Detailed Management Accounting Report: HLW Case Study Analysis

This comprehensive report provides a detailed analysis of a management accounting case study, focusing on the financial performance of HLW. The report begins with an executive summary outlining the key objectives and findings, followed by a table of contents for easy navigation. Part A of the rep...Read More

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student
Name of the University
Authors Note
Course ID

1MANAGEMENT ACCOUNTING
Executive summary:
The concept of management accounting or the managerial accounting enables the managers
to make use of the provisions of accounting information to better obtain the information in
the betterment of the internal organization. The concept of management accounting helps in
serving as the internal control for the better performance of the management functions. One
of the important factors of management accounting is relating to the provision of financial
and non-financial decisions making procedure of the firm to provide the management with
the better information. The concept of management accounting enables the management
accountant to consider the events that takes during the normal course of business by taking
into the considerations the requirements of the business.
The primary objective of the management accounting is to help in projecting the future
anticipated profits and undertaking the necessary decisions of either making or purchasing.
The current case study takes into the considerations the explanation of the two methods
namely the management accounting and cost accounting by assessing the future cash flow
analysis from the implementation of the new plans. The initial phase of the study is
associated with the determination of the overhead costs and determining the product cost
thereafter. The later part of the case study is associated with the determination of the analysis
of the cash flow in order to determine the potential benefit of the new plans.

2MANAGEMENT ACCOUNTING
Table of Contents
Answer to Part A:.......................................................................................................................3
Answer to requirement 1:...........................................................................................................3
Answer to requirement B:..........................................................................................................3
Answer to requirement C:..........................................................................................................4
Answer to Part B:.......................................................................................................................5
Answer to requirement A:..........................................................................................................5
Answer to requirement 2:...........................................................................................................6
Sales revenue in the present plan:..............................................................................................7
Sales revenue presented under the presented plans of membership:.........................................8
Answer to requirement 3:.........................................................................................................10
Conclusion:..............................................................................................................................11
Reference List:.........................................................................................................................13

3MANAGEMENT ACCOUNTING
Answer to Part A:
Answer to requirement 1:
Activity Activity
Cost
Activity Driver Annual
Quantity
Cost per
Unit of
Activity
Process Receivables $15,000 No. of Invoices 5000 $3.00
Process Payables $25,000 Nos. of Purchase
Orders
2500 $10.00
Program Production $28,000 Nos. of Production
Schedule
1000 $28.00
Process Sales Order $40,000 Nos. of Sales Order 4000 $10.00
Dispatch Sales Order $30,000 Nos. of Dispatches 2500 $12.00
Load Mixers $14,050 Nos. of Batches 1000 $14.05
Operate Mixers $45,900 Nos. of Kilograms 200000 $0.23
Clean Mixers $6,900 Nos. of Trays 1000 $6.90
Move mixture to filling $3,450 Nos. of
Cakes/Pastries
200000 $0.02
Clean Trays $20,000 Nos. of Trays 16000 $1.25
Fill Trays $16,000 No. of
Cakes/Patries
800000 $0.02
Move to baking $8,000 No. of Trays 16000 $0.50
Set up Oven $50,000 No. of Batches 1000 $50.00
Bake Cake/Pastries $1,30,000 No. of Batches 1000 $130.00
Move to Packing $40,000 No. of Trays 16000 $2.50
Pack Cake/Pastries $80,000 No. of
Cakes/Patries
800000 $0.10
Inspect Patries $2,500 No. of Pastries 50000 $0.05

4MANAGEMENT ACCOUNTING
Answer to requirement B:
Illustrations for Bill of Activities
Activity Consumed Annual
Quantity of
Activity
Driver
Cost per Unit of
Activity
Total Cost
Process Receivables 500 $3.00 $1,500.00
Process Payables 200 $10.00 $2,000.00
Program Production 100 $28.00 $2,800.00
Process Sales Order 400 $10.00 $4,000.00
Load Mixers 100 $14.05 $1,405.00
Operate Mixers 30000 $0.23 $6,885.00
Clean Mixers 100 $6.90 $690.00
Move mixture to filling 30000 $0.02 $517.50
Clean Trays 2000 $1.25 $2,500.00
Fill Trays 100000 $0.02 $2,000.00
Move to baking 2000 $0.50 $1,000.00
Set up Oven 100 $50.00 $5,000.00
Bake Cake/Pastries 100 $130.00 $13,000.00
Move to Packing 2000 $2.50 $5,000.00
Pack Cake/Pastries 100000 $0.10 $10,000.00
Dispatch Sales Order 500 $12.00 $6,000.00
Develop & Test Product $600.00
Total Overhead Cost $64,897.50
Annual Volume 100000
Cost per unit for Lamington $0.65

