Managerial Accounting

This assignment discusses the implementation of regulatory accounting and analyzes a case study. It explores different cost categories and provides relevant information for decision making. The assignment also includes a critique of journal articles on management accounting.

Managerial Accounting

Contents
Managerial Accounting...................................................................................................................1
Introduction......................................................................................................................................3
Part A: a Case study and the Analysis.............................................................................................4
1)..................................................................................................................................................4
2)..................................................................................................................................................6
3)..................................................................................................................................................7
4)................................................................................................................................................10
Part B: Critics of the journal articles.............................................................................................16
1)................................................................................................................................................16
2)................................................................................................................................................18
3)................................................................................................................................................19
Conclusion.....................................................................................................................................20
References......................................................................................................................................21

Introduction
There is reference about a case that confers that an old couple who is very experienced in rail
Board Company in which they have worked for 30 years and have developed a business unit
whose owner is 57 years old man named as Douglas and another is 52 years old named as
Pamela. This couple instituted a business for children whose name is nanna’s house that is in
Oroville, Texas. This assignment contains the implementation of various particulars regarding
regulatory accounting. The most important object in this assignment is to find the best suitable
option for business and its cost and impact on profit. Which would help in attaining the goals of
the company in future effectively (Averkamp, 2019). This assignment demands a specialist’s
decision for choosing the best option among numerous options for business.

Part A: a Case study and the Analysis
1)
Costs
In every business, it is required to spend some money to produce goods and render services to its
customers and for this it has to occur some cost transaction called expenditures. This can be in
both form that is monetary and non-monetary, the expenditures that are occurred by a business is
called as cost in terms of accounting.
Categories of Cost
 Variable cost
Various cost is also known as a recurring cost. In business, there occur various activities and
transactions where day to day operations and its expenses is necessary to produce the goods and
for working of the business. The expenses which are indulged in day to day activities are named
as a variable cost (Chenhall and Moers, 2015). This cost is having a direct relation with output
that means if output increase this cost also gets emerged. In this assignment, the variable cost is
considered as a meal of children that is $3.20 per child per day and there is also laundry expenses
that reflect the variable cost.
 Fixed cost
Fixed cost is having the quality of non-recurring nature. This cost does not have relation with
output that means it does not increase due to increment in output, so it is having no connection
with the output. Though fixed cost having does not have change after change in output. In this
assignment, the purchase cost of house and renovation expenditure is $79500 for a fixed cost.
These are the cost that cannot be managed by any business that is required to initiate production
activity.
 Semi-variable cost
This cost is a composition of both above-explained costs that are fixed cost and variable cost. In
business this cost rest non-changeable till a point of time but after a level of production or over
of that fixed time it emerges with the slight amount. This assignment refers insurance
expenditures as semi-variable cost, in this frank provides shelter to 9 children in his own house

and if they go to another house in that they provide shelter to 14 children in this regard the
insurance expenditures get an increase to $5000.

2)
Relevant Information
In the referred report, there is an issue with laundry machine and dryer in the starting week of
business and its working due to which owners faced this problem of cleaning the dirty and
muddy clothes of children even this laundry facility is not required to the couple but now this has
become necessary to them. In this report, the owners having many substitutes of it and they have
to analyses them for selecting any one which is best in all of them (Fullerton, Kennedy and
Widener, 2014). There is an option to the company which is near to the company and it
facilitates with laundry and dry-cleaning services and also provides pick-up, delivery service is
just $52 per week. Owners having an option where they have to take away the clothes to
laundromat who is only 3 miles away once in a week and he charges just $8 per week but their
owners have to provide detergent to a laundromat. Owners having a last option to purchase both
these machines in $420 for laundry machine and $380 for dryer. These referred data is pertinent
for business to take a decision for buying machines or not.
Irrelevant information
There are also some data that is wholly resilient for decision making about buying a machine or
not in business. Like, the cost of purchasing a house is $79500 and its expected life is 25 years
that is totally resilient. Another one is license fees and insurance fees that is $225 and $ 3840 that
is also resilient for business. These are the expenses and cost which have no future relevancy and
assistance to future decisions because they are have been incurred in the launching of business.
Also, there is some day to day expenses like meals for children and other expenses that are
resilient. There are also some data about the area of house and population of a city that is wholly
resilient for choosing the best option for business.

