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Management Accounting Authors Note: Evaluating the decision of replacement of loader truck for Airline Company

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ACC202 management accounting (ACC202)

   

Added on  2020-05-28

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MANAGEMENT ACCOUNTING 9 MANAGEMENT ACCOUNTING Situation Accounting Authors Note: Evaluating the decision of replacement of loader truck (Situation 1): 2 Conniving provision of Flying Airline Company and detecting whether old or new loader is needed for their services: 2 Evaluating the income generated from different flight route (Situation 2): 5 A) Detecting flight route viability, which could allow Airline company to improve its financial performance: 5 B) Identifying other factors, which needs to be discussed, while making the

Management Accounting Authors Note: Evaluating the decision of replacement of loader truck for Airline Company

   

ACC202 management accounting (ACC202)

   Added on 2020-05-28

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Running head: MANAGEMENT ACCOUNTINGManagement AccountingName of the Student:Name of the University:Authors Note:
Management Accounting Authors Note: Evaluating the decision of replacement of loader truck for Airline Company_1
MANAGEMENT ACCOUNTING1Table of ContentsEvaluating the decision of replacement of loader truck (Situation 1):.......................................2Conniving provision of Flying Airline Company and detecting whether old or new loader isneeded for their services:...........................................................................................................2Evaluating the income generated from different flight route (Situation 2):...............................5A) Detecting flight route viability, which could allow Airline company to improve itsfinancial performance:...............................................................................................................5B) Identifying other factors, which needs to be discussed, while making the decision for flightroute:..........................................................................................................................................7Detecting the viability of special tourist charter flight (Situation 3):........................................8A) Evaluating calculation for the new special tourist charter flight when spare capacity ispresent and detecting its financial viability for the company:...................................................8B) Identifying the viability of special tourist charter flight when no spare capacity is presentfor the airline company:...........................................................................................................10Reference and Bibliography:....................................................................................................12
Management Accounting Authors Note: Evaluating the decision of replacement of loader truck for Airline Company_2
MANAGEMENT ACCOUNTING2Evaluating the decision of replacement of loader truck (Situation 1):Conniving provision of Flying Airline Company and detecting whether old or newloader is needed for their services:Situation 1ParticularsNot replacing Old loaderDepreciation $ 25,000.0 Write off$ 0.0Proceeds from sale$ 0.0Depreciation of new loader$ 0.0Operating costs $ 80,000.0 Total $ 105,000.0 The above table indicates the total operating expenses of Flying Airline Company,when the organization does not replace the old loader. Moreover, the calculation directlyvalues depreciation and operating cost that is incurred by the company promise operations.This totals the overall operating cost to $105,000, which relatively produces actual income ofthe organization. Bromwich and Scapens (2016) mentioned that evaluation of cost incurred inoperations allows management to detect adequate opportunities, which could reduce excessexpenditure conducted by the organization.Situation 1ParticularsReplacing Old loaderDepreciation$ 0.0Write off$ 25,000.0Proceeds from sale$ (5,000.0)Depreciation of new loader$ 20,000.0Operating costs$ 50,000.0Total$ 90,000.0The total operating cost can be identified from the evaluation of above table whenFlying Airline Company use new loader. The operating cost when using the new loader
Management Accounting Authors Note: Evaluating the decision of replacement of loader truck for Airline Company_3
MANAGEMENT ACCOUNTING3mainly declines to $90,000. The calculation of total operating cost is detected by writing of$25,000, where the position of new loader and proceed from the sale of old loader iscalculated. This directly helps in identifying the overall cost incurred by the Flying AirlineCompany in implementing the new loader in its operations.In this context, Chiarini andVagnoni (2015) argued that changes in operations could eventually increase expenses of theorganization if adequate research or not conducted by the management before taking thedecision. Situation 1ParticularsDifferential costDepreciation$ 0.0Write off$ 0.0Proceeds from sale$ 5,000.0Depreciation of new loader$ (20,000.0)Operating costs$ 30,000.0Total$ 15,000.0Differential cost can be identified from the above table for Flying Airline Company,which would allow the management to make adequate decisions to implement the new loaderor continue with old loader. The total savings on operating cost that will be conducted by theFlying Airline Company is $15,000, which helps in increasing its profitability. Thedifferential cost directly neglects any kind of changes in depreciation and write conducted inprevious calculations. Furthermore, differential cost directly states positive value for proceedsfrom sales of old loader, while negative value is detected for the depreciation of new loader.Lastly, the difference in operating cash is detected to be $30,000, which would allow theorganization to reduce its overall cost. This differential cost could eventually help inidentifying the savings that will be conducted by Flying Airline Company after implementingnew loader in its operations. According to Coad, Jack and Kholeif (2015), differentialanalysis allows management to identify and detect measures in which expenses can be
Management Accounting Authors Note: Evaluating the decision of replacement of loader truck for Airline Company_4

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