Case Study Analysis & Journal Critique: HI5017 Managerial Accounting

This assignment presents a comprehensive analysis of a managerial accounting case study involving 'Nanna's House,' a children's business owned by an experienced couple. It delves into cost concepts, relevant and irrelevant information, and decision-making processes related to laundry services and expansion opportunities. The analysis includes evaluating different alternatives for laundry services (outsourcing vs. purchasing equipment) and assessing the financial implications of employing additional staff to accommodate more children. Furthermore, the assignment critiques a journal article focusing on innovation management in Canon Inc. and Apple Computer Inc., examining the role of management accounting in strategic decision-making. The conclusion highlights the importance of managerial accounting in optimizing business operations and fostering innovation.

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