Managerial Accounting

This homework assignment analyzes managerial accounting concepts using a case study of Nanna's House, a childcare business. It examines cost types, evaluates appliance purchase decisions, and explores the impact of hiring additional staff on profitability. The assignment also discusses management accounting systems used by Canon Inc. and Apple Computer Inc., highlighting their contributions to innovation.

Managerial Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
PART A ..........................................................................................................................................1
1. Various types of cost which occurs in organisation ................................................................1
2.) Best alternative to purchase appliance....................................................................................2
3.) Cost that couple has to incur to launder cloths.......................................................................3
4.) Calculation of Franks additional employee............................................................................4
5.) Calculation in context to the how much employees are required to hire...............................5
PART 2............................................................................................................................................6
1.) Management accounting system in Canon Inc. and Apple computer Inc. ..........................6
2. Management accounting contribute to the innovation process ...............................................7
3. Specific lessons from article research .....................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Managerial accounting is the process which is helpful to prepare relevant documents &
reports which assist the corporation to take better decisions for the smooth functioning of
business operations. It covers distinct topics such as: cost behaviour, budgeting, capital
budgeting, transfer pricing etc. Managerial accounting is required in order to keep financial
records so that financial position of a firm can be analysed. To better understand this concept
chosen business is Nanna's House that is started by Pamela & Douglas and it is basically a child
care business. In this report, there are various topics has covered such as: to examine distinct
types of cost, purchase decision in context to the appliances, cost associated with couple to
launder clothes and elements of management accounting system. Along with this, report also
discuss about innovation process in a firm as a process of information creation and outcomes
which are beneficial for management accountant in Australian corporations.
PART A
1. Various types of cost
Cost express the amount of funds which spent on the production of goods or service. It is
treated as an expenditure so it is required for the corporations to minimise the cost so that profit
margin can increase. To sustain for a long time in market it is important for Nanna's House to
minimize the cost and maximize the profits. It is helpful for the firm to achieve its predetermined
objectives (Koester and Wangerin, 2016). To produce a product there are different types of cost
has incurred such as: fixed cost, variable and semi variable cost and these are as mention as
below:
Fixed cost: It is that type of cost which does not change over a short period of time but in
long term it can change as per the changes in sales volume. It involves: depreciation, insurance,
property taxes, rent etc. To minimise this cost is not an easy task because its remain fir for a
certain period of time. This cost does not change as per the changes in production. As the case,
fixed cost has arises in the business of Nanna's House in which Douglas and Pamela has paid
fixed annual insurance of $3840. Along with this cost of dyer & washer which is $420 and $380
that is also not change. Apart from this cost of delivery of the appliances which is $35 and it is
also comes under fixed cost where as the installation cost that the couple has to incur which is
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$43.72. So these different types of fixed cost which can be incurred in the business which is
started by Douglas & Pamela.
Variable cost: The cost which can change as per the changes in production volume and it
includes cost of raw material, labour etc. If production has reduce than this cost will also reduce
and if production will increase than variable cost will also increase. According to the case of
Douglas and Pamela, the variable cost is $800 per month and it is the cost of child care services
which can vary. Along with this $15 have to pay by the parents if children's come after 4 pm and
$ 3.20 is the cost of snacks & meal which can vary as per the changes in number of child. Apart
from this cost of laundry is $ 8 per week which can changes over the number of weeks and it is
also included in variable cost (Granof and et. al., 2016).
Semi variable cost: Variable cost is that which contains the elements of fixed as well as
variable cost. There is one portion of cost is fixed in this type of cost and it can not be change
even production becomes zero and other portion is variable which change as per the changes in
production level. According to the case study of Douglas and Pamela, semi variable cost has
been incurred while hiring the new staffs. As because one employee can take about three
children maximum and if number of children has been increased than they have to hire additional
employees. If they want to take care about total fourteen children's then three employees are
required to be hire additionally.
2.) Best alternative to purchase appliance
To take an effective decision it requires different types of information but it should be
relevant and while taking a decision there are various factors are needed to be analysed .
According to the case scenario, Douglas and Pamela wants to buy an appliances that will help
them to launder the clothes. For the corporation it will be used as an asset which is beneficial to
provide laundry services to the children and for that purpose it is require to take appropriate
decision in context to the overall cost of procurement of assets & required cost for the
installation. Before taking a decision it is require to know the useful life of an asset and amount
of depreciation is needed to be calculated because value of an asset will reduce over a period of
time. As the information which is important to know while purchasing the appliance are includes
cost of washer which is $420 & $380 is the cost of dryer. The delivery charges of store is $35
which is required to be analysed while taking a decision. Where as irrelevant information that is
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cost of laundry supplies that is $35 per quarter and it does not needed to be consider (Zhang and
Zhang, 2017).
