Managerial Accounting Analysis and Case Study Report

This report presents a comprehensive analysis of a managerial accounting case study, focusing on cost classifications, financial decision-making, and business expansion strategies. The case study explores variable, semi-variable, and fixed costs, providing a detailed breakdown of each. It examines relevant and irrelevant information for appliance purchases, evaluating different options with associated costs and benefits. The report also analyzes the impact of employee recruitment and business expansion on financial statements, offering insights into profitability and resource allocation. Furthermore, it discusses the role of management accounting in business decision-making, emphasizing the importance of innovation, market analysis, and strategic planning for achieving financial success. The report also provides a comparison of Canon, Inc. and Apple Computer, Inc. as a case study illustration.

Running head: Managerial Accounting
Managerial Accounting
Name of the Student
Name of the University
Author Note

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Table of Contents
PART A.........................................................................................................................3
ANSWER NO 1.........................................................................................................3
Answer No 2..............................................................................................................4
Answer No 3..............................................................................................................5
Answer No 4..............................................................................................................7
Answer No 5..............................................................................................................8
PART B.........................................................................................................................9
Answer No 1..............................................................................................................9
Answer No 2............................................................................................................10
Answer No 3............................................................................................................11
References and Bibliography.....................................................................