Discuss how allocation of customer-related overhead cost can lead to better decision making within firms with reference to the case below.

Case that has been discussed is about an insurance company, this company decided to review profitable along with the non-profitable customers based upon the policy that is being provided to the, It was found out that retired people were the in the on-profitable customers as they get enough of the time to review the policy and make certain changes about it and review it completely as compared to the other people. Now coming towards the next part that is the allocation of customer-related overhead cost that can lead towards the better decision making within different firms and those are:

Make sure to provide all of the information for the better decision making and tell each and every detail. Setting different prices for the policies of different kind is one example for the decision that needs to be made by the help of management. Prices are also often get established depending upon the different kind of policies. Overhead needs to be considered appropriately.

Next one is promoting the efficient use of all the available resources. Number of different activities are being performed for the making of a policy. Different activities are being performed and all such activities also need different resources too.

Question A
Many academic scholars believed that ‘Strategic information must be in balance with operational information about an enterprise. Thus the balanced scorecard is the most useful management accounting tool.
Introduction:

Strategic information systems that is also called as SIS are the kind of information systems that are being developed to corporate the business initiative. They can help in the delivery of a product or even the service as well that is at much low in cost, it is also differentiated. It helps in focusing on a specific segment of the market or it is also innovative as well. What one measures is also being obtained. There are many of the senior executives which understands that all of their organization’s system of the measurement also effects the behavior of managers as well as of employees. Different executives also understands that all of the financial accounting measures like returning on an investment and earnings on the per share can give some of the misleading signals for the continuous innovation as well as the improvement activities in the today’s competitive demands in the environment. All of the traditional financial performance helps in measuring all of the work for the area of industry. They are also out of the step with certain skills and the competency companies are trying to master up today. (Hoque, 2014)

Main Body: According to Kaplan and Norton in 1992, the balance scoreboard helps in measuring the drive performance. According to the other Harvard Business Review balance scoreboard helps in providing the integrated review of the complete performance of an organization along with some of the strategic objectives. This Balance Scoreboard integrates the financial measurements with the other key indicators of the performance for creating the perspective which incorporates financial as well as the non-financial aspects. This has also proven to be one of the most powerful tool for the planning in relation to the strategic along with the communication strategy which supports in the strategy implementation. The successful strategy implementation is entirely based on the effective strategy planning. In due to the strategic planning which is known to be the virtual necessity in the business terms, this work helps in proposing an integrated approach for all of the balanced scorecard tool along with the knowledge based system by using the method that is called as Analytical Hierarchy Process (AHP), this further develops one of the intellectual DSC system of the knowledge based for the strategic planning that further sets or even selects any of the firm management or the operational strategy as well that is relying upon the certain perspectives which are: Learning and the growth, internal process of the business, customer performance along with the financial performance. All of this system can help out in the determination of the specific strategy weights. This intellectual BSC knowledge based system facilitate the effective strategic planning that is automated. (Huang, 2009)

Conclusion of allocation of customer-related overhead cost can lead to better decision making within firms with reference to the case below

The figure below shows the vision along with the strategy. Different perspectives are being linked with it which are, Financial sector, Business processing, customer behavior along with learning and growth.

Question B

Budgeting has a number of different purposes including: Planning; Control; Performance evaluation; Motivation. Some managers believe that zero-based budget is more beneficial than other types of the budget for firms.’

Introduction: There is no doubt in it at all that Budgeting include number of different factors like planning that includes how things need to be done and how they have to be managed, Controlling the limits of the budget so that they don’t get exceeded at all and this part is also included in the planning again. There should be proper setup or different aspects to have a look on the performance of the budgeting that how it is going along with its evaluation as well which shows how it ended up at the end. Coming towards the next part that states that managers believe that zero based budget is more beneficial than others. Yes there is one difference that is the biggest difference and that is capital is not being allocated to the units of business that depends upon the past spending. The zero based budget actually starts at the zero with all of the different units of business that are present inside any of the company that competes with one another for each dollar when any of the new budget is being made up.

Main Body: This zero based budgeting helps in ensuring that mangers think about the dollar that how each of the dollar is being spent in each of the budgeting period. This is the process that also forces out for the justification of different operating expenses and also considers out that which part or area of the company are generating the revenue. In the traditional budgeting, the cost of legacy may not get examined for many of the years until or unless there is some kind of economic shock which then forces the company to take some of the extreme actions. All these expenses also have the tendency to grow over the time period with each of the department that protects its budget from different sort of the cuts. This sort of approach can be myopic and with the passage of time it can also lead towards the useful misallocation of the different resources as well. If all these things are being done correctly, zero based budgeting is the one that can prevent this all from happening. (Pyhrr, 2012)

Along with the advantages, I also want to share some of the disadvantages that are associated with this zero based budgeting. This zero based budgeting is resource intensive. This takes a lot of the time along with the effort as well to review this all closely and then justify every budget element as compared to the modification of an existing or already present budget and then only review out the new elements. Because of all this, some of the critics argument has also been done that benefits of the zero based budgeting as do not justify the time and cost.

Conclusion allocation of customer-related overhead cost can lead to better decision making within firms with reference to the case below

In addition to this, this process can also be gamed by the savvy managers to get more different kind of the resources in their different departments. If all of this happens, it can further lead towards the change in a culture where decreased spirit of the corporation in the company is available as all of the workers do feel expendable. (Ibrahim, 2017)

References allocation of customer-related overhead cost can lead to better decision making within firms with reference to the case below

Hoque, Z. (2014). 20 years of studies on the balanced scorecard: Trends, accomplishments, gaps and opportunities for future research. The British accounting review. 33-59.

Huang, H. C. (2009). Designing a knowledge-based system for strategic planning: A balanced scorecard perspective. Expert Systems with Applications,. 209-218.

Ibrahim, M. A. (2017). Zero-Based Budgeting is a Panacea to Fiscal Distress: Do the Perceived Benefits Significantly Influence its Adoption in Borno State?. Saudi Journal of Business and Management Studies, 2(10), 943-950.

Pyhrr, P. A. (2012). Zero‐Based Budgeting. Handbook of Budgeting. 677-696.