VIVA Energy RIET Annual Report And Account Essay

Question:

Discuss about the VIVA Energy RIET Annual Report and Account.

Answer:

Introduction

Viva Energy REIT can be thought of as an enterprise whose main business is to deal with the property by hiring it and then making certain investments. There are about 425 service outlets of the company across the whole of Australia and its states. The company’s headquarters is situated in Docklands, Australia. The company can be described as a real estate business company. And as mentioned earlier, the company has 425 service outlets in the whole of Australia. The company has been interested in the fuel refining and retailing sectors. When it comes to refining and retailing it needs immense stress upon the cost allocation and structure. Cost allocation is an important consideration and hence, the system of ABC will lead to better practice in terms of allocation (VIVA Energy RIET, 2017).

The working atmosphere of the company is such so the employees have a hunger for achievements. Responsibility is a different matter but the company has there to instill faith in the employees and to make them think that the company is their own and so to innovate something new and flourish the business. Structure of the company has been its rate of performance. The company believes in the result so intellect and activeness are the key binders for the company where employees are rewarded as per their contribution and also the company has been attentive towards safety and has been seen to follows the policies strictly (VIVA Energy RIET, 2017).

Policies and the laws of the company are the foundation pillars of the company with a very traditional type of strictness which has honesty and integrity written all over it where respect giving to each other is prevalent no matter what community they are from. The working standards offered to every employee is the same with safety and profitable atmosphere the key to success to expand their horizons and contribute as much as possible.

Explanation of ABC model and its features:

Activity-based costing can be defined as the one which has been seen to give and manage all the segments of a production unit separately. The traditional method used to invest all the money in the name of production unit without knowing the actual investing segments which have been using the money positively, but this is not the case with this method. The activity-based costing methods divided the manufacturing process into different unit according to their dominance and needs after proper analysis and then funds the u8nits to work together to form the products of the company as and when needed (Marsh, 2009).

Not only manufacturing unit but any special program undertaken or any event can also be added to activity-based costing method. The extra costs are then detected after analysis and then the related operation is terminated or wrapped up. Transaction drivers and duration drivers may also be seen into action on the basis of the manufactured product (Parrino et. al, 2012).

It can be understood from the above explanations that the expenses are not given in one hand by the ABC system and this helps to eliminate the extra costs by detecting the worthless operation that is included as an individual task.

The line of attack under Activity-Based Costing:

  • Cost Allocation
  • Fixed Cost
  • Variable Cost
  • Cost Driver
  • Cost Driver Rate

Steps for implementation of ABC system:

  • Classification of the proper operations and their respective segments.
  • The connection between the individual segments and the expenses that they have been eating up.
  • Allocation of funds to the operative segments.
  • Calculation of activity rates based on the unit of measurement.
  • Assignment of costs to the cost objects using the rates of activities determined.
  • Preparation of management report and further study and discussions on the same

The overall know expenses that are taken up by a single manufactured product are easily detectable. The problem arises when the indirect expense is to be taken into account to prepare records because they are used by several units for they own different production and the common operation which they follow parallel is termed as cost drivers (Lee et. al, 2015). The main aim of the activity-based costing is to makeover the indirect expenses in the form of direct expenses as much as possible which will increase the performance rate and the efficiency to measure the same.

The ABC system is seen to create a bridge between the offered product, customer benefits and the cost of the product which helps the company to understand their working reviews. Plans are made according to the system so that the operations undertaken by the company can be rated as per their performance and if any changes were required. It also sees that the expenses of the customers are worth it and if any product manufacturing has to be eliminated which is not worthy of it (Robinson & Last, 2009).

Times have changed and technology has taken over because of which the labor workforce of the company has been replaced by the equipment workforce for the sake of better and faster production. The expenses which are common in all the production units are being paid more attention and this is the place where the activity-based costing comes into action to improve the performance rate of the company and the undertaken operation by division and proper analysis which is also a boon to the customers of the company (CIMA, 2016).

The process is very important for highlighting the operations that are not at all cost-effective and the ones that are under scaled and not seen due to the products that are suffering the loss in the market. Tenders and challenges are easily met by the company as the performance rate accuracy increases (Horngren, 2013). The above process can be held responsible for the easy detection of losses. This helps to move these saved expenses to the section where the company has been earning profits and generating revenue. Saving of the expenses on a personal level is possible if department wise costs are listed and analyzed (William, 2010).

Catering of ABC model with current goals and strategy of the company

The report has selected the company of Viva Energy REIT. The opting and the implementation of the ABC system in the company will be discussed thoroughly.

