MANAGEMENT ACCOUNTING CASE STUDIES
In this study, detailed research is to be presented on the aspects and factors regarding the implications and evaluations of the management accounting and decision making for the year. The mainly involves the analysis of two segments one of them is case study analysis of the child care business of Douglas and Pamela. The case study reflects that the couple has worked for a company over 30 years and now has shifted to a small town of 3500 residents. The couple decided to conduct a childcare business where both of them would take of children. They charged a certain amount of compensations for each child. Now the case study information is to be observed and studied for the development of the requirements. Various calculations regarding business performances and possible growth options along with the current costing are also to be presented in the study. Adequate explanations and briefing also to be added in the study, as for the second part of the study it is an article review which reflects various angles of the management account that are applied in the modern market and organisations. Thus with the provided information of the second case study and related articles, the requirements are to be fulfilled with research made on the provided aspects. Detailed explanations and presentations regarding the management accounting and other factors are to be provided and explained in order to get suitable understandings and meaning of the study.
Part A: Case Study Analysis
The case study provided various information regarding the incurred and applied costs in the business by the couple, the section requires identifying and explaining the incurred cost types and figures that the couple has implied through the year in their business. Identification of the incurred costs and managing of the cysts in order to have maximum returns are also to be performed in the study.
According to the above case study, it is observed that the couple has incurred various types of costs in their business. The identified costs incurred by them are direct cost, indirect cost, fixed costs, variable costs etc. three of the incurred costs are to be identified and evaluated in the context of the case study.
Direct costs are the costs that are directly attributed to the production of certain goods and services for the year (Singer, 2017).
The couple had invested $3.20 as the cost of a meal per child which is a direct cost.
Indirect costs are the costs that are not directly attributed to the production of certain goods and services for the year.
Utility costs of $50 will be considered as indirect costs
A fixed cost is considered a cost that remains the same even after with an increase or decrease in the number of goods or services produced or sold. Fixed costs are the expenses that have to be paid by a company, independent of any business activity.
The couple had invested $3840 as their business apartment insurance which is a fixed cost.
According to the case study, it is observed that the appliances that are identified in the case study regarding the usage and implications in their business were researched briefly over the period. The laundry appliances are essential for the couple to buy as the couple requires to wash out the children's dirty clothes and other accessories the laundry work if done by the laundry shop would cost the, $52 per month which is calculated to be $624 per annum which is quite high. As they did not charge any fees regarding the laundry work then they need to consider their decision in whether to go for laundry shop or to do laundry at home. The laundry if dining on the premises would cost $67 per quarter which is evidently cheap from doing laundry form the shop. Thus the couple would prefer to do laundry on the premises (Thompson, 2017).
Cost of laundry
Laundry cost by red oak $52 per month
Annual cost $52*12 months
Laundry from premises $8 per month
soaps and fabric from mart $35 per quarter
Travelling cost $0.56*3 miles
= $8*4 months + $35+ $1.68
Appliances $420 + $380 = $800
Installation cost $43.72
Delivery charge $35
Energy costs $120 + $145 = $265
Estimated duration for each option is 7 years
$624 * 8 years = $4992
$68.68 * 8 years
$1065 (except deliver and installation cost) * 8 years
Thus laundry from premises isacceptable
Determination the need of additional employee
Cost of employee $9 per week
= $9*30 days = $270
Child numbers that can be increased with every employee 3
Therefore $800 * 3 = $2400
Therefore it can say that they should appoint additional employee.
Letter to frank
The couple should do their business within their own premises that would not require any additional cost rent. Thus the couple can afford additional employee and can increase the child count by 3 which makes a total of 9 children for the premises. Thus the total fees that can be calculated by the firm with the inclusion of 9 children are $7200 per month. From these fees income the coupe can easily mark a; their expenses regarding insurance, license and employer salary. The laundry expenses would not cost them much if they do it from their own premises. Thus it is to be recommended that they should conduct business from own premises (Havnes, 2015).
Part B: Journal Article Critique
Identifying the components of the management accounting system in each of the two companies, and discuss their relevance in enabling decisions to be made efficiently and effectively
Cannon Incorporation and Apple Incorporation have been two of the most successful businesses in their respective industry by the way of innovation within their products and services. Innovation has played an important role in the company's development in a very big manner. The management accounting system is an important and integral part of an overall management system which has helped the companies like Apple and Canon to use a financial system based on which financial decision making became easier for various operational activities of the firm. It cannot be denied that innovation within these companies were not the only parameter based on which the companies have reached great heights but management accounting system has also helped the firm to make better financial decision and to ensure that management of financial are well so that the company is able to invest in the innovations and find success within their respective market. The components of the management accounting system which played a vital role in the companies with their relevance to the company decision-making process are as follows:
Optimization of financial resources:
Financial resources are one of the most important things which a company has to manage in order to be financially efficient within the market. It is to be mentioned that firms want to optimize the level of financial resources used so that it is able to optimize the overall cost which is incurred in the operational activities of the firm this increases the profitability of the firm which in change increases the financial stability of the firm. In this manner when the company becomes financially stable the environment for innovation increases a company's management cannot focus on innovation when going through financial crisis hence financial stability is a major component which firms within different industry Like Cannon and Apple have used to achieve innovation at workplace so that they are able to innovate products and create a better product for their market. Hence in order to get financial stability optimization of cost is done by the use of Management accounting system (Fullerton et al. 2014).
