Managerial Accounting: A Case Study of Douglas and Pamela Frank

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Managerial Accounting

Table of Contents
INTRODUCTION..............................................................................................................1
PART 1.............................................................................................................................1
(1): Various kinds of cost......................................................................................... 1
(2): Data relevant to buy appliance..........................................................................2
(3): Calculation of laundry cloth...............................................................................3
(4): Computation for three extra child......................................................................3
(5): Calculation.........................................................................................................4
PART 2.............................................................................................................................5
(1): Identification of element for management accounting system...........................5
(2): Use of management accounting in innovation...................................................6
3: Results analysis from the case studies................................................................7
CONCLUSION................................................................................................................. 8
REFERENCES.................................................................................................................9

Introduction
Managerial accounting is an essential process that is related with the cost accounting
that can studied specific process of examining, measuring, evaluating, interpreting and
communicating data to managers for the pursuits of an organisational aims and
objectives. The primary objective of using accounting system is to record their daily
business transactions into their respective format. The manager uses this information
which is associated with the cost of product and services that has been purchased by
the company during the time (Bobryshev and et. al., 2015). It is important for an
organisation manager to use right kind of accounting system that can help in recording
necessary data into their respective format. On the basis of given information the
investors used to take essential decision to attain sustainability for the company. This
project assignment discussed at specific case about the Douglas and Pamela in order
to make decision about different types of cost. However, critical analysis of necessary
role of management accounting and associated financial data in the innovative
procedure has also being analysed in this project effectively.
PART 1
(1): Various kinds of cost
In accordance to any given organisation cost is an essential aspect that is taken into
account on first priority. It is the value that is invested by the company for attaining
something such as product and services. Thus, cost of products sold from the buyers
tends to examine as cost for their specific items. It would be more helpful for analysing
the cost of individual project for short or long term purpose. On the other hand, cost is
the amount of total value related to explicit and implicit data (Hasniza Haron, Kamal
Abdul Rahman and Smith, 2013). As per the given case studies of Dougles and
Pamela, it has been seen that different types of costs is being incurred by both of them
while purchasing a new house in the small town. Some of effective costs are mentioned
underneath:
Variable cost: It is known as that particular cost which is associated with corporate
expense which can be change in accordance with the production process. It will be
mostly relies on changing in increase or decrease of industries overall product capacity.
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In the mentioned case study some of the examples are associated with raw material, or
direct labour etc. It has been seen that meal and snacks for children is categories for
worth $3.20 per child.
Fixed cost: In an organisation these cost are remain unchanged with the production of
any additional unit’s increase of decrease. Such kind of costs is basically paid by the
company. Such examples are as per the mentioned case studies are Douglas and
Pamela per annum fees to maintain license is considered as fixed cost. The insurance
value of $3840 is annually marked as fixed.
Semi-variable cost: It is necessarily associated with indirect cost related with the fixed
expenses related to operating activities that varies from rent to administrative cost.
These are more considered as non-labour expenditure that could not be operate by the
business. In this situation some common examples are utility cost and old appliance
value that sometime remain variable and fixed.
(2): Data relevant to buy appliance
In the given case study, it has been evaluated that both Douglas and Pamela frank is
looking to operate a new business in their home that is known as Nanna’s house. Every
facilities that is effectively helpful for an organisation. The house is expanded in around
820 square foot in accordance to their home that is constructed so many years ago. The
Frank has decided to buy that house and renovate them properly. The cost incurred for
the renovation work is amounted to $79500 and it has been determine that it will be
helpful life of around 25 years. The facility has been equipped with accordance to small
kitchen, small laundry areas and a set of two bathrooms. In the very first week of
operation the two of the most important equipment has stop working such as washer
and dryers (Moser, 2012). The reason behind this is that both appliance are seems to
be analysed old and has been damage because of having maximum utilisation. The
value of old appliance that was amounted as value of $440. The laundry rooms cannot
be initially an effective part of home but it has become most important part for soiled
clothes of child. Based on the given information in the case scenario, it has been
analysed that decision for buying application is right because they are not operating in
proper manner. The reason for purchase is not being having not any option that has
sufficient value because they are affecting the operations. Hence, sources of income
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are considered as very narrow that will assist them to deal with buying old appliance for
the new house. It is more inappropriate cost that wills not being incurred as results of
making management decision. It has been found that washer and dryer are two of the
most crucial aspects of appliance that would assist them in washing dirty utensil so that
hygienic food is being prepared for the children. The value of washer appliance is $420
and dryer worth $380. In relation to other important accessories for appliance like
washer and dryer with certain installation cost of $43.72. The essential part of appliance
is determined as last 8 year ago. In accordance with the producers both of them would
deliver extra energy price through$120 per year (Marius, Denisa and Florina, 2012).
