HI5017 Managerial Accounting: Costing, Decisions & Article Review

This assignment provides a comprehensive analysis of managerial accounting concepts through a case study and journal article critique. The case study involves cost analysis and decision-making for a hypothetical couple, evaluating different laundry options and business expansion scenarios, including hiring additional employees and assessing the profitability of serving varying numbers of children in a childcare setting. The analysis incorporates various costing methods such as fixed, variable, and incremental costs to determine optimal business strategies. The journal article critique examines the Management Accounting Systems (MAS) in Apple and Canon, evaluating their relevance in strategic decision-making and innovation processes. The critique also identifies lessons learned from the article and their implications for companies, focusing on innovation, information transmission, and the role of leadership accounting schemes in fostering innovation and achieving strategic objectives.

HI5017
Managerial Accounting

Contents
PART-A......................................................................................................................................................3
Analysis of the case study given..................................................................................................................3
1. Sort of costing and describe three type of costing with examples........................................................3
2Infomation which are relevant and irrelevant for the decision making of appliance..............................4
3. Total cost incurred for the couple to laundry and computation............................................................5
1. Purchase of the Appliance (alternative 1)........................................................................................5
2. Self-service laundry (alternative 2)..................................................................................................5
3. Delivery laundry service (alternative 3)..........................................................................................7
4. Hiring of additional employees and its computation............................................................................7
5. Option to stay at current option or go forward with rental space? Number of children to be served?
Additional employees to be hired?..........................................................................................................9
Remain in the current Location...............................................................................................................9
Option B: Move to a larger facility........................................................................................................11

Part B: Journal Article Critique.................................................................................................................12
1. Parts of MAS in Apple and Cannon and evaluation of the relevancy in making the strategic decision
effectively..................................................................................................................................................12
2. Article focuses on the innovation process in firm and creation of the innovative and transmit
information in process. Explain how MAS contributes to innovation process.......................................14
3. 4 lesson learned from the article and its implication on the companies and given justification of
answers related to 2 outcomes from each companies.............................................................................15
References.................................................................................................................................................17

PART-A
Analysis of the case study given
1. Sort of costing and describe three type of costing with examples.
There are several types of costing such as fixed cost, variable cost and other operating sunk cost.
Fixed costing—this is the costing which is incurred by company on fixed basis annually and
does not change with the changes in the production unit. For instance, annual license fees paid by
company is $ 225 which is incurred annually on fixed basis.
Incremental fixed cost expenses- this is the different type of costing which is incurred by
company on fixed basis but it changes gradually with the time and does not change with the
changes in the unit. For instance, annual insurance fees paid by company is fixed at $ 3840
which may vary with the changes in time (Laudon, and Laudon, 2016)
Variable costs- This variable costing of the business is the cost incurred on the basis of the
incurred units. The cost of the variable cost depends upon the monthly charges. For instance,
laundry service is pegged at $ 52 per month.
2Infomation which are relevant and irrelevant for the decision making of appliance
There are several business costing which are incurred as below and would be relevant for the
decision making of the appliance
a) Costing required for making the initial investment.
b) Delivery charges of the appliance
c) Installation cost incurred for the appliance
d) Incurred cost for the appliance

However, the other cost such as laundry service pick up and cost related to the mileage,
laundering and cost of detergent would be considered for the relevant to decision making
(Sumpter, 2015).
The costs related to the laundry service pick up and those related to delivery of the same.
Nonetheless, cost given below will be considered irrelevant for the considering of the decision
making to buy appalling.
a) Last cost incurred for the existing appliance
b) Detergent cost
Other cost related to the spending money for the Laundromat and time of delivery from and to
Laundromat.
3. Total cost incurred for the couple to laundry and computation
1. Purchase of the Appliance (alternative 1)
Costing Amount
Annual energy cost 265
Depreciation 109.84
Detergent cost 878
Total cost 514.84
2. Self-service laundry (alternative 2)

Self-service laundry cost
Particular Total amount in $
Driving cost
6miles week*.56 per mile and *52 week
174.72
Laundering costing of cloths 416
Detergent costs 140
Total costs related to self service 730