Investment Appraisals: Now there are various investment option and innovation models in which companies like Canon and Apple can invest in but they will only invest in option which is innovative and financially viable in the future market. Profit making companies like Canon and Apple will never invest in an option which financially not viable because it will not derive profitability to the firm. Hence through the usage of management accounting system companies Like Canon and Apple determine the financial profitability of the different investment or innovation option based on which investment decision are made on which is the most profitable option to the firm. Hence by doing this, the company is able to be successful in the gaming market by both innovation and financial standards.
Explain how management accounting contributes to this innovation process. Include in your discussion two (2) specific examples from each of the two companies mentioned in the journal article
Innovation is a process in which an organization develops new concepts and idea based on which suitable market product are launched especially in companies like Cannon Incorporation and Apple Incorporation. Management accounting plays a vital role in managing financials for innovation. Both of the company have somewhere used management accounting process which has contributed to the company's innovation process. Examples of this are given below:
In the case of Canon, the firm was well equipped and was in good financial health when it thought of introducing a Mini Copier within the market which was dominated by the presence of Xerox. The company had various barred like over 600 patent brought from Xerox and the competition within Xerox in the market although the company went for the profit of developing a self-technology Mini Copier. This technology was self-owned and was innovated on home grounds. It is to be mentioned that management of the firm decided to conduct a feasibility study in which the feasible amount of sale which should be achieved by the company was decided to be 200 yen by doing this there goal and objectives in minds of the people although the company wanted to have this copier to be less costly in comparison to that of Xerox hence on this basis the company followed the management accounting process. The company followed the management accounting process by considering factors of cost which would be optimized in order to reduce the manufacturing production cost of the copier. Through the use of management accounting, the company also ensured that innovation is cost friendly for the company and reaps high of an amount of profitability. Management of cost factor involving the marketing and sales of the mini copier was also considered as the main pit based on which the decision in relation to the cost optimization was done. This shows the management accounting played a vital role in management cost for the Mini Copier innovated by the firm and helped the firm in making these product more cost friendly in the market so that this new innovation of the firm is a heavy competition to other product of Xerox in the same market by giving Canon and Competitive advantage (Maas et al. 2016). This innovation was self-claimed and was improved on home grounds. It is to be referenced that administration of the firm chose to lead an achievability contemplate in which the possible measure of offer which ought to be accomplished by the organization was chosen to be 200 yen by do this there objective and targets in psyches of the general population despite the fact that the organization needed to have these copier to be less exorbitant in contrast with that of Xerox consequently on this premise the organization pursued the administration bookkeeping process. The organization pursued the administration bookkeeping process by considering elements of cost which would be advanced so as to lessen the assembling generation cost of the copier. Through the use of the board bookkeeping the organization additionally guaranteed that advancement is cost agreeable for the organization and procures high of measure of gainfulness.
Provide four (4) specific outcomes or lessons learned from the article’s research findings that will be useful for management accountants in Australian companies to learn from, and justify
The lessons learned for the article which will be useful for management accountants in Australian companies to learn from are as follows:
The first point which can be learnt from the research findings of the article is that innovation is a process which helps a firm to get an opportunity to transform itself into a prominent company so that it is able to create a huge market for itself. Management accounting plays a very important role in the creation of such opportunity which suits the innovation environment within a company. Management accounting helps an organization to know whether they can go for innovation or not because of the implementation of innovation there will be a requirement of financial resources which can only be identified and managed using the management accounting systems (Renz, 2016).
Management accounting of company and management accountant within a firm is responsible for managing financial resources for the firm so that the innovation coined by the research and development team of the firm is implemented and operated in an evident manner. For this purpose, the role of management accounting increases as it helps in cost optimization management of different sources of finance which can be used for the operations. In this management, accounting plays a vital role in the management of finance which is available to different operations of the company and management accountants are responsible to manage these financial effectively (Kaplan and Atkinson, 2015).
Financial decision making is one of the most important aspect within management accounting system there are various innovation and investment option which are available to the firm hence in order to go for anyone option the company has to choose the most viable and innovative one as it will the company in achieving goals from both innovation and financial standards. Management accounting also helps in gathering financial information which is needed the most in making an overall decision. Hence it can be said that the management accountant and management accounting system are very responsible for the overall decision-making process within the firm.
The study has been done by including detailed research regarding the aspects and factors of the implications and evaluations of the management accounting and decision making for the year. This mainly involves the analysis of two segments one of them is case study analysis of the child care business of Douglas and Pamela. The couple decided to conduct a childcare business where both of them would take of children. They charged a certain amount of compensations for each child. Hence, the case study information has been observed and studied for the development of the requirements. Various calculations regarding business performances and possible growth options along with the current costing are also presented in the study. Adequate explanations and briefing have been added in the study. The second part of the study is an article review which reflects various angles of the management account that are applied in the modern market and organisations. The management accounting system is an important and integral part of an overall management system which has helped the companies like Apple and Canon to use a financial system based on which financial decision making became easier for various operational activities of the firm. It cannot be denied that innovation within these companies were not the only parameter based on which the companies have reached great heights but management accounting system has also helped the firm to make better financial decision and to ensure that management of financial are well so that the company is able to invest in the innovations and find success within their respective market. Thus with the provided information of the second case study and related articles, the requirements are fulfilled with the research made on the provided aspects. Detailed explanations and presentations regarding the management accounting and other factors are provided and explained in order to get suitable understandings and meaning of the study.
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