Nestle Company Nestle

NESTLE COMPANY 3

NestleCompany

NestleCompany

Activity-basedcosting Nestle Companyuses(ABC) methodthiscostingmethodclustersall theexpenseswith a singlemanufacturingtask.Thisclusteris irrespective of iftheproductionworkfallsunder theclassificationof labor,rawmaterialsoranyotherthing.In Nestle Company, thatdealswith bottling andfoodproductionactivitybased costing method,expensesprobablywill encompassoperatingthedispensing machines,movingpalletsof bottles,performingqualitychecksandmanymore.Eachof theseactivitieswill involveenergy,humanlabor,expendable resources,rawmaterialsandequipmentexpenses.However,foranalytic purposes,thecostsare puttogetherunder a singleactivityconcept.

TheABC approachaccountsforexpenseswhenproductionworkis underway.Asa result,itpermitstheCompany to comprehendbetterwhereoverheadcostsare going.Theaccounting methodwill identifywastefulproductsandunnecessarycoststhereforeresourcescan be usedproductively. Themanagementusestheaccounting methodto makean informeddecision,forexample,to pricetheCompany productcompetitively. Thequalityof the productthat Nestle Company manufactureshas improvedbecausetheABC datadetailsproductionandexpensesissuesthat requireimmediatesolutions.

InNestle Company, ABC approachin managerial accounting is thebasisfortheoperationsof theCompany from dayto dayorlongtermproject.Ifdata analysisisdonecorrectly,itensuresthatthenextstepon whatdecisionto makeis alsoaccurate(Collier, 2008, p. 231). Themanagementmust understandtheentiremanagerial accounting approachincludingits benefitsbecausetheyare expectedto utilizethemethodto runtheCompany. Themanufacturingandthefinancialprocessesinformationwhenlinked,providesa newviewof performancemeasures.Consequently, thisoffersa lotof informationto themanagementthat are betterusedbetterto understandthefinanciallevel of theCompany.

References

CollierP. M. &amp Ampomah S. A. (2008). ManagementAccounting Risk and Control Strategy.Burlington. Elsevier.