3. Delivery laundry service (alternative 3)
Cost of pick up and U delivery computation
Particular Details $
Cost of pickup of laundry and its
delivery
52 per month *12 624.00
Total annual cost of pickup and
delivery
624.00
It is observed that total application cost for the couple to laundry is $ 514.84.
Total annual cost required for the self-service laundry would be $ 730.72
Total annual cost of pickup and delivery cost is $ 624
Therefore, lowest cost
4. Hiring of additional employees and its computation.
This is based on the incremental analysis in which additional employees will be hired for the
increased revenue.
Details Computation Amount
Cost of hiring three additional employee 3*$800 $2400
Reduced by
Additional employee cost $9.00 / hour * 40 hrs* 4.33 $1558.80

wks
Cost of food $3.20*3*5*4.33 207.84
Total incremental cost $1,766.64
Incremental contribution (profit) $633.36

Frank would have revenue $ 2400
Additional cost of employees would be $ 1766.64
Additional profit to be generated = $ 633.36
5. Option to stay at current option or go forward with rental space? Number of children to be
served? Additional employees to be hired?
Remain in the current Location
Total cost of Frank if he stays his operation his at current location and its costing for 6 and 9
children
Details 6 children 9 children
Revenue (@ 800 per child) 4800 7200
Less: Expenses
Meals cost
($3.20 per child*5 days a week* no of child* 4.33 weeks)
415.68 623.52
License costs
($225.00/12)
18.75 18.75
Insurance costs 416.67 416.67

(5,000/12)
Cost of laundry ( alternative 1)
(514.64/12)
42.90 42.90
Depreciation Expenses
($79,500/25 years) = $3,180.00/12 = $265.00
265.00 265.00
Utilities expenses 50.00 50.00
Rent expenses 0.00 0.00
Employee costs 0.00 1,558.80
Total costs
Net income 3,687.67 4,321.03
If 6 children are served then profit would be $ 3687.67
If 9 children are served then profit would be $ 4321.03
The incremental revue would be $ 2400 if one additional employees is hired.
The incremental cost of hiring employees would be $ 1766.64.
Therefore, profit would be $633.36
Therefore, this option should be accepted by Frank

Option B: Move to a larger facility
Providing service to 12 and 14 children by moving to take larger space
12 children 14 children
Revenue (@ 800 per child) 9,600 11,200
Less: Expenses
Meals cost
($3.20 per child*5 days a week* no of child* 4.33 weeks)
831.36 969.92
License costs
($225.00/12)
18.75 18.75
Insurance costs
(5,000/12)
416.67 416.67
Cost of laundry ( alternative 1)
(514.64/12)
42.90 42.90
Depreciation Expenses 0.00 0.00
Utilities expenses 125.00 125.00
Rent expenses 650.00 650.00

Employee costs
($9/hour x 40 hours/week x 4.33 weeks/month=1,558.80*2 and
*3)
3,117.60 4,676.40
Total costs 5,202.28 6,899.64
Net income 4,397.72 4,300.36
If 12 children are served then profit would be $ 4397.32
The incremental revenue would be $ 4397 if one additional employees is hired for 12 children.
The incremental cost of hiring employees would be low as compared to the profit.
If 14 children are served then profit would be $ 4300.36 (Nerger, Nagpal, and Assenmacher,
2015).
The incremental cost of hiring employees would be higher as compared to the profit.
Therefore, the option of serving only 12 children should be accepted by Frank (Ainsworth, and
Deines, 2019).
Part B: Journal Article Critique
1. Parts of MAS in Apple and Cannon and evaluation of the relevancy in making the strategic
decision effectively.
The Management Accounting System is based on the three main components which are Risk
management system, Performance management system and the Strategic management system.
All these components help the Management Accounting System of canon to analyze the data of
the existing business and make a good decision in selecting resources for the business manpower
so that in future it can put a great impact on the business which lasts longer. The three
components are listed below in details (Cooper, Ezzamel, and Qu, 2017).