Canon's Innovation and Cost Management Strategies

The assignment provides a detailed analysis of Canon's business process management (BPM) practices, highlighting the company's approach to innovation and cost management. The case study examines how Canon, a Japanese company, has managed its BPM practices over time, with a focus on the development of new products such as copiers and scanners. The document also discusses the importance of joint efforts between design and production engineering in achieving the objective of Canon Revolution, which aimed to create a new concept for operating the company's business processes. The assignment draws on various references, including books and journal articles, to provide a comprehensive understanding of Canon's BPM practices.

Managerial Accounting

Table of Contents
Managerial Accounting....................................................................................................................1
INTRODUCTION ..........................................................................................................................2
TASK 1............................................................................................................................................2
1. Different types of cost.............................................................................................................2
2. The relevant and irrelevant information to make the decision of purchase the appliances....3
3. Cost to the couple to launder the cloths..................................................................................4
4. Calculation for hiring the employees for child care................................................................5
5. Calculation for accommodation and hiring new employees...................................................6
TASK 2 ...........................................................................................................................................7
1. Components of management accounting system in each of two companies and discuss their
decisions is to be made effectively and efficiently.....................................................................7
2. The contribution of management accounting in innovation process......................................8
3. Outcome or lessons from the study of article..........................................................................9
CONCLUSION..............................................................................................................................10
REFERENCE ................................................................................................................................11

INTRODUCTION
Managerial accounting is the process of measuring, identifying, interpreting, analysing
and communicating the useful information to the higher authority or managers to make the
decision and set the goal for the organisation. It is also known as cost accounting. The report
highlights the case study and the practical study of uses of accounting information in real life
companies. The case study is based on a married couple Douglas and Pamela who decide to start
a business of day child care in their house and they named their business Nanna's house. This
report focus on the different types of cost like variable cost, fixed cost, direct cost, indirect cost,
opportunity cost etc. and the cost which are included in the case study. It explains the various
kind of information which are relevant for the decision making of purchase of appliances and
also the information which are not related to the purchase decision and they can be avoidable. It
also explains the various cost for launder the clothes through different way. It highlights the cost
of hiring the employee and how it can be benefited for them and how much. It helps to
understand the cost of expanding their business and to understand that should they have to accept
the 14 children or not. It explains the cost of accommodation, rent, and increase in energy. It
helps to analyse the various cost on including the no. of children and to make the decision that
they have to rent the house for 14 children or they have to operate their business at home with 9
children.
The second part of the study explains the component of management accounting and their role in
making decision efficient and effective.
TASK 1
1. Different types of cost
There are different types of cost in the accounting system. The types of cost are direct
cost, indirect cost, fixed cost, variable cost, opportunity cost, sunk cost, controllable cost etc. The
estimation of cost helps to prepare budget for the organisation and manage the activities
according to the budget. In the case study of Douglas and Pamela the cost involve are:
Fixed cost : Fixed cost does not vary with change in number of goods and services (Sun and
et.al., 2015). For example, the cost of machinery, house, building are fixed in nature. Fixed cost
are less controllable in compare to the variable cost.

In the case study of Douglas and Pamela the fixed cost are:
Fixed cost Amount
Insurance $3840
Cost of home and its renovation $79500
The insurance and cost of home are fixed in nature because it does not increase with increase in
no. of children in their child care.
Variable cost: Variable cost are not fixed in nature. It varies with change in number of
products. Variable cost increase with increase in production or decrease with decrease in
production. The examples of variable cost are packaging cost, light and water bill, food expenses
etc (ambaud, Richard, 2015).
In these case study the variable costs are licensed fee, meals and snack cost, fee charges
for the child care etc. the licensed fee for 6 children is $225 but it varies with increase in no. of
children from 6 to 7 or 8.
Direct cost: Direct cost are completely attached with the production of goods and
services. We cannot separate the direct cost from the production. It includes the manufacturing
supplies, commissions, wages, power and water supplies, fuel etc. Direct costs are directly
connected with production activities.
In the case study of Douglas and Pamela the direct costs are utility cost. Utility cost
include the power and water supply cost. Utility cost is directly connected with the household
expense to care the children. The laundry services are also included in direct cost.
2. The relevant and irrelevant information to make the decision of purchase the appliances
The relevant information to make the decision of purchase the appliances
Relevant information is the information which helps to make the efficient decision for
purchase any items (Tonchia, 2018). These information helps us to make an estimation of the
total cost and the future outcome of the purchase of item. In these case study, the cost of washer
and dryer, cost of additional accessories for installation, delivery cost are relevant for making the
decision to purchase the appliances of dryer and washer. These are relevant information because
it helps to make the appropriate decision.