3.) Cost that couple has to incur to launder cloths
As there are 3 alternatives are available in front of Douglas and Pamela which are as to
launder the clothes by itself, to take laundry services from Read Oak and to purchase a new
appliance. The cost which incur in each option is describe as below:
Option 1: Self serve laundry
As from the calculations it has been identified that there are mainly 3 options are
available in front of Douglas and Pamela and they have to chose best one so that it can get more
revenue. The cost will incur $52 per month if they take services from Red Oak Laundry and Dry
Cleaning. If clothes are launder by themselves than cost of appliance will be $ 60.86 and if they
but new appliance than cost will be 31.24 so it is important for Douglas and Pamela to purchase
new appliance because it inured less cost as compare to other options (Summers and Wood,
2016).
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4.) Calculation of Franks additional employee
As calculations of profit & loss are based when there are total six children and no
additional staff has been hired:
Income statement $
Income
Fees from child 800*6 4800
Expenditure
State & annual fees 225/12 18.75
Insurance 3840/12 320
Meal and snacks 6*3.2*30 576
Depreciation (79500/25)/12 265
Utility cost 50
Total cost 1229.75
Net profit 3570.25
As calculations of profit & loss are based when there are total nine children and
additional staff has been hired:
Income statement $
Income
Fees from child 800*9 7200
Expenditure
State & annual fees 3.125*9 28.13
Insurance 3840/12 320
Meals & snacks 6*3.2*30 576
Depreciation (79500/25)/12 265
Utility cost 50
Salary to additional employee 40*9*4.33 1558.8
Total cost 2797.93
Net profit 4402.08
As from the calculation it has been analysed that overall income that is earn if there are
no additional staffs are being hired and in this context the cost is $4800 & overall cost which
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arises $ 1229.75 & in that case $ 3570.75 is the net profit where there is six child and no
additional staffs has been hired by the corporation. When number of children's has become nine
and for that purpose it have to hire additional workers and in this context overall income earn by
organisation is $ 7200 and total cost which has incurred is $ 2797.93 and in this regard it has
earned the net profit of $ 4402.08. So from the above calculations it has been analysed that if
Nanaa's House hire more employees than they earn more profits and it is beneficial for the strong
financial position of the organisation (Park and et. al., 2016).
5.) Calculation in context to the how much employees are required to hire
Capacity at 9 children
If an extra worker is being hired
Income $ $
Fees from child 800*9 7200
Expenditures
State & annual fees 3.125*9 28.125
Insurance 3840/12 320
Meals & snacks 9*3.2*30 864
Depreciation (79500/25)/12 265
Utility cost 50
Salary to additional worker 40*9*4.33 1558.8
Total cost 3085.92
Net profit 4114.08
Capacity at 14 children
If an extra worker is being hired
Income
Fees from each child 800*14 11200
Expenditures
Rent 650
State & annual fees 3.125*14 43.75
Insurance 5000/12 416.67
Meals & snacks 14*3.2*30 1344
Depreciation (79500/25)/12 265
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Utility cost 125
Salary to additional staff 40*14*4.33 2424.8
Total cost 5269.22
Net profit 5930.78
According to the above calculations it has been identified that where company has
capacity of nine children's then total cost will incurred which is $ 3085.92 and Nanna's House
will earn the net profit of $ 4114.08. In the case where there are total fourteen children's and
additional staffs has been hired. In this situation the total cost which incurred is $5269.22 and the
net profit which is generated by the company is $ 5930.78. So it is beneficial for the organisation
to hire additional employees so that it can take care about 14 children's and it is also beneficial
for the firm in order to earn more profits. According to the state regulations it has been instructed
that an employer can hire maximum 3 children's. So it is suggested that Franks can move the day
care from its home to rented space in town so that it can accommodate all fourteen children's. It
is also helpful in context to the growth of company so they should hire more staffs which can
take care about 14 children's (Narayanaswamy, 2017).
PART 2
1.) Management accounting system in Canon Inc. and Apple computer Inc.