The entire decision for buying new appliance is correct because it is too simple or easy
in terms of laundry. It would be helpful for reducing cost and manage Frank income in
proper manner.
(3): Calculation of laundry cloth
In relation to the given case study, it has been found that the new house that was buy
by Douglas and Pamela for those kids. In that particular house there is a laundry area
which was made for so many period of time. It is primary aspects that have become
increasingly important for laundering that has been used for soiled cloths of those
children, sheets and warm blanket. The detail of cost and expenses are given below:
Cost of delivery is amount to be 52 weeks with the rate of mileage rate of $0.56.
In respect they are using self-services then,
Laundering for cloth by frank then it would be cost about $8 per weeks
Buying laundry items in huge amount from mega store will cost is $35/12.99=2.69 per
week.
Note: For quarter: 4.33*3: 12.99.
Total cost actual per week: 8+2.69: 10.69
Total cost in case he does self-laundry: 10.69*4.33:46.2877
From the above information it has been computed that in case laundry cloths are use
through self than the cost will be very minimum in accordance with the other areas.
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(4): Computation for three extra child
In the mentioned case, Frank can provide accommodation for only three employees the
reason behind that the capacity to deal with total of 9 children is analysed as per the
below mentioned specification:
Hiring additional employee will cost: 9*40=$360
In case of 3 employees: $360*3=1080
Monthly cost: 1080*4.33=$4676.4
Total net income for extra child: 800*9: $72000
Net profit: $7200-4676.4=$2523.6
Henceforth, the results are clearer and simple that frank can hire new employees that
can results with total net profit of $2523.6 in a financial period of time.
(5): Calculation
Total number of children: 9
Cost of space $650 per month
Utility cost $125 per month
Insurance cost: $5000
Total cost: 650+125+5000
: 5775
In case they accommodate at their frank home: 5775/9
: 641 per children
For 3 children: 641*3: $1923
Whereas, in case rented space is being taken into account: 5775/14: 412.5 per children
In case of 3 children: 412.5*3: $1237.5
From the above data the cost for providing accommodation for child in the home and for
rented areas in the town has provide proper safety to them in near future. This has been
determine that cost of providing care for children those are living at home is costly in
relation to the rental location. In accordance with that they are using self home for those
child then it would generate a total cost of 641.5 per child. In relation to deliver proper
facilities and accommodation in rented location then it would cost a sum of 412.5 for
single child. Henceforth, it will be recommended to take necessary decision for choosing
rented location. In case of they are using 2 extra employees for providing care facilities
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of 9 employees that will cost a total of $1923 in case they are using self home ( Kanellou
and Spathis, 2013). Generally, only 4 additional employees have been required to
provide better recommendation services for 14 children. This is taken into account as
more effective decision that has become reliable cost that is lower when it comes in
terms for going for rental areas in small town. Hence, it is more accurate decision for
Frank to manage and control their extra cost and taken essential decision which will
provide additional advantage to them in coming period of time.