The irrelevant information to make the decision of purchase the appliances
Irrelevant information is the information which does not help to make an efficient
decision for purchasing any item. This information is not related to the product or services and
can be avoided in decision making process. The avoidance of this kind of information does not
affect the purchase decision because it can be easily manage by the organisation. In the case
study of Douglas and Pamela the cost of laundry supplies like dry-cleaning fluids, fabric
softeners, brightening agents, conditioning agents, enzymes etc. and the increasing energy cost
are irrelevant for making the decision of purchasing the appliances (Li, Hall, 2016). These cost
does not affect the buying behaviour because they can avoid these cost in making the decision of
purchase of Dryer and Washer appliances.
3. Cost to the couple to launder the cloths
1 option launder the cloth by the Red Oak company Cost Total cost
Pick up, Delivery and Washing Cloth cost $52 $52
2 Option launder the cloths in Laundromat
Cost of Conveyance 14.5488
cost of launder the cloths 34.64
cost of launder supplies
11.66666666
67
Total cost
60.85546666
67
3 option purchase of appliance
Particulars Cost Total Cost
Washer cost $420
Dryer cost $380
Cost of accessories for installation $43.72

Delivery cost $35
Total cost 878.72
per month cost incurred for purchasing appliances
Depreciation per month
9.153333333
3
Energy cost for dryer
12.08333333
33
Energy cost for Washer 10
Total cost per month
31.23666666
67
Interpretation: The cost of launder the cloths by red Oak Company is $52. If they launder
the cloths in Laundromat, then the cost incurred is $60.86 (approx.) which include the
conveyance and launder supplies cost. On the purchase of appliances like washer and dryer the
cost incurred per month to Douglas and Pamela is $878.72 for the life of 8 years so the cost for 1
month is approx. 31.24 (excluding the cost of launder supplies).
4. Calculation for hiring the employees for child care
Calculation of net earnings after the hiring of new employees
Particulars cost cost
Total fee from day care 7200
Less: Total cost to be incurred
cost of licensing 18.75
Cost of new license 9.375
employment cost 1558.8
cost of meal and snacks 864
insurance 320 2770.925
net income 4429.075

calculation of present net income of day care
particular cost cost
fee from day care 4800
less: cost to be incurred
license cost 18.75
cost of meal 576
insurance 320 914.75
net income 3885.25
Interpretation: On hiring a new employee the cost incurred to Douglas and Pamela is
$2770.925 so the net income is $4429.075 for the 9 children and the cost for 6 children is
$914.75 and the net income is $3885.25. On hiring one extra employee and increasing the no. of
children they can earn the extra income of $543.825. Franks have to hire the additional employee
because on hiring the additional employee they can increase their income by $543.825. The
acceptance of 3 additional children will increase their profit and to manage the 3 children they
will hire one employee.
5. Calculation for accommodation and hiring new employees
calculation of net earnings of day care by caring for 14 children
particular Cost Total cost
fee from day care 11200
Less: cost to be incurred
license cost 18.75
cost of new license 25
employment cost 4676.4
cost of meal 1344
utility cost 125

rent 650
insurance 416.6666666667
7255.816666666
7
net income
3944.183333333
3
Interpretation: On increasing their no. of children from 6 to 14 the cost of the day care
will increase. They have to increase the no. of employees also because according to the state
regulation each adult can supervise 3 children so they have to Hire 3 more employees which
increase their cost. They have to continue their facility at home because when they rent space in
town their profit is $3944.18 (approx.) and when they continue their business at home then the
profit is $4429.075 with 1 extra employee and 9 children. So the extra profit they can get from
doing business through the home is 484.895. The total cost on 14 children includes the rent,
licensing amount, insurance, utility cost and employee cost. The new licensing amount is $43.75
because for 6 children the amount is 18.75 so for the 14 children the cost will increase by $25.
 They should continues the business at home rather than to rent the house for extra
children. To continue the business at home will help them to earn higher profit rather than
to rent the space in town. They can earn $4429.075 at home with 9 children which was
greater than to rent a space.
 They can accept only 3 more children in their day care because on addition the children,
cost will increase with decreasing profit. So rather than to accept the 14 children they
have to continue their business with 9 children.
 They will need to hire one more employee because for 9 children they need 3 employees
(each adult for 3 children) so excluding Douglas and Pamela they need one more
employee. The cost of hiring one employee is $1558.8 because the per hour cost is $9 and
the employee can work 40 hours in a week so the cost is $360 and there are 4.33 weeks in
a month so the total cost of employee will incur to $360* 4.33 which is $1558.8.