As management accounting system is important for the organisations in order to make
proper records of financial transactions related to the business of company. It provide appropriate
information about the financial position of the business entity which is helpful to take better
decisions in context to growth of firm so that predetermined objectives can be accomplish and
firm can survive for a long time in the market (Ward and Calabrese, 2018). It is also beneficial to
contains the internal & external information that is used to prepare budget and important
management reports so that financial performance of corporation can be analysed. With the help
of management accounting system company can identify, analyse, evaluate and communicate the
important financial information and data which are useful for the management of Canon & Apple
to take effective decisions so that business of firm can grow and it can generate more profits
which is beneficial. Both companies are using distinct management accounting systems which
are as describe below:
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Cost reliability improvement system: As Apple & Cannon can use this specific system
in order to control the cost of its manufactured products. As an example, in the year 1969 Canon
has launched PPC by implementing original technology. In the year 1982, the demand was
levelling off & appear for fice market saturation. As there is mini copier has been launched by
the organisation which can be used in office because it is small in size. The clarity can be seen in
copy & it is less than fifty ponds. This product is cost effective because there is no additional
cost has been incurred to purchase this product. Apple has also emphasis towards cost reliability
improvement system. In this regard it has launched entire Mac project in the year 1988 which
have additional facilities. It is able to attract the consumers to purchase the product because it has
more centric about quality. As cost of this product is more because corporation is emphasis to
deliver quality products in order to fulfil the needs of consumers (Sun, 2016).
Quality control system: This management accounting system is emphasis to deliver
quality products so that desires of consumers can be satisfy. It is helpful to produce quality
products as an instance, Canon has introduced mini copier which have best quality and small size
and does not need more maintenance. Where is known in the world for its quality products which
provide value to the money of consumers. For an example, Apple has launched Mac project that
have best quality and have additional features so that consumers can attract towards the products
and purchase it. So both organisations are used this system in-order to maintain appropriate
quality. It is helpful in order to enhance the profitability of business entity (Pavlatos and Kostakis
2015).
Price optimisation system: For an organisation it is important to set relevant price so
that consumers can show their willingness in order to purchase the products of company. As an
example, management of Canon set prices of mini copier which is not much high so that
maximum consumers can purchase the products of firm. Where as Apple generally charge more
prices for its product because it provide quality products which is helpful to fulfil the
expectations of consumers. So price policy which is used by both companies are different from
each other because it depends upon product quality and additional features which a product
contain.
2. Management accounting contribute to the innovation process
To survive in the market it is important for an organisation to bring some innovative
products and for that purpose it is required to think unique idea in context to the development of
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new product & service. According to the case, in the year 1969 Canon has launched PPC which
have innovative technology so that more consumers can attract towards the products and
purchase it and after some time it introduced another copier machine which is small in size and
prices are also less and by using management accounting cost can be controlled.
As company launched a mini copier which is manufactured by using innovative
technology. To satisfy the needs of consumers this product has been launched and it was light
weighted product which print clear copies and it does not require additional maintenance
expenses. So this innovation is beneficial for the company in order to enhance the revenue and to
capture more market share so that it can sustain for a long time in the competitive market.
As management accounting system is used to bring innovation by Apple so that it can
capture more market share and maximize the profitability. For that purpose it has launched Mac
project which is innovative and able to capture the attention of maximum consumers because it
consist of best quality. In this regard it is important for the organisation to take corrective actions
in order to minimize cost and maximize the quality (Kholis and Maksum, 2017).
As an instance, management accounting system provide the help in team building in the
workplace where little financial & bureaucratic discipline are insist to produce new innovative
products. As the financial year 1979 it has been analysed that innovation is required in context to
the low cost production so that people can purchase the products. That is the reason Apple has
started work on the project Mac.
3. Specific lessons from article research
As the management accounting system is beneficial for the corporation to get appropriate
information about the business entity and on the basis of it important decisions can be taken for
the growth of business. As management accountant can use this system for the growth of
corporation and the lessons which are learned are as describe below:
Apple computer: Narayanaswamy, R., 2017
As from the information available in the article it has suggested that management
accounting system provide helps the organisation to identify the problems so that effective
decisions can be taken for cost minimization and quality maximization. As because management
can get relevant information about the financial position and business growth and on the basis of
it important decisions can be taken.
Canon:
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As management accounting system can be used by the Canon in order to take better
decision in order to control the cost so that profit can be maximize. For the quality improvement
it is also helpful so that desires of people can be fulfil and people will show their willingness in
order to purchase the products of company (Alkordi and Dabaghia, 2017).
CONCLUSION
As from the above report, it has been concluded that to analyse the distinct types of cost
which incurred in manufacturing process are important. As new appliances can be purchase by
the company and it is require to hire additional employees so that accommodation of fourteen
children's can be possible. In innovation process management accounting system contributes in
context to the growth of corporations.
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