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PART 2
(1): Identification of element for management accounting system
In most of the business organisation their primary motive is to earn sufficient amount of
profit with the available resources. This is valuable for an organisation to make use of
effective system that can assist accountant to record their day to day transaction in
proper manner. This is entirely responsible for taking primary decision for an
organisation by using right kind of accounting system which can help in managing future
losses. It has been found that Canon Company has been established in the year 1933
by the profitable motive of developing their operation and manufactures a 35 mm Digital
camera (Parker and Fleischman, 2017). There are certain fact which is effective in case
they are using innovative procedure to deal with vital problems in the present era. The
analysis of correct issues would allow the company to determine right solution to
develop new strategies in well organised manner. Some of the reliable accounting
system that is effectively useful within Canon Inc is being given below:
Price optimisation system: In accounting point of view, this particular system is known
as numerical plan that assist in calculating how demand changes at various prices
levels and would combine that information on cost and stock level to suggest essential
prices to improve profitability position. In Canon Company, they are taking decision for
introducing AE-1 Camera that has become huge success for them because it is best
fitted in the price range of customers. This particular system has been organised for
reliable and constant coordination that leader of associated as internal company
process.
Cost accounting system: It is refers as effective design that can be used to determine
the cost of their goods for the purpose of profitability evaluation, stock analysis and cost
control. The primary purpose of this system is to monitor the cost which is incurred in
production of Camera. The group has been worked on cost and feature that is allotted a
good sales charge of 200000 yen. It was initial time under which Canon sectors which
has related with activity that had been gone so far in strategies planning. The chances
of getting synergistic effects is being analysed effectively.
In accordance to other company, Apple Inc which is closely differ from Canon in
different manner. Some of the basic similarities which are common in relation to their
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goods development plan. This has been analysed that management is constantly work
with talented people within environment under which small financial discipline has been
planned. Some critical accounting system has been needed to deal with organisational
issues which are mentioned below:
Inventory management system: According to this particular accounting system Apple
Company can control and manage their stock level in effective manner. This is more
consistent that can interacted between members of Mac Team that can lead to critical
aspects of use by company. This would be essential to deal with excess of stock which
has been kept by industry in their accounting period of time (Wickramasinghe and
Alawattage, 2012). The Apple company project team is held responsible for developing
informal design for meeting critical inventory detail of the company.
Job costing system: It is an effective accounting system that is associated with cost
which is used in production on individual job. The reliable decision for using this system
is to determine each project identities because they all are given individual date and
manufacture features. The Apple inc is using expansion areas on their original Mac that
will allow other parties to deliver extra add-on features. There are some hard issues for
the project member that has demanded by customer in their personal computer of
laptop to the society.
(2): Use of management accounting in innovation
In accordance to the overall development and growth of corporate growth and
sustainability the opportunity is getting advance day by day. It will help in increase the
products demand and attracting customer towards their products. Innovation is basically
more effective aspects that can lead improvise the specific features in the products. It is
utmost important process by which new information has been develop and included
within the items. Innovative process would discover great opportunity which is useful in
formulation of latest strategies and attaining maximum based in the competitive market
(Miller and Power, 2013). This given case study article has examine that how effectively
innovation has design for management control that can respond according to their
organisation requirement to face all kind of issues. This has been identified that
management accounting would have be related with modern approach that can control
operating event in respect to the related system through delivering certain attention to
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use advance technology. As per the similar condition that has been determine from the
case situation has build innovative products for their customers. The role of
management accountant is more valuable because the manager will be going to use
right tools and techniques that can deal with the specific kind of financial related issues.
Innovation have always bring certain changes that can measure the effect of accounting
base and create growth opportunities in near future. In case scenario, it has been
compare with product development plan in two of the most advance companies. It has
been taken into account in development procedure which tends to deal with a situation
in well organised manner. In canon they have developed new technology feature
products called as Mini Copier. While Apple inc has framed advance computer which is
known as Macintosh. Both the companies are using innovative strategies to remain in
the market. It has been seen that innovation used to deliver creativity within any given
products that help in drawing the attention of so many client towards purchasing. The
role of management accounting assists the companies to move with latest technology
that can provide maximum chances of getting profitability in coming period. It is
necessary for the companies to create a well organised environment that can increase
the moral of employees and other staffs member those are working in their respective
areas (Demerjian et.al., 2012). The manager of these two companies has make proper
utilisation of different provision that can assist in getting their desire outcome in future.
