested to the company is balanced scorecard. Balanced scorecard method is one of the modern accounting tools that are used by the company for evaluating the performance of the company. This method of management accounting helps the company in monitoring the performance. Moreover, it evaluates the efficiency of the labor and machine for the activities of the business operations. The balanced scorecard method helps the company in measuring the performance on the basis of financial, customers, internal process and the learning & growth perspectives (Hansen and Schaltegger, 2016). These perspectives are essential to be maintained to measure by the firm because there is need to analyze the loopholes in the organization.
Conclusion
In the end, it can be concluded that bank of Queensland can implement the activity-based costing method because this method provides the support to the current strategies of the company. The board of directors of the company should check the all the advantages that they are going to get if they will implement the ABC model in their organization. Along with this, the board of the director will check the assistance of activity-based costing for accomplishing their current strategies. In end, the report includes suggestion related to the management accounting method apart from the Activity costing method considering the need of the company.
References
Accounting Learning (2018) Advantages and Disadvantages of Activity Based Costing [Online]. Available from: https://accountlearning.com/advantages-and-disadvantages-of-activity-based-costing/ [Accessed on 10th May 2018]
Accounting Learning (2018) Meaning of Activity Based Costing (ABC) [Online]. Available from: https://accountlearning.com/activity-based-costing-meaning-features-objectives-implementation/ [Accessed on 10th May 2018]
Bank of Queensland (2018) About us [Online]. Available from: https://www.boq.com.au/About-us [Accessed on 10th May 2018]
Bank of Queensland (2018) Boq Annual Report Microsite 2016 [Online]. Available from: https://www.boq.com.au/microsites/annual-reports/2016 [Accessed on 10th May 2018]
Bank of Queensland (2018) Company overview [Online]. Available from: https://www.boq.com.au/About-us/company-overview [Accessed on 10th May 2018]
Christopher, M. (2016) Logistics & supply chain management. UK: Pearson.
Dale, B.G. and Plunkett, J.J. (2017) Quality costing. New York: Routledge.
Foroughi, A., Kocakulah, M., Stott, A. and Manyoky, L. (2017) Activity-Based Costing: Helping Small and Medium-Sized Firms Achieve a Competitive Edge in the Global Marketplace. Research in Economics and Management, 2(5), p.150.
Hansen, E.G., and Schaltegger, S. (2016) The sustainability balanced scorecard: A systematic review of architectures. Journal of Business Ethics, 133(2), pp.193-221.
Lombardo, C. (2018) Activity Based Costing Advantages and Disadvantages List [Online]. Available from: https://thenextgalaxy.com/activity-based-costing-advantages-and-disadvantages-list/ [Accessed on 10th May 2018]
Marketing (2016) How BOQ operationalised love [Online]. Available from: https://www.marketingmag.com.au/hubs-c/boq-operationalised-love/ [Accessed on 10th May 2018]
Nagasaka, Y. and Lee, G. (2017) Process Oriented Activity-Based Costing for Business Process Management. Holistic Business Process Management: Theory And Practice, 14, p.21.
Oseifuah, E.K. (2018) Activity-based costing (ABC) in the public sector: benefits and challenges. Management, 12, pp.4-2.
Sherman, F. (2018) Advantages & Disadvantages of Activity-Based Costing [Online]. Available from: https://bizfluent.com/info-8469151-disadvantages-advantages-activitybased-costing.html [Accessed on 10th May 2018]
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