Managerial Accounting for Business Growth

The assignment discusses the importance of managerial accounting in understanding a company's financial position and making strategic decisions for growth. It highlights the role of cost management, efficient decision-making, and innovation in driving business success. The provided text emphasizes that effective managerial accounting systems contribute to long-term sustainability by attracting customers and generating profits.

Managerial Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
PART A ........................................................................................................................................1
1) About various types of costs ...................................................................................................1
2. Best option to purchase the appliances....................................................................................2
3) Calculation for each option .....................................................................................................3
4 Calculations related to hire more employees............................................................................4
5. Calculations that present the need of staff...............................................................................5
PART B............................................................................................................................................5
1. Management accounting system in Canon & Apple computer ..............................................5
2. Process of information creation...............................................................................................7
3. Specific outcomes ...................................................................................................................8
CONCLUSION: ..............................................................................................................................9
REFRENCES.................................................................................................................................10

INTRODUCTION
Management accounting is the process which is helpful to prepare documents & reports
and assist the managers in order to take effective decisions for the betterment of corporation. It is
the procedure of evaluating, analysing and communicating the information to the management
for pursuit of company's goal. To better understand this concept chosen business is Nanna's
House that is started by Douglas & Pamela which provides child care services. In this report,
there are various topics are covered such as: to analyse three types of costs, calculate the cost of
launder clothes and elements of management accounting system. Along with this, report also
discuss about innovation process in a firm and how management accounting contributes to the
innovation process & the specific outcomes of article's that is helpful for management
accountants in Australian companies.
PART A
1) About various types of costs
A cost is the value of money which occurs while manufacturing or deliver a service. To
produce a product there are different types of costs has involves and it is required for the
management to consider the cost of its products so that on the basis of final price can be analyse.
The cost is treated as an expenditure by the corporations so it is necessary for the management to
take better decisions in order to minimize the cost so that profit margin can be maximize. As
case, discuss about Douglas & Pamela and they want to start a child care business that is known
as Nanna's House (Zamecnik and Rajnoha, 2015). To operates a business there are different
types of cost has incurred such as:
Variable cost:
Variable costs are the expenditures which changes over the proportion to the volume of
goods or services and as per the volume of production it can fluctuate. As the production
increase it also increases and if it decrease it also minimize. Variable cost includes cost of raw
material, labour, distribution cost etc. As per the case variable cost is food expenses while can
increase or decrease according to the changes in production. As Nanna's House has charge $800
for frank fee and in case if children's want to spend some extra time than they have to give $15
per hour. For the food & snack facility Douglas and Pamela charge $3.20 per child.
Fixed cost:
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The cost which does not changes as per the volume of production and it remain fix for a
certain period of time. To reduce fixed cost is difficult as compare to the variable cost. It
involves amortization, depreciation, rent, taxes and salaries. As the fixed cost for Nanna's House
involves: annual cost of insurance which is $3,840 and $225 which is annual license fee. These
type of cost does not change over a period of time and it remains constant.
Semi variable cost:
A semi fixed cost contains the both elements of variable and fixed cost & it remain fix for
a certain level of production and become variable after the production level has exceed. If such a
case where organisation does not produce any unit than fixed cost will remain the same and it
will not minimise. As per the scenario, semi variable cost is $52 per month. According to the
demand and supply it can be increase or decrease (Nouri and Parker, 2013).
2. Best option to purchase the appliances
To achieve the objectives of the company it is important to take better decisions as a
result it can generates higher profits. As the higher authority has power to take sound decisions
which is helpful in context to the growth of business. To analyse the financial performance is
important for Douglas & Pamela so that they can make effective decisions on the basis of
business performance. As owner's want to take the decision of best purchase option and for that
purpose it is require to analyse the factors which are associate with business. As $440 is the cost
of old appliances and there are different alternatives are available which provide help in context
to the success of business and $878.72 is the purchase cost of appliances.
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laundry form Red Oak Laundry & Dry
Cleaning
$52 per
month
$
2 6 miles for 4.33 weeks (6*4.33) 25.98 0.56 per mile 14.5488
$8 Per week cost of laundry 34.64
Cost of detergent or fabric sheer per
month
11.66666666
67
Total cost of alternative per month
60.85546666
67
2

$
3 Cost of washer and dryer (420+380) 800
Additional accessories for both appliances 43.72
Delivering cost 35
Total cost of appliances 878.72
Annual depreciation 109.84
Per month depreciation
9.153333333
3
Incremental cost (120+145)
22.08333333
33
Total cost
31.23666666
67
3) Calculation for each option
1 6 miles for 4.33 weeks (6*4.33) 25.98 0.56 per mile 14.5488
$8 Per week cost of laundry 34.64
Cost of detergent or fabric sheer per
month (35/3)
11.66666666
67
Total cost of alternative per month
60.85546666
67
$
2 Cost of washer & dryer (420+380) 800
Additional accessories for both appliances 43.72
Delivering cost 35
3

