Derwent Ltd's Management Accounting Analysis

This assignment involves analyzing Derwent Ltd's management accounting reports to understand the company's operations, financial performance, and strategic decisions. The analysis is based on various operational costs, including those related to managing telecommunications services in the US division compared to the Australian division. The report provides insights into the company's performance, suggests effective gains in the business, and highlights the benefits of the US division.

MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Scenario 1a.......................................................................................................................................1
Question 1...................................................................................................................................1
Question 2...................................................................................................................................2
Scenario 1b.......................................................................................................................................3
Question 1...................................................................................................................................3
Question 2...................................................................................................................................4
Question 3...................................................................................................................................4
Scenario 2.........................................................................................................................................5
Question 1 Establishing the potential demand for the planned flights........................................5
Question 2 Distinguishing between business and pleasure travellers.........................................5
Question 3...................................................................................................................................5
Question 4...................................................................................................................................6
Recommendation:.......................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Implication of management accounting techniques which in turn will be helpful and
effective as to have satisfactory rise in the income and efficiency in business performance. In the
present report there will be discussion based on analysing the financing for Derwent Ltd
Manufactures Telecommunications and their operational practices in US and Australia. There
will be several analyses which will bring the effective information in relation with improving the
operational income as well as analysing the fruitful income sources in both the divisions.
Scenario 1a
Question 1
Particulars details Amount (in $)
Reduction in taxes of Australia 35% * $1
= $0.350
Rise in import duties of US 15% * $1
= $.150
Less: Reduction in US taxes 40% * 1.10
= .440
Tax payments 0.060
Particular details Full manufacturing cost Market price
Australian division
Sales Revenues 800 * 10000 = 8000000 950 * 10000 = 9500000
Expenses
Manufacturing Expenses (800 *
10000)
8000000 8000000
Operating income 0 1500000
Less: Tax @ 35% 0 525000
Operating profit after tax 0 975000
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US division
Sales Revenue (10000 * 1150) 11500000 11500000
Expenses
Transferring Expenses 800 * 10000 = 8000000 950 * 10000 = 9500000
Import duties @ 10% of
transferred in price
80 * 10000 = 800000 95 * 10000 = 950000
Total cost (transferring cost +
import duties)
8800000 10450000
Operating income (Revenue –
expenses)
2700000 1050000
Less: Tax @ 40% 2700000 * 40% = 1080000 1050000 * 40% =
420000
Profit after tax (operating
income – tax)
1620000 630000
Question 2
Particular details Amount (in $)
Full manufacturing cost per unit 800
Market price 950
Average price (800 + 950) / 2
= 875
Particulars Amount (in $)
US division
Sales revenue (10000 * 1150) 11500000
Expenses
2

