Toyota Management Accounting

Management accounting is a mechanism of preparing and keeping track of various reports and accounts that help to provide the manager with accurate and timely information regarding both financial and non-financial information. This type of information that is being gathered through this process helps managers in making decisions for their business. For example, managers everywhere use management accounting as a way to help develop strategies for their organization. These strategies are then communicated within the organization to help implement a strategy that the company will from then on use. Management accounting combines the three major departments of accounting, finance, and management, to utilize the various skills and techniques of each

To start off, one infamous company apart of the automotive industry that has put management accounting to use would be the Toyota Motor Corporation. In 2008, Toyota’s gross revenues declined greatly due to a company-wide issue with accelerator pedals and engine defaults in various Toyota models. After reviewing the financials and realizing the company’s revenue had suffered a great loss, Toyota decided to gather information to try and find the root cause behind this issue. After analyzing both qualitative and quantitative data that was held by the company, they came to the realization that it was most likely due to major defects that were found in their cars – hence the issue with the accelerator pedals and faulty engines. Once agreeing upon this conclusion, management then decided to come together and create a new plan for their employees to follow to lower defects within factory made cars. This new plan was then communicated business wide to be implemented as soon as possible. This ‘new plan’ was a success for the company. Sales volume increased greatly and helped in providing a much better decision-making method. The main impact came from the company’s production system. Fixing this part of the company helped in reducing defaults, which reversed the gross revenue decline. Toyota’s revenue began to rise and slowly these numbers went back to

At RBS Finance, the company provided customers with various services. However, the primary service offered at this financial institution was loans. When providing a customer with a loan, there are many steps that come into play. For example, any loan activity always required a credit verification check. Managers were required to keep track of customer credit because bad credit disqualified any customer from receiving loans. In this case, management accounting helped the company from making the wrong decision when it came to handing out loans. Through the use of historical customer information, such as the customers’ credit scores, the company was able to accurately decide based on these gathered information if processing the loan was the right move. On the other hand, when a loan was processed and handed out to a customer, the company was then required to monitor loan payments. Without the use of management accounting to track information such as loan payments, the company could land themselves into a bad position. All in all, management accounting is used in almost every, and any, business sector one can think of. From banking, to merchandising, management accounting has helped companies worldwide make their best decisions through the use of gathering and monitoring different information. Thanks to this process, business-making decisions for managers everywhere