TASK 2
1. Components of management accounting system in each of two companies and discuss their
decisions is to be made effectively and efficiently.
Management accounting use the provision of accounting information so they can better redress
themselves before taking any decision in the matter of organisation. Management accounting
involves strategic management, performance management and risk management (Hassanzadeh,
Cheng, 2016). Management accounting is the process of preparing the accounts that aims to give
us the accurate and timely information required by the agents of management accountant within
the organisation such as manager of particular department and chief executive officer while
taking the decision.
Components of Canon
Cost reliability
Canon mini copier has do theCost saving and reliability improvement is impossible
contradiction in between as the upgrade the mini copier and it is having very different
characteristic as compare to traditional PPC''s as this copier gives very clear copies and also it is
very light weighted and compact and the nmost fundamental contradiction the team faced is
inverse relationship in between the reliability and cost so for this the director has given the
objective called cost reliability improvement. For this they have created the concept of how to
operate the copier. for this they have to do the planning is the first stage in which the effective
strategies and techniques are being formulated to attain the company goals effectively. Canon
and Apple both use the strategy of planning before the innovation of product. In the case of apple
they try to make the cost less expensive as the mac has adopted many features of computer, it
was smaller, faster and less expensive. For this they plan and construct the business activity to
ensure the growth and profit of business, this step help the organisation to take the right decision
by using the proper strategies such as optimum utilisation of resources, maintain the financial
report, safeguard the asset (Haney and et.al., 2017).
feasibility

In the case of canon feasibility team is being formed to examine the necessary things in
Mini copier and the entire team is having the average age of 28 and they did lots of Research and
development, even they organise the camp session for the arguments done on this and then they
design the product. In this scenario the decision making is very important in every step of
business as it enables us to take decision of business in wise manner. If we did not attain the
sales goal than the decision has to be done for the adjustment of cost. Strategy used in pricing
and promotion of innovative product. In the case of Apple they examine the feasibility to
develop extreme low cost computer and at that point of time it was just limited to three people. in
the early time the team does not have any idea about what the computer look like and then they
grow their team and make the mac computer. For this they do the decision to edit the marketing
plan if it does not go smoothly. As tactical partner and provider of decision is being based on
operation and financial information, management accountant as they are obliged to lead team and
report all the responsibility and relationship to the finance department of organisation. Decision
is to be made weather the business is small and big we must prepare to provide the information
for management accounting even it was being noted down or printed on a piece of paper.
2. The contribution of management accounting in innovation process
Innovation is the action of undertaking through which the new information is being
generated as innovation emerges the new information and it is being concreted in the product
which meets the human needs (Kaplan, Atkinson, 2015). Canon has done the innovation of Mini
Copier and the Apple has developed the Macintosh computer. For both of this company it is the
crucial development of products. Management accounting techniques do the strategic focus on
both the aspect of financial and non financial information, and having the characteristic are
bench marking, target costing, based costing, balanced score card, total quality management etc.
it is being consider that innovation are primarily associated with the contemporary management
accounting techniques.
Innovation is associated with the newness in the present product to add any latest
features, techniques. For example, the development of new product innovation is an aspect of
information creation (Holmgren Caicedo and et.al 2018). To be in the competition the companies