Total cost of appliances 878.72
Annual depreciation 109.84
Per month depreciation
9.153333333
3
Incremental cost (120+145)
22.08333333
33
31.23666666
67
From the above table it can be seen that 60.85 is the cost for one option where as 31.23 is
the cost of other option. As it has been analysed that second option is more better because the
cost is minimum as a result there are the chances that higher profits can be generated. So it will
be beneficial to for them to buy washer & dryer which it contains the minimum cost
(Mullakhmetov, 2016).
4 Calculations related to hire more employees
Income statement for month $
Income
Fees from each child 800*6 4800
Expenses
State & annual fees 225/12 18.75
Insurance charges 3840/12 320
Cost of meals & snacks 6*3.2*30 576
Depreciation (79500/25)/12 265
Utility cost 50
Total cost 1229.75
Net profit 3570.25
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If an additional employee is hired
Income
Fees from each child 800*9 7200
Expenditure
State & annual fees 3.125*9 28.13
Insurance 3840/12 320
Cost of 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 4402.07
To hire the additional employees it is require for the organisation to pay more salaries
and it can increase the expenditure for the firm. As a result its profits does not increase if
production will not increase. So it is important for the organisation to maximize the production if
they hire more number of employees. As per the first option it can be seen that net profit is
3570.25 if Franks does not hire an employee and if an additional employee get hired than profits
will be 4402.07 which means it is increasing and it will be beneficial for the business and its
growth & success (Liguori and Steccolini, 2014). So they can accept three additional children
while they hire the additional employees and the main reason behind it is that net profit will
increase if an additional employee will get hired.
5. Calculations that present the need of staff
Fees from each child 800*14 11200
Expenditure
State and annual fees 3.125*14 43.75
Rented space cost 650
Insurance charges 5000/12 417
Cost of meals and snacks 6*3.2*30 576
Utility cost 125
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Salary to additional employee 1558.8 * 3 4676
Total cost 6488
Net profit 4712
As Franks should rent space in town because profit is increasing which is 4712 and if
they hire three employees they can take care about all children in the care home. As Franks can
accommodate maximum of nine children and if they hire three more additional workers than they
can take care about all fourteen children's. According to the state regulation it has been instructed
that one adult can take care about maximum three children. For that purpose they can accept all
fourteen children's and for the take care of all children's they require three more employees. So it
has been suggested that Franks should rent space in town because it help to maximize the profits
(Krishnan and Wang, 2014).
PART B
1. Management accounting system in Canon & Apple computer
As the management accounting system is used to make financial reports and it provide
important information about the financial position of the organisation. Management accounting
system is the process of evaluating, measuring, gathering and communicating useful information
to the management of firm and on the basis of it important decisions can be taken in context to
the business growth. It consider the information to the external parties such as: creditors,
stakeholders & public regulators. These system are based on management information such as:
product cost analysis, budgeting and cost reports and associated with other financial information.
Management accounting system has been used by Canon & Apple Computers to that business
can operate successfully. The management accounting systems are used by both companies are
describes as below:
Job order costing system: This system is used to assign & accumulating manufacturing
cost of an individual unit of output. Job order costing system is suitable when company produce
different products and they are different from each other. This system is mostly used by
manufacturing & service industries. If Canon use this system than it can analyse the cost of
different products which are manufactured by the company and provide help to match the flow
of cost to physical flow of products & services through production process. As the management
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of Apple can assign the work to distinct divisions because it produce multiple products which are
distinct from each other and it involves: iphone, Apple watch, Mcintosh, ipod, macOs, homePod
etc. All products have different features and made for different purposes as per the requirement
of consumers. So by using this job costing system Apple can determine the cost of an individual
unit of output. To analyse the cost is important to determine the final price of a product and both
companies are try to minimise the cost so that profit margin can increase (Kotas, 2014).
Price optimisation system: This system has emphasis to analyse how consumers will
respond to different prices for its products & services through different channels. Along with this
it is useful to determine the prices that organisation will complete the objectives by maximising
operating profits. By using this process best price can be determine for which consumers are
willing to pay. As Canon began to diversify in office machine through the development of
electronic calculators & copying machines. In this regard it is important for the organisation to
set an appropriate price for which consumers are ready to pay. As a result needs of consumers
can be satisfy and it is helpful to maximize the sales of firm. As an example, Canon has launched
the Mini Copier which cost does not exceed 200000 yen and it can influence the consumers
because they will not purchase the product at the high price. As the management of Apple
company use this system in order to determine the price of its products. For its products it charge
high price because it provide quality products which can satisfy the desires of consumers. This
price strategy is helpful for the company to earn more profits. For an organisation it is important
to set more appropriate prices for its product so that sales can be maximize and more number of