5MANAGEMENT ACCOUNTING
Answer to requirement C:
By taking into the considerations the above stated tabular representations, it is
understood that the overhead cost is stated and accompanies the indirect costs that lends their
support to the procedure of manufacturing or the alternative process of distribution (Williams
2014). Furthermore, the evidences from the computations represents that are large amount of
indirect costs which efficiently forms the part of the present state of affairs but these indirect
cost are yet to be incorporated.
Direct cost can be defined as those costs that can entirely attributed to the cost of
productions of the particular goods and services. Some costs form the part of the direct costs
such as the depreciation cost and the administrative expenses (Pratt 2016). These costs forms
the most difficult to allocate the specific product and hence these costs are regarded as the
indirect costs. Direct costs generally regarded as the cost that mainly arises from the
manufacturing of products and service dealt in by the firm (Ahmed and Kannaiah 2016).
Direct cost forms the vital element of the manufacturing process but there are certain forms
of state of affairs where the production of goods and service cannot be carried out without
having incurred any associated costs (Marshall 2016). Therefore, to ascertain cost of
production of Lamington, it becomes necessary to take into the considerations the indirect
cost and the same has been illustrated below;
a. Charges related to freight inward
b. Direct labour costs
c. Direct material costs

6MANAGEMENT ACCOUNTING
Answer to Part B:
Answer to requirement A:
Taking into the considerations from the circumstances obtained from the current case
study it is noticed that HLW has generated revenue from mainly two different sources. These
revenues particularly comprises of the revenue from the annual membership and the incomes
generated from the court fees (Lanen 2016). Consequently, a large part of the revenue or in
other words more than 40 per cent of the revenue is generated from the annual membership
fees for the period of two months. After considering the left over part, it is understood that
the fees derived from the court is based on every twelve months basis.
More specifically the inward flow of cash from the court fees hardly remains same
during each month. An important consideration in this regard is that when the business hits
high time evidences have shown that there is a greater amount of court fees generated and the
revenue increases by 45% of the total amount of revenue. In addition to this, during the
months of May to September, evidences have stated that the amount of court fees have
declined significantly and forms merely 15% of the total amount of revenue.
In the present situation of HLW the application of the new plans of membership it
turns out to be important in collecting around 80% of the total volume of revenue within the
span of the first month of accounting year (Ellul et al. 2015). Additionally, the HLW would
be able to take the advantage of several numbers of benefits and the same has been stated
below given the circumstances that the HLW has applied new plans;
a. With the application of the new plan, HLW would be in the position of taking the
advantage of the controlled amount of inflow of cash from the business sources or
from the annual membership (Bouwens 2017). By taking into the account the current
plan, the club is required to be reliant on the individual program namely the hourly

7MANAGEMENT ACCOUNTING
fees charged by the court for generating greater than 50% of the total amount of
incomes.
b. With the implementation of the new plans, it would provide HLW would with the
greater amount of benefit for HLW. This is because it would provide HLW with the
preparation of platform that would assist the club in generating the stable amount of
inflow of cash during every of business operations (Angelopoulos and Pollalis 2017).
c. The application of new plan for the HLW would help in providing additional amount
of benefit because the management of the club is better able to accumulate revenue
which would be 80% greater than total amount of revenue derived during the early
phases of business operations (Schaltegger and Zvezdov 2015). The application of the
new plans ultimately lends the path for HLW in making an appropriate use of the
funds that is accumulated together with the considerations made for different forms of
financial decisions undertaken.
Answer to requirement 2:
Evidences obtained from the current case study suggest that there are several
highlighted issues and consequently there are some assumptions that is necessary required to
be made in getting the better understanding of the effect created from the new plans of
membership sales. There are certain listed assumptions in this regard and the same is stated
below;
a. The should be a full usage of court be made during the hours when the business hits
the peak time
b. Considerations should be made regarding 60% of the total usage capacity when the
business goes through the non-peak time
c. Additionally, it is necessary to make use of 40% of the total court during the lean time