3)
In this report there are two devices named as laundry machine and dryer has an issue in its
working at the starting stage of business. These are the activities that are important for a business
to apply it. For this business needs to analyses all given options and selecting any one option
which is best and cost-effective means it helps to minimize the cost for the month.
Alternative1: launder from red oak laundry and dry cleaning
Launder clothes Cost
There is a launder named as red oak laundry which has convince for cleaning and dry cleaning
clothes for frank in just $52 per month and it also indulging pickup and delivery charges, yearly
estimation is provided below-
Particulars Working Amount per year
cost of dry cleaning including pickup and
delivery
$52*12 $624
If a company applies the first option and it occurs cost for laundry and dry cleaning is $624 for a
year.

Alternative 2: laundry from laundromat
There is another alternative is provided to frank that clothes take away to the laundromat for
cleaning and dry-cleaning of muddy clothes of children’s once in a week. There is detergent
service is provided by Frank and get service as self-service for business. There is provided with
some calculations of expenditure on a yearly basis-
Particulars Working Amount per year
cost of laundry and dry cleaning 8*4.33*12 $415.68
cost of fuel note no.1 $174.58
cost of detergent and laundry sheets 35*4 $140
total cost $730.26
(Note no.1: there is a cost for fuel is resolute, there is remoteness between house and laundromat
is just 3 miles to the one trip has a total gap of 6 miles. The average charge of fuel is $0.56 per
mile. There is cleaning is to be done in one time in a week so the total charges for fuel for one
week are 6*0.56=$ 3.36 per week. The total cost that is estimated is 3.36*4.33*12= $174.58 per
year)
After the implementation of the second alternative, it having a total cost of $730.26 for frank for
a year.

Alternative 3: Purchasing of the laundry machine and drying the cleaner
There is at last alternative for frank is to purchase laundry machine and dryer having the cost of
$420 and $380. The estimated period for the machine is 8 years and there is using the straight-
line method for depreciation in business. The total cost for machine involving delivery expenses
and accessories is provided under-
Particular Amount
Washer cost 420
Dryer cost 380
Installation cost 43.72
Delivery cost 35
Total cost $878.72
There are explained costs for washing and dry cleaning of clothes on a yearly basis-
Particulars Working Amount per year
cost of machines 878.72/8 109.84
energy used by the
washer
- 120
energy used by the dryer - 145
total cost $374.84
From abovementioned alternative 3 is economical for business to purchase new machine and
dryer. According to the provided estimation, the total cost of laundry and dry cleaning is just
$374.84 per year regarding option third. The cost of alternative first that is $624 and in second is
$730.24 which is more than in alternative first so, for Frank, the cost of cleaning is $374.84 per
year.

4)
Frank can provide shelter to more three children’s for this he has to employ one other person in
payment of $9 per hour for 40 hours in a week. Total increment in gains of the company after
making an additional shelter to children is estimated as under-
Particulars Working Amount per year
Incremental revenue 800*3*12 28800
Less: cost of employee 9 *40 *4.33 *12 (18705.6)
Less: cost of meals and snacks Note no. 2 (2494.08)
Total additional profit $7600.32
(Note no.2: Expenses of snacks and meal is $3.20 for one child per day. An employee is to be
employed for 40 hours a week and a full day is contents 8 hours of the week. We have to
estimate it according to 5 days a week. So, there is some extra cost of meal and snacks for three
more children’s on year basis is 3*3.20*5*4.33*12=$2494.08.)
From the abovementioned estimation, we can conclude that this will be advantageous for the
company to accept it because it rendered an extra profit of $7600.32. So there it seems to be a
beneficial alternative for a business to employ one more person.