Transferring Expenses 875 * 10000 = 8750000
Import duties @ 10% of transferred in price 87.5* 10000 = 875000
Total Expenses 9625000
Operating income 11500000 – 9625000 = 1875000
Less: Tax @ 40% 1875000 * 40% = 750000
Profit after tax 1875000 – 750000 = $1125000
Scenario 1b
Question 1
Particulars details Market price
Australian division
Sales Revenues 950 * 10000 = 9500000
Expenses
Full manufacturing cost (800 * 10000) 8000000
Operating income 1500000
Tax @ 35% 525000
Operating income after tax 975000
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US division
Revenue (10000 * 1150) 11500000
Expenses
Transferring Expenses 950 * 10000 = 9500000
Import duties @ 10% of transferred in price 95 * 10000 = 950000
Total cost (transferring cost + import duties) 10450000
Operating income (Revenue – expenses) 1050000
Tax @ 40% 1050000 * 40% = 420000
Profit after tax (operating income – tax) 630000
Interpretation: In accordance with the operational gains of the business in both the
segmentation such as Australia will bring the operating income after tax as 975000 and US
division has 630000. Therefore, it has been ascertained here that US division will be beneficial to
the firm as per having higher revenue due to lower operational expenses (Ax and Greve, 2017).
However, there will be a satisfactory rise in the revenue and income of business in relation with
having the most appropriate gains from the business.
Question 2
On the basis of above listed measurements it has been determined here that the divisional
managers in both the locations such as US and Australia. It can be said that they will have
effective rise in the income and the reduction in the operational expenditures of the firm.
Therefore, it will be helpful and profitable in developing the business efficiencies as well as
managing the operational gains for the long term business operations. On the other side, there
has been variation in the taxation rates and duties prices of the countries which affects the
revenue generation (Zhou, 2017). Thus, to overcome with such expenditures it will be suggested
to the mangers that they must search alternative solution and mainly emphasis over domestic
production or resources which will be costs effective to them.
Question 3
The analysed outcomes in the firm which indicates that there will be changes into
operational practices as well as revenue generation of the business which in turn will be effective
and helpful as to have satisfactory rise in the income and operations of entity (Latan and et.al.,
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2018). Moreover, it will be very helpful and beneficial to the business professionals as to have
satisfactory rise in the income and the reduction over operational expenses.
Scenario 2
Question 1 Establishing the potential demand for the planned flights
In relation with managing the flight schedule of the airline there will be need to have
effective plans and operational analysis over the prices of the organisation they has had planned
for managing the flying schedule of East-coast Airways which in turn will have effective
analysis over returning the daily return flights from Melbourne to Gold coast (Eldenburg,
Krishnan and Krishnan, 2017). Thus, to manage the schedule and the ticket prices of these flights
there is need to analyse the market demand, number of travellers each day from each location
were boarded into the flights. However, after analysing the requirements and operational
efficiency of the business which in turn will be effective as to determine the suitable prices over
the services offered by them (Christ and Burritt, 2017).
Question 2 Distinguishing between business and pleasure travellers
Business travellers: the travelling schedule of the business professionals is for the work
and mainly for attending any meeting or synopsis at any location. They do not make stay at a
place for more than a week or usually they do not stay at a place on weekends. Therefore, the
desired of promptness in the work and the travelling purpose, they are goal seeker and always in
a hurry (Soderstrom, Soderstrom and Stewart, 2017). Therefore, it will be beneficial to the airline
in terms of having appropriate gains and the operational advantages. They do not focus over the
prices of the tickets as they mainly make booking at the end time and which will charge them
higher cots. Therefore, these are the most profitable consumers for an Airline unit (Honggowati
and et.al., 2017).
Pleasure travellers: In relation with the behaviour of pleasure travellers in an Airline
unit it can be said that they are free from the rush and they start their journey in a week and
usually make a stay at the location during weekends (Rikhardsson and Yigitbasioglu, 2018).
They return to their places may be during the week or thereafter. These are the traveller which
waits for the Airlines to lower down the ticket prices and plan the most effective deal for better
travelling experiences (Schaltegger, 2018). They are very cost sensitive and make the plans
which in turn will not be that profitable to the Airline firms as compared to business travellers.
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Question 3
Particulars 1 2
prices 600 1350
Business 200 180
Pleasure travellers 100 20
revenue
Business 120000 243000
Pleasure travellers 60000 27000
Less: variable cost
Business (225*65), (215*150) 14625 32250
Pleasure travellers (110*65), (25*150) 7150 3750
Total Profit
Business 105375 210750
Pleasure travellers 52850 23250
Question 4
Particulars 1 2
prices 600 1350
Business 200 180
Pleasure travellers 100 20
revenue
Business 120000 243000
Pleasure travellers 60000 27000
Less: variable cost
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Business (225*65), (215*150) 14625 32250
Pleasure travellers (110*65), (25*150) 7150 3750
Less: Fuel cost business 18500 18500
Less: Fuel cost pleasure travellers 18500 18500
Total Profit
Business 86875 192250
Pleasure travellers 34350 4750
Recommendation:
In relation with analysing the costs and the profitability of this categorise of travellers in
an Airline business on which it can be said that there will be higher revenue generation which
were being generated by Business travellers. Moreover, it can be said that the business traveller
will be most profitable and effective to the industry as to have satisfactory rise in the income and
the operational gains of the business (Air travel trends in Australia, 2018). Therefore, on the
basis of such analysis it will be recommendation to the professionals of this aviation industry is
to make rise in the prices of seats as well as increase the business seats more than the pleasure
travellers (Dai and et.al., 2017). On the other side it will be helpful as if they make increment in
the ticket prices or reduce the costs of the firm.
CONCLUSION
On the basis of above report it can be said that there are various techniques which were
being implemented as to have the accurate data analysis and concrete reasons behind the
operations of the firm. Moreover, there has been analysis based on various operational costs of
Derwent Ltd Manufactures Telecommunications in relation with managing the operations as well
as making effective gains in the business. They have been suggested that the US division is most
beneficial to the firm in comparison with the Australian division in the world.
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REFERENCES
Books and Journals
Ax, C. and Greve, J., 2017. Adoption of management accounting innovations: Organizational
culture compatibility and perceived outcomes. Management Accounting Research. 34.
pp.59-74.
Christ, K. L. and Burritt, R. L., 2017. Water management accounting: A framework for
corporate practice. Journal of Cleaner Production. 152. pp.379-386.
Dai, N. T. and et.al., 2017. IPOs, institutional complexity, and management accounting in
hybrid organisations: A field
Eldenburg, L. G., Krishnan, H. A. and Krishnan, R., 2017. Management Accounting and
Control in the Hospital Industry: A Review. Journal of Governmental & Nonprofit
Accounting. 6(1). pp.52-91.
Honggowati, S., and et.al., 2017. Corporate governance and strategic management accounting
disclosure. Indonesian Journal of Sustainability Accounting and Management. 1(1).
pp.23-30.
Latan, H. and et.al., 2018. Effects of environmental strategy, environmental uncertainty and top
management's commitment on corporate environmental performance: The role of
environmental management accounting. Journal of Cleaner Production. 180. pp.297-306.
Rikhardsson, P. and Yigitbasioglu, O., 2018. Business intelligence & analytics in management
accounting research: Status and future focus. International Journal of Accounting
Information Systems. 29. pp.37-58.
Schaltegger, S., 2018. Linking Environmental Management Accounting: A Reflection on
(Missing) Links to Sustainability and Planetary Boundaries. Social and Environmental
Accountability Journal. 38(1). pp.19-29.
Soderstrom, K. M., Soderstrom, N. S. and Stewart, C. R., 2017. Sustainability/CSR research in
management accounting: A review of the literature. In Advances in Management
Accounting (pp. 59-85). Emerald Publishing Limited.
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Zhou, Z., 2017. 90. Framework and Development Trend of Management Accounting
Information System—Based on the Empirical Analysis of Guangju Energy Chemical
Listed Companies. Boletín Técnico, ISSN: 0376-723X, 55(9).
Online
Air travel trends in Australia. 2018. [Online]. Available through
:<http://www.traveller.com.au/air-travel-the-emerging-trends-travellers-should-know-
about-gsuz7z>.
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