Managerial Accounting: Cost Analysis in a Childcare Business Firm

This assignment presents a case study examining the application of managerial accounting principles in a childcare business owned by Douglas and Pamela Frank. The first part involves analyzing costs, material data, and evaluating different options for laundry services, including cost comparisons between using a laundry service and purchasing a washer and dryer. It further delves into employee costs and profitability per child, assessing the financial implications of expanding the business. The second part of the case study refers to innovation management postulates by Nonaka and Kenney, comparing directorial accounting practices at Canon Inc. and Apple Computer Inc., highlighting the role of directorial accounting in strategic decision-making, performance evaluation, and fostering innovation within organizations. The analysis emphasizes the importance of cost management, strategic planning, and the application of directorial accounting methods for achieving business objectives and maximizing profitability. Desklib provides a platform for students to access similar solved assignments and study tools.

MANAGERIAL ACCOUNTING

Contents
Introduction......................................................................................................................................3
Part A: case study examination........................................................................................................4
1)..................................................................................................................................................4
2)..................................................................................................................................................6
3)..................................................................................................................................................7
4)................................................................................................................................................14
5)................................................................................................................................................18
Part B: Journal assessment of the report........................................................................................22
1)................................................................................................................................................22
2)................................................................................................................................................23
3)................................................................................................................................................24
Conclusion.....................................................................................................................................26

Introduction
There is a case study that explores directorial accounting in this, this case study having two parts,
it fetches the working and activity of directorial accounting, for instance, characters in the
business. There are two folds in this case study and the first one is about a child care business
that owns by Douglas and Pamela Frank, in their business they were in position of indecision
regarding management of their business then they follow directorial accounting that assists them
to take the best decisions for their business and also attain effective outcomes.
Another part of this case study and refers to the latest postulate of innovation management that is
given by Nonaka and Kenney (Appelbaum, et. al., 2017). The directorial accounting provides
various accounting methods, policies and procedures that applied by cannon Inc. And Apple
computers Inc., with the help of this directorial accounting they can make differences between
many types of accounting procedures to choose any one best and appropriate for their
organizations. This case study is beneficial for Australian accountants.

Part A: case study examination
In this report, it refers that Pamela Frank and Douglas who has employed for 30 years in the
railroad company, they both are initiated the child care business in town. They utilize many
directorial accounting principles and rules for making transactions that occur in organization and
cost is also occur.
1).
Costs
In any business, there are various types of costs incurred to complete a process of manufacturing.
Manufacturing is started from raw material and finished to final products and this process takes
many expenditures that are known as costs in an organization (Brewer, Garrison & Noreen,
2015). Costs are incurred to provide products to customers. Costs are the value of products and
services that are rendered by the business.
Sorts of costs
Direct cost
Direct cost refers to an expenditure that is incurred most in business and having nexus impact in
transactions of a business. This direct cost is evaluated and calculated easily in business and its
activities and transactions (Cristea, 2017). There are many costs that are like direct cost named as
direct labor, direct material and employee’s salaries etc. This cost occurs more rather than
indirect cost an organization.
Indirect cost
This is the cost incurred in each segment of business and it is very difficult to find this in
activities of the business. Indirect cost having an indirect impact on all transactions and activities
in business, this is not easy to evaluate as like direct cost. These are like overheads and other
expenses that are occurred in various segments of the organization.

Fixed cost
Fixed cost is the cost that has expenditures for one time and rendered its benefits for a long time
to business and this having a fixed amount of expenses (Butler & Ghosh, 2015). In this case
study, there has also explained about fixed cost as insurance and license fees and these remain
unchanged till months or years.

2)
Material data
In this report, there are having material data and information that is helpful for a business to
evaluate and calculate the costs and many other expenditures in business, as like Douglas and
Pamela's Frank has planned to initiate a business for children and for their take care in town. In
this business, many expenditures will incur like insurance fees, other state expenses. The
expenses that are occurred by the business for a child is $800 per child and they are having their
activities from 8:00 am to 4:00 pm. In their business, the washer and dryer were not working at
the initial stage and both of them are worried about this issue and got panic for this problem.
Through this case study, they examined various situations and solutions and evaluate them all
according to their problems in business (Di Vaio & Varriale, 2018). With the help of this report,
they evaluated many options for these machines of washer and dryer and tried to get better
service at economical cost.
Immaterial data
In this report, there are also explained about some immaterial data and information’s that are
totally useless for business and not having an impact on accounting procedures of business. For
instance the age of owners and their past working and acts done by them these are so irrelevant
for business (Fullerton, Kennedy & Widener, 2014).
There has been also referred about 820 square feet extra land to their home that is also very
immaterial for business.

3)
There are explained and referred some calculations about cleaning and dryer of clothes and
comparison with two option of the cost that is incurred from the laundering of clothes is
evaluated there and seeks for the minimum cost incurred in these alternatives-
Launder clothes cost
Launder Clothes
Option 1st, situation 1st
Costs Amount (Per month)
For pick-up and Deliver 52
Launders cost 32
Detergent 11.66
Total 95.66
Amount of 8 years 9183.36
There above-mentioned the launder clothes cost and it involves pick-up and delivery charges
because these are charged separately by launder and they increase the cost and expenses. There is
also explained about the different cost in the above-prescribed alternative.
Option 1st, situation 2nd Amount (Per month)

From Frank carrying 13.44
Launders cost 32
Detergent 11.66
Total 57.1
Amount of 8 years 5481.6
The above calculations are provided according to the case when owners are bear the pick-up and
delivery cost and they are having impacts on costs (Guinea, 2016). According to the above case,
it is calculated as the cost incurred by owners and they attain fewer cos as compare to the first
option (Lagorio-Chafkin, 2019).
Working Notes
Cost of miles as per month
Miles (two way) 6
per mile 0.56
total per week 3.36
Weeks in month 4

Month 13.44

Landers Cost
Per week 8
Weeks in month 4
Month calculation 32
Detergent cost
Per quarter 35
Months in quarter 3
Months calculation 11.66667
Second alternative
Purchase of Washer and dryer
Particular Amount
Washer cost 420
Dryer cost 380

installation cost 43.72
delivery cost 35
installing appliances -
Washer energy cost 960
Dryer energy cost 1160
Total cost 2998.72
The above-mentioned calculations are done as per clothes of a child for the second alternative
Working Notes
Washer energy cost
Per year 120
Months 12
Per month 10

Eight years cost 960