5)
Cost per children
Particular Amount Year
Space cost 650 7800
Utility cost 125 1500
Insurance 416.6667 5000
Total 1191.667 14300
Per children 99.30 1191.6
Meals and snack 19.2 230.4
Total per children 118.50 1422.0

Employees needed
Particular Amount
Total children 14
Handle children 3
Per working member 5

Frank Profit per children
Particular Amount
Charges from parents 800
Cost 118.5056
Profit 681.4944

Employee cost
Particular Amount
Per hour 9
per week cost 360
per month 1440
Employee cost 4320

Profit
Particular children Amount
employee cost -4320
charges from parents 12 9600
cost of children 12 1422.067
Profit 6702.067
Per children 12 478.719
According to the above-stated data, there will be advantageous for a business to adopt these
alternatives and move on to towns and take a house on rent and also providing shelter to
additional children’s total 14. This all will be beneficial for frank in his business.

Part B: Critics of the journal articles
1).
In each business, the day to day operations is most necessary for it's smooth working in an
organization it does not affect whether it is large or small in Size. In each organization, provided
data and information are required for making any future decision in business. There is no
management accounting system that avails business much information to forming policies, rules,
procedures and fundaments for its working (Lagorio-Chafkin, 2019). The management
accounting system is a way that is used by every business in its daily working for the completion
of activities in an effective manner, the management team in the business is also getting
assistance from it regarding finance, cos, accounts and taxation of business to make important
decisions. It also provides innovation and development as referred in the report of Canon Inc.
And Apple computers. There are mentioned below some factors that assist these two companies
to make effective decisions and examination of information-
 People: in management accounting people play a very important role because with the
help of this they can make an effective future decision and in the case of Apple
computers and Canon Inc. The main persons who are managers use this system for
innovation and making of decisions.
 Input devices: input device is defined as a transition way of data and information in
business from its users to system software of company for future estimations. This having
components that help to transmit data and information. For instance mouse, keyboard and
bar codes etc.
 Data: data is the basis for producing any important information in business. It is
important to make any decision. Data is a very crucial thing in business because it leads
to future decisions and assists the company in future working, providing data for the
future.
 Software: now time most companies using software to make it’s working effective and
easy. Even the management accounting system also processing with software that
provides data from many sources and also available accurate and quick data and
information.

 Output devices: these are the form of machines and provides ready data and
information’s to business to take decisions. It provides data that is acceptable and make
effective use for instances printer, monitor and many other devices.
 Information storage device: for every business, it is important to the processing of data
and retaining its outcomes. There is a device named as a button that collects
information’s and after processing provides it for further future working and it having
importance and relevancy that exist in its initial stage. There are both the companies
cannon Inc. And Apple computers having the best devices to collect and process their
data. These devices are technology-based and having many changes with the passing of
time so there is an updating in these devices is necessary.
 Internal control: internal control is a system that having a crucial impact on business.
With the effective internal control system company can make the best decisions for future
and management will assist the company to face all challenges that are emerging in the
market. There are cannon Inc. And Apple computers both are having good internal
control due to this they are count in successful companies in the world.

2).
The conference in the report related to the innovation process in a form as a procedure of data
making and a method that adopt by the company to transfer the latest knowledge. There are some
subjects that are above explained and these are attention seeking towards these persons and
leaders who wish to adopt innovation procedures and make utilization of management
accounting system. There are some necessities that are reflected by both the companies that are
cannon Inc. And Apple computers.
At starting level cannon Inc. Only producing cameras but there is some other company for this so
cannon Inc. Expand its business with the launching of Xerox machines and calculators. Canon
Inc. Gets the assistance of accounting management in exploring with PPCS to MC (mini copier)
that is more effective and produce clear copies and this is very light weighting machine with
cost-effective basis as mentioned under-
 Product revolution: there is management accounting provides assistance to company to
attains the plan of evolving the light weighted and compact shaped devices.
 Forecasting: after implementation of management accounting policies and procedures
cannon Inc. Can projecting the future situations in the market and cash flow based on
reports and data according to prior mode.
In this report, the management accounting also assists apple computers to evolve a different unit
of Mac computers that is very economical to its customers and users at a low cost (Nonaka and
Kenney, 2018). For its interpretation, there are some points that are prescribed as below-
 Pecuniary direction: in Apple computers, there were some issues at the time of innovation
of apple second and due to which company gets affected to make effective decisions at
that time they introduced management accounting system and procedure to make better
decision making in an organization.
 Reducing the cost of capital: there are many alternatives for apple computers to select any
one which is best for its business and this decision was supported by this management
accounting system.