(3): Results analysis from the case studies
According to the mentioned case scenario of Apple and Canon there are so many
positive or negative aspects are taken into consideration. These are affecting the growth
and future sustainability position of the companies in near future. Different kinds of
areas are needed to focus so that innovative decision can make in well organised
manner. Two companies would have showing innovation as primary base of creative
event which can assist in getting social communication. This is widely attractive project
that helps in gathering employees to draw best sources from their surroundings and
taken into account to operate in the given environment. The actual product has being
design by companies according to the requirement of competitive market (Gitman,
Juchau and Flanagan, 2015). There are certain essential results which are analysed
from the give case are discussed below:
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Canon: This industry is using advance innovative strategies for recruiting mid-skilled
personnel from various firm for the purpose of formulating oppose culture. It will help in
creating potential growth for idea generation. Because of this it has been found that
internal decision can be easier with the use of Copier techniques. They would have
implementing such PPC because of real technology would not violate Xerox’s more
than 600. Some of other aspects found from the analysis are related with the
development of MC to examine the feasibility of team as well as network.
Apple Inc: This Company has introduced not only machines but at the same time they
also use technology which can create Xerox parc. The Mac is having draw the advance
characterise because of small in size, accuracy and economic for mid class people.
This has been evaluated that Mac development teach has taken into account that there
is disconnect from rest of organisation that was helpful in taking future decision. The
Macintosh is wide leap forward in single computers that has developed a advance
information for this company (Sajady, Dastgir and Nejad, 2012). Hence, it count do
nothing for transforming apple in similar situation which is faced by canon. They are
creating potential base in market the reason behind is that to draw maximum client to
use their services in coming time.
CONCLUSION
According to the given project report, it has been articulated that role of managerial
accounting is important aspects for every business. This will assist in future planning
and make sure to use their resources in organised ways. However, analysis has shows
that certain types of cost those are incurred in development of any new project can be
essential for any individual or firm. The analysis has also determined positive growth
chances of Canon and Apple inc through using innovative feature and techniques in
their latest products. On the basis of their given information valuable suggestion has
been provided that can help in increase growth opportunities in near future.
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REFERENCES
Books and Journals:
Bobryshev, A.N and et. al., 2015. Management accounting in Russia: problems of
theoretical study and practical application in the economic crisis. Journal of
Advanced Research in Law and Economics. 6(3 (13). p.511.
Demerjian, P.R., and et.al., 2012. Managerial ability and earnings quality. The
Accounting Review. 88(2). pp.463-498.
Gitman, L.J., Juchau, R. and Flanagan, J., 2015. Principles of managerial finance.
Pearson Higher Education AU.
Hasniza Haron, N., Kamal Abdul Rahman, I. and Smith, M., 2013. Management
accounting practices and the turnaround process. Asian Review of
Accounting. 21(2). pp.100-112.
Kanellou, A. and Spathis, C., 2013. Accounting benefits and satisfaction in an ERP
environment. International Journal of Accounting Information Systems. 14(3).
pp.209-234.
Marius, C.D., Denisa, C.M. and Florina, B.R.I., 2012. Managerial accounting–a source
of information for an efficient management in SME. Procedia-Social and
Behavioral Sciences. 62. pp.521-525.
Miller, P. and Power, M., 2013. Accounting, organizing, and economizing: Connecting
accounting research and organization theory. The Academy of Management
Annals. 7(1). pp.557-605.
Moser, D.V., 2012. Is accounting research stagnant?. Accounting Horizons, 26(4),
pp.845-850.
Parker, L.D. and Fleischman, R.K., 2017. What is Past is Prologue: Cost Accounting in
the British Industrial Revolution, 1760-1850. Routledge.
Sajady, H., Dastgir, M. and Nejad, H.H., 2012. Evaluation of the effectiveness of
accounting information systems. International Journal of Information Science and
Management (IJISM). 6(2). pp.49-59.
Wickramasinghe, D. and Alawattage, C., 2012. Management accounting change:
approaches and perspectives. Routledge.
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