Application of Management Accounting in Company Sustainability

Abstract

This report illustrates how management accounting can be used in helping an organization reach sustainability by applying four main tools in management accounting to a dairy company. These tools are LifeCycle Analysis, Identification of Relevant Costs, Activity-Based Costing (ABC) System and Balancing Score Card, all of which can help qualify and consequently quantify the various costs (including environmental costs) incurred during the operation of a company. Besides that, the above tools can also be utilised in a company’s decision-making processes by the man-agement team. Thus, it is suggested that companies integrate these tools into their reporting system. This report illustrates the definition of a sustainable organization in the beginning, followed by detailed descriptions of the four management accounting tools, together with their applications to a diary company. The report ends with a summary on which type of role each tool plays in the re-porting system.