3).
The article stated by Nonaka and Kenney in the year 1991 “Towards a new theory of innovation
management: a report that defines differences between canon Inc. And Apple computers Inc.”
Has been explained in this report. This report refers to various aspects and characteristics of a
management accounting system that are implemented by Canon Inc. And Apple computers. With
the help of this article many accountants of Australian to study management evaluation and
examination. There are some important points that are discussed below-
 Management accounting system conveys all data and relevant information’s to innovation
management, innovation defines as a pursuing procedure of evolvement. Innovation
indulges plan, new projects, creations and policies etc. Innovation is not only one time
process this refers to the ongoing expansion of the business. There are apple computers
who are wishing cost economical and easy buying computers with many characteristics
after the launching of apple second.in its starting stage, the company make a comparison
between its product prices with the market price for evaluation of its success. Apple
Computers Inc. Is able to drive the cost of its products and the price of this product.
 Maintaining organizational operations: for conducting working in business and also not
to lose any chances of its growth and development by the involvement of resources.
Apple Inc. Utilized the resources after the launching and success of apple second to make
less costly products named as Macintosh. So from this accountants requires to study uses
of more cash flow in innovation procedure (Shaikh, 2019).
 Examination of risk and return factor: there is a huge chance to get an effective return if
there are evaluation and examination done before making an investment. Here both canon
Inc. And Apple computers examined risk and return factors before applying their funds in
any project or company. There are projects implemented which predicts the cash flow for
the company was applied. In regard to apple computers Inc. Was not ready to accept the
different line of Mac computers from Apple computers because they seem it is not
according to the cash flows of the company.

Conclusion
The above-mentioned case study refers to a developed business which was for children and was
launched by an old couple. This report contains many different alternatives for the evolvement of
business and methods of management accounting to evaluate different options. In this report,
there are comparison between the two companies that are canon Inc. And Apple computers. This
report provides that how effective and correct utilization of management accounting system can
be done by a business so as to provide success to the business. There is the best use of finance
and its investment and it changes in big evolvement for the business organization.

References
Averkamp, H., 2019. What is managerial accounting? Accounting coach. [Online] Available at:
https://www.accountingcoach.com/blog/what-is-managerial-accounting [Accessed on: 27 May.
2019]
Chenhall, R.H. and Moers, F., 2015. The role of innovation in the evolution of management
accounting and its integration into management control. Accounting, organizations and society,
47, pp.1-13
Fullerton, R.R., Kennedy, F.A. and Widener, S.K., 2014. Lean manufacturing and firm
performance: The incremental contribution of lean management accounting practices. Journal of
Operations Management, 32(7-8), pp.414-428.
Lagorio-Chafkin, C., 2019. Costs. Inc. [Online] Available at:
https://www.inc.com/encyclopedia/costs.html [Accessed on: 27 May. 2019]
Nonaka, I., and Kenney, M., 2019. Towards a new theory of innovation management: A case
study comparing Canon, Inc. and Apple Computer, Inc. Journal of Engineering and Technology
Management. 8, p. 67-83.
Shaikh, S., 2019. 8 Main Types of Costs involved in Cost of Production and Revenue (With
Diagram). Economics discussion. [Online] Available at:
http://www.economicsdiscussion.net/production/cost-of-production/8-main-types-of-costs-
involved-in-cost-of-production-and-revenue-with-diagram/13829 [Accessed on: 27 May. 2019]