consumers will purchase the products of firm as a result profits will maximize. As Apple make
the fix price for its products due to the high quality of products (Kanodia and Sapra, 2016).
Quality control system: This system has emphasis in order to maintain the quality so
that better products can be available to the consumers and needs of people can be satisfy. As an
example, Canon can set the quality control system and instruct the employees to produce the
products as per standard quality which is set by the organisation and this strategy will help the
firm to produce better products. As Canon manufacture Mini Cannon and for that purpose it
emphasis towards the quality so that more consumers can purchase the products and its market
share can be enhanced.
Apple is known for its quality products and consumers are happy with the products of
company. As company has emphasis towards the innovative technology which is helpful to
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produce quality products. The company has launched Macintosh computer that have better
quality and through it consumers can attract towards it and can purchase this product of
corporation (Hiebl, 2014).
Cost reliability improvement system: It is helpful to control the cost because it like an
expenditure for the organisation so it is important for the organisation to minimize the cost in
order to gain more profits. As cost can be involve while manufacturing the product which is Mini
Copier. As an instance, Mini Copier has launched a new product and for that it is require to
emphasis towards the cost improvement so that cost will be minimize and profits can be
maximize. Cost can be involve in hire labour, technology, raw material etc. For the product
development it is require to focuses about cost control and improvement so that it can earn more
profits. As the Apple has introduced its new product which Macintosh computer so it is
important for it to set reasonable price so that maximum consumer can attract towards the firm
and it is beneficial to generate higher profits. As Apple is famous for its quality but the products
are available at higher price. So it is important for the firm to use management accounting
system in order to reduce the cost so that it can get higher profits. With using the management
accounting system better decisions can be taken which is helpful in context to the growth of
organisation (Cheng and Yue, 2013).
2. Process of information creation
Innovation may be defined as a kind of process which is related to the bringing changes
in the process and policies. Eventually, innovation is a necessary part of all kind of organisations
because it is helpful in attracting and maintaining the customers. This is why because it is helpful
in making changes in the products and services. Herein, the case of Canon and Apple, they have
introduced some new products with new features and specification. This innovation helped them
in attracting new customers. The process of information creation means bring something new
which is not based on the deduction or induction. Basically, it is based on the human activities.
In the case both companies have decided to launch a new product. Like Canon company
has decided to innovate a new product which is Mini copier as well as Apple has decided to
innovate the Macintosh that is being used to make new information for Apple for manufacturing
new and advanced products (Flamholtz, 2012).
Herein, the aspect of information creation, it is important to analyse the market. This can
help in analysing the need and demand of the customers. As well as on the basis of need
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organisations can make suitable change in their products. The manager of both the companies
use the management accounting techniques and methods for setting the prices of the products. As
well as it can help in managing the expenses effectively. Apart from it, different methods of
management accounting techniques such as inventory and cost accounting method can bring
transparency in the process of information creation. Both the companies, Apple and Canon can
use these accounting methods and techniques for bringing innovation in their products and
services. Apart from it, the management accounting system can help in offering important
information about the upcoming income and expenses (Bloomfield, 2015).
3. Specific outcomes
For Australian corporations it is important to take help of management accountant in
order to make records and analysing the performance of company so that manager can take better
decisions while considering the financial performance. For that purpose management accountant
can prepare distinct types of budgets reports by considering the annual reports of company. As
the outcomes are as follows:
As Canon company has emphasis towards innovation procedure by using management
accounting. For that purpose it is require to take better decisions for the new product
development by using innovation so that more number of consumers can attract towards the firm
and purchase the Mini Copier. It is also important to use management accounting system in order
to minimise the cost so that higher profits will generated.
Apple is also using management accounting which is help for the cost control and to
produce the products which have better quality so that maximum people will attract towards the
business entity. Cost improvement system can be used to reduce the cost of production so that
profits can be maximize (Ben-David and Harvey, 2013).
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CONCLUSION:
From the report, it has been analysed that it is important for the organisation to use
managerial accounting so that it can get useful information about the financial position of
company as a result better decisions can be taken for the growth of business. There are various
cost which are related to a product and it is require for the management to make better strategies
so that it can be reduce. To take effective and efficient decisions management accounting system
is very useful and innovation process is to attract more consumers and it is beneficial for the
purpose of growth and profit. As a result company will sustain for a long run.
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