Increase in shareholder value by using the experience that the company is having and taking control of the group scale process. Further the company focus on performance, people, and partners. It has a disciplined activity that leads to proper allocation of cost and activities. Identification of corporate strategies

Increasing the strength of the financial statements along with positivity ion manufacturing unit and extra cost elimination has been the attention of the company currently. Strategic plan execution precisely has been crucial in positive deflection of the company in these mentioned areas. The strategy followed by the company as per the records is stated below:

The company focuses on the point that every single inch of money invested by the shareholders is put in such a way that the shareholders get back the maximum benefit thus attracting others as well. Taking the business in a direction where a bunch of profit can be attained along with the benefit of the customers also is the focus of the company (Barnat, 2014).

International alterations and up-down in the real estate was a turning point for the business and the financial statements of Viva Energy REIT projects the situation. The company has been focusing on grabbing chances and cutting expenses. The total revenue generated is then carried on to deduct the extra costs so that the profit amount can be seen. The strategies are updated so as to keep the profits consistent (CIMA, 2016).

Adoption of the activity-based costing has been a boon to the company for cutting off the extra expenses. Updating the strategies with time has been done in accordance with the ABC system. All this summons up to show that the company has been efficient in the use of these techniques (Shim & Siegel, 2009).

The difficulties to maintain the business in a wise way without any complex situation is hard for Viva Energy REIT which has shown impressive play to cut the costs effectively and increase the performance respectively. After seeing all the records and the undertaken steps, it can be said that the company must continue its real estate business and focus more on the performance rates and the analysis on the recorded data which are the foundation pillars of the company.

The company is operating smartly but it is still advised to keep checking the operations undertaken and to analyze the costs that may be hidden to a longer lifespan. The new undertaken are already cleared loopholes must the current prevailing expenses and venture must also be treated in the same manner with cautions (Deegan, 2011).

Other management accounting tool for the company

The market has been altered many times and collapsing situation has risen but the company has stood tall to all those which shows the experience and wisdom. It so has happened that the company has undertaken many accounting techniques in this time span that has helped it to survive (Deegan, 2011). The management of the company has been efficient enough to put all the tools at the right place and the implementation has been perfect and in accordance with the policies of the company as shown by the results.

The balance scorecard technique is one which can be implemented to see the strategy’s profitability in the market. Financial matters are paid more attention to doing all the evaluations but this process also takes into consideration the non-financial figures that may impact the performance of the company. Learning and growth, business processes, customers, and finance are the sectors around which the balanced scorecard revolves (Barnat, 2014).

It can happen sometimes that the company has its management right and all the employees are working up to the mark but then also the company graph is deflecting to the negative side. This situation arises when the key points and strengths of the company are not taken into consideration and there is a failure to understand the data precisely or the reviews by the customers are not catered to or not paid attention to (Houston & Brigham, 2009). These can easily impact the financial statements which can be undone by the balanced scorecard technique.

Conclusion

The performance rate of the company has been impressive and so it can be assumed that the company is following the right principles along with the constant adoption of activity-based costing and it can be said that in the upcoming years the company has chances to flourish much more than now. The non-financial indicators have also played a major role in the detection of financial faults which has to be appreciated. The working of the management and the implementation of the ABC system has been a boon to Viva Energy. But there are still more techniques which can be opted for in the future for better success.

References

Barnat, R. (2014) Strategic Management formulation and implementation. Available from: [Accessed 23 May 2018]

CIMA. (2016) Enterprise risk management and budgetary control: a management challenge [online]. Available from: [Accessed 23 May 2018]

Deegan, C. M. (2011) In Financial accounting theory. North Ryde, N.S.W: McGraw-Hill

Horngren, C. (2013) Financial accounting, Frenchs Forest, N.S.W.: Pearson Australia Group.

Houston, J.F. and Brigham, E.F. (2009) Fundamentals of Financial Management. Cincinnati, Ohio.

Lee, J., Park, M., Lee, H.S., Lee, K.P. and Hyun, H. (2015) Application of Activity-Based costing (ABC) for Modular Building Construction Indirect Costs Calculation at the Manufacturing Stage. Korean Journal of Construction Engineering and Management, 16(4),139-145. doi: 10.1158/1078-0432.CCR-17-2219

Marsh, C. (2009). Mastering financial management. Harlow: Financial Times Prentice Hall.

Parrino, R, Kidwell, D. and Bates, T. (2012) Fundamentals of corporate finance. Hoboken, NJ: Wiley

Robinson, M. and Last, D. (2009) Budgetary Control Model: The Process of Translation. Accounting, Organization and Society, NY Press

Shim, JK. and Siegel, JG. (2009) Modern Cost Management and Analysis. Barron's Education Series

VIVA Energy RIET. (2017). VIVA Energy RIET Annual report and account 2017 [online]. Available from: [Accessed 23 May 2018]

William, L. (2010) Practical Financial Management. South-Western College.

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