are creating the innovation in existing product by making the strategies. Innovation is perceived
when it was invented or being adopted by the people than only it will evaluate the judgement.
Management accounting plays an important role in innovation as shows the various issues
related to initiation, implementation and internalisation of management accounting and use the
advance tool system used in such as Just in time and Total quality management.
3. Outcome or lessons from the study of article
From the canon Mini Copier
11 Team management: the innovation of canon MC explains that how a better team can
achieve the vision of the organisation (Asakura, 2017). The case study highlights the
team work of innovation of MC. From the case study of mini copier, they find that the
manager from different department work together to give their ideas and make the
decision. Canon company freely support their employees to make the efficient changes to
minimize the cost of MC and replace the drum timely to improve the quality of printing.
They motivate their employees to arise different complicated problem and then find their
solutions. They work on drum and cleaner to reduce the cost of MC. The team
management and the work of different department helps them to improve their
performance and innovate a new component to expand their business from canon camera
to MC.11 Supportive environment: The environment of canon group was too supportive. Through
the study we find that they arrange a meeting with different department to give their
valuable suggestion to improve their innovation of canon Mini Copier.
From the study of apple incorporation
Macintosh group examines to develop a low cost computer for the public. Macintosh was a mini
computer or say as personal computer. The outcomes from the case study are :
11 Use of highly skilled person: From the apple incorporation case study we find that the
highly skilled workers or employees can convert an imagination into reality. The
innovation of macintosh was the imagination of Steve jobs (Nonaka and Kenney, 1991).
He starts to create a team to innovate a personal computer which was inexpensive for the
users. The team had only 25 members. The small size of team allowed them to interact
with one another and give their suggestions and improve the system but the problem is

that the final decision is in the hand of Steve jobs. He selects the highly skilled person
from the mac and lisa group to innovate the product. They are highly skilled in their work
and give their valuable and innovative suggestions like the use of 4 voices in the system.
These can help to create innovative idea and develop the management information
system.11 Control of project leader: in the project of innovation of Macintosh computer the
control; of the whole project are in the hand of Steve (Heracleous, Papachroni, 2016). He
makes the final decision. It helps them to innovate the product without any support of
apple incorporation because they were engaged in Apple II and Apple III and Lisa project
and refuse to give their support. The control of Steve helps them to assign the project
effectively and finely gain the outcome and the success in their work. The study helps the
management accountant to make the efficient and effective decisions.
CONCLUSION
From the above study it has been summarised about the different types of cost that is
fixed, variable and direct cost and mention the example of each type of cost. This report also
analyses the cost of appliance and the cost of laundry and it suggests that the company has to hire
the employees for the children at the same company has to hire only nine children if they hire for
14 children it will increase the cost. This report also explains the different components of
management accounting system and their relevance at the same explains the contribution of
management accounting in innovation and in last it elaborates the outcome of two innovation
done by Canon and Apple.
Innovation in management accounting is being consider as ideas, concepts, practices or
the object that is being recognised by the organisation and adopting the innovation. Innovation
requires lot of time and research, small Copier require the different characteristic from PPC's in
the result it is very lightweight and compact and generate the clear copies but the problem
associated that it was used rarely and it is very expensive earlier than the cost reliability
improvement is being taken in consideration to resolve this contradiction and create the new
concept is also come up with how to operate. To achieve the objective of Canon Revolution there
is a joint efforts by the Design and Production engineering that is inseparable.

REFERENCE
Books and journal
Asakura, Y., 2017. BPM Practices in a Japanese Company: A Case Study of Canon Co.
Ltd. Holistic Business Process Management: Theory And Pratice, 14. p.109.
Eckert, K., 2019. Low-Cost 8mm/Super 8 Film Digitization Using a Canon 9000F II Flatbed
Scanner and Photoshop: A Case Study. Journal of Contemporary Archival Studies, 6(1).
p.16.
Haney and et.al., 2017, May. Utility cost of formal privacy for releasing national employer-
employee statistics. In Proceedings of the 2017 ACM International Conference on
Management of Data (pp. 1339-1354). ACM.
Hassanzadeh, S. and Cheng, K., 2016. Suppliers Selection In Manufacturing Industries And
Associated Multi-Objective Desicion Making Methods: Past, Present And The
Future. European Scientific Journal, ESJ, 12(1). p.93.
Heracleous, L. and Papachroni, A., 2016. Strategic Leadership and Innovation at Apple Inc.
SAGE Publications Ltd.
Holmgren Caicedo and et.al 2018. The development of the management accountant's role
revisited: An example from the Swedish Social Insurance Agency. Financial Accountability
& Management, 34(3). pp.240-251.
Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.
Li, W.C. and Hall, B.H., 2016. Depreciation of business R&D capital. Review of Income and
Wealth.
Nonaka and Kenney, 1991. Towards a new theory of innovation management: A case study
comparing Canon, Inc. and Apple Computer, Inc.”, Journal of Engineering and Technology
Management. 8.pp. 67-83.
Rambaud, A. and Richard, J., 2015. The “Triple Depreciation Line” instead of the “Triple
Bottom Line”: towards a genuine integrated reporting. Critical Perspectives on
Accounting, 33. pp.92-116.