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Just Other Articles - A Career in Management Accounting
Often this area is referred to as “Reporting” in the company structure, but it is so much more than that! Management accounts are concerned with:
• The process
• The process
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
of identification, measurement and accumulation of product and service costs
• Preparation of statements relating to materials, labor and overhead
• Standard co
• Preparation of statements relating to materials, labor and overhead
• Standard co
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
sts
• Budgeting for decision-making
• The communication of information used by management to plan, evaluate and control the entity as well as assure accountabil
• Budgeting for decision-making
• The communication of information used by management to plan, evaluate and control the entity as well as assure accountabil
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
ity over it’s resources and assure their proper use (the reporting function).
In addition management accounting is often responsible for ancillary reporting to n
In addition management accounting is often responsible for ancillary reporting to n
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
on-management groups. This can take the form of shareholder reports, reports to creditors, regulatory agencies inquiries and taxing authorities.
COST CONTROL
M
COST CONTROL
M
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
anagement accounting has been around for a long time, even before it was identified as a separate accounting specialty. However it came under fire recently with
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
the huge business scandals like Enron and Worldcom.
Working CPAs and educational institutes alike were criticized for conducting and teaching management accounti
Working CPAs and educational institutes alike were criticized for conducting and teaching management accounti
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
ng the same way they had for years, even though the business environment was rapidly changing.
As a result considerable resources were devoted to the development
As a result considerable resources were devoted to the development
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
of more innovative and effective ways for the management accountant to serve the entity. One of the biggest changes is in cost control techniques.
Traditionall
Traditionall
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
y, the primary costing technique in a manufacturing concern was variance analysis. This is a systematic way of comparing the expected costs to the actual costs o
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
f materials and labor. This kind of analysis tool is far from obsolete and is still in use today by a majority of U. S. manufacturing concerns. But now it is
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
often used in conjunction with more modern methods.
Life Cycle Costing attempts to identify cost savings at the times in the life cycle where they would bring th
Life Cycle Costing attempts to identify cost savings at the times in the life cycle where they would bring th
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
e most benefit. For example, the largest focus on controlling costs in manufacturing is during the design stage. Small changes to the design can lead to signifi
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
cant overall cost savings for the plant.
Activity-Based Costing operates under the recognition that the key to effective cost control is optimizing the efficienc
Activity-Based Costing operates under the recognition that the key to effective cost control is optimizing the efficienc
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
y of the tasks and activities making up the cost. For this reason it is sometimes known as “Cause and Effect” accounting.
Both Life Cycle Costing and Activity-B
Both Life Cycle Costing and Activity-B
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
ased Costing recognize that avoiding disruptions in the manufacturing cycle is much more important to the overall financial health of the company than finding the
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
best price on a raw material. Activity-Based Costing goes a step further and de-emphasizes direct labor as a cost driver. Instead it concentrates on the activ
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
ities that drive the costs and finding ways to make them more efficient.
SUMMARY
To be successful, management accountants will be adept at addressing issues on
SUMMARY
To be successful, management accountants will be adept at addressing issues on
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
product rates, researching quality problems, figuring how to get higher profit margins, helping to identify profitable market segments and introducing new product
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
s.
If you are in accounting or studying accounting in school and are looking for a highly visible position in your company, take a look at management accounting.
If you are in accounting or studying accounting in school and are looking for a highly visible position in your company, take a look at management accounting.
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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