8MANAGEMENT ACCOUNTING
Sales revenue in the present plan:
The computations that has been made below is useful in ascertaining the effect of the
present sales. The assumption in the computations makes the use of systematic method by
taking into the considerations the earlier stated assumptions;
Yearly revenues of membership:
Particulars Weightage No. of
Members
Annual
Membership
Fees
Total Fees
Total Members 100% 2000
Individual Members 25% 500 $45 $22,500
Student Members 25% 500 $30 $15,000
Family Members 50% 1000 $100 $1,00,000
Total Membership Fees $1,37,500
Total amount of court fees:
Particulars Hourly
Court
fees
No of
Courts
No. of
Days
Usage % Hours Total
Fees
Peak Season- Prime
Time
8 10 181 100% 4 $57,920
Peak Season- Non
Prime Time
12 10 181 60% 8 $1,04,256
Off Season 6 10 184 40% 12 $52,992
Total Court Fees $2,15,168
Total amount of sales revenue generated:
Particulars Amount Weightage
Membership Fees $1,37,500 38.99%
Court Fees - Peak Season $1,62,176 45.99%

9MANAGEMENT ACCOUNTING
Court Fees - Off Season $52,992 15.03%
Total Fees Collected $3,52,668 100%
Sales revenue presented under the presented plans of membership:
As evident from the current state of affairs, the club would be able to generate the
sales revenue in compliance with the new plans of membership that is stated below;
Sales revenue from the earlier membership plans:
Particulars Curren
t
Membe
r
% of
Continuatio
n
% of
Active
Members
Annual
Fees
Total
Fees
Individual 500 70% 45% 250 $39,375
Student 500 70% 45% 250 $39,375
Family 1000 70% 45% 450 $1,41,75
0
Total Fees from Early
Membership
$2,20,50
0
Sales revenue from the general membership plans:
Particulars Curren
t
Membe
r
% of
Continuatio
n
% of
General
Members
Annual
Fees
Total
Fees
Individual 500 70% 55% 250 $48,125
Student 500 70% 55% 250 $48,125
Family 1000 70% 55% 450 $1,73,25
0
Total Fees from
Normal Membership
$2,69,50
0

10MANAGEMENT ACCOUNTING
Total amount of sales revenue generated:
Particulars Amount Weightage
Membership Collected:
August-September $2,20,500 34.45%
October $2,69,500 42.11%
March $1,50,000 23.44%
Total Membership $6,40,000 100.00%
Effect on sales revenue and the cash flow:
A tabular representation is made regarding the impact that is created on the sales
revenue and in flow of cash depending upon the current periodic sales revenue:
Particulars Current Plan New Plan Increase/
(Decrease)
Revenue:
Pre-Received (Aug-Sep) $0 $2,20,500 $2,20,500
October-April $2,99,676 $4,19,500 $1,19,824
May-September $52,992 0 -$52,992
Total Membership $3,52,668 $6,40,000 $2,87,332
The above stated tabular representations provides that the sales revenue that has been
generated by the HLW has immensely increased by $2,87,332 given that the HLW has started
making sufficient use of the court during the peak business hours. The above assumptions is
made after taking into the account the sales revenue that is generated by the company under
the current plan. In addition to this, taking into the considerations the above stated
computation it is understood that the implementation of the new plans would enable the
company in making a greater amount of assembly of revenue from the period of October
onwards (Taylor and Nyide 2014).

11MANAGEMENT ACCOUNTING
Answer to requirement 3:
One of the important considerations concerning the above stated proposed plan is that
the revenue that is generated from the new plans would yield HLW with greater amount of
revenue from the sales made in earlier instances. The primary reason for this is that there are
certainly large amount of factors that is required to be taken into the considerations when
implementing the new plans (Christ and Burritt 2015). Bearing in mind the above stated
assumptions made, the below stated factors have provided a sufficient amount of
explanations relating to the analysis that is made.
a. An important factor that is required to be considered is that the revenue that would be
generated from the new plans would be considerably greater than that of the fees that
is derived in the earlier instances (Rieckhof, Bergmann and Guenther 2015). Because
of this, there are expectations that there could be a loss of memberships after applying
the new plans of memberships. In other words there are also certain amount of
students that are not reliant based on financial terms and would be incapable of
affording greater amount of fees together with the renewal of the plans of membership
relating to the new structure of fees (Bierer et al. 2015). In addition to this, after
taking into account the present outcome, it becomes vital to assess the feedback that is
derived form the members.
b. On the application of the new plans of membership, the management is provided with
the advantage of making the collection of fees during the starting period of two or
three months. In such kind of circumstances, the administration would be better
position of reducing the cost of collecting the revenues that is generated from the
court fees (Kokubu and Kitada 2015). The management would be provided with
better opportunities of maintaining sufficient periodic records for the amount of

12MANAGEMENT ACCOUNTING
revenues generated. Therefore, it turns out to be vital in taking account of the cost
lowering techniques at the time of evaluation.
c. Within the time period of six months, the management expects that they might lose
some of the members (Mahal and Hossain 2015). The management would be required
to implement the new plans or consequently they could face with circumstances of
failure in attaining the desired amount of revenue.
d. One of the important factor that is required to be taken into the considerations is the
execution of special campaign, as this would help in promoting the new plans
(Almeida and Cunha 2017). In addition to this, the cost that is involved in the
activities of promotional campaigns at the time of deriving the net income together
with the amount of cash yielded from the implementation of the new plans.
Conclusion:
On arriving at the conclusive note one of the important considerations must be paid
towards the methods that is the activity based costing procedure as it is regarded as beneficial
in determining the actual cost of the product. One of the important considerations in this
regard is that the business information that is necessarily required to be incorporated in the
business report and the same has been duly applied in the present case study.
In other words, the activity based costing is referred those business costs that takes
into the account the cost that is occurred in the business. Most importantly, the activity based
costing method is regarded as the easy to understand and helps the business in better analysis
of the present costs. On an important note, an assertion can be bought forward by stating that
the activity based costing provides advantage to the business in making the correct business
decisions.

13MANAGEMENT ACCOUNTING

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Reference List:
Ahmed, R. and Kannaiah, D., 2016. The considerations for the implementation of an Activity
Based Costing System (ABC).
Almeida, A. and Cunha, J., 2017. The implementation of an Activity-Based Costing (ABC)
system in a manufacturing company. Procedia Manufacturing, 13, pp.932-939.
Angelopoulos, M. and Pollalis, Y., 2017. Activity Based Costing (ABC) as a tool for Lean
Transformation: The Case of the Greek Power Public Corporation (PPC).
Bierer, A., Götze, U., Meynerts, L. and Sygulla, R., 2015. Integrating life cycle costing and
life cycle assessment using extended material flow cost accounting. Journal of Cleaner
Production, 108, pp.1289-1301.
Bouwens, J., 2017. Understanding investment decisions: the role of cost accounting.
Christ, K.L. and Burritt, R.L., 2015. Material flow cost accounting: a review and agenda for
future research. Journal of Cleaner Production, 108, pp.1378-1389.
Ellul, A., Jotikasthira, C., Lundblad, C.T. and Wang, Y., 2015. Is historical cost accounting a
panacea? Market stress, incentive distortions, and gains trading. The Journal of
Finance, 70(6), pp.2489-2538.
Kokubu, K. and Kitada, H., 2015. Material flow cost accounting and existing management
perspectives. Journal of Cleaner Production, 108, pp.1279-1288.
Lanen, W., 2016. Fundamentals of cost accounting. McGraw-Hill Higher Education.
Mahal, I. and Hossain, M.A., 2015. Activity-Based Costing (ABC)–An Effective Tool for
Better Management. Research Journal of Finance and Accounting, 6(4), pp.66-74.
Marshall, D., 2016. Accounting: What the numbers mean. McGraw-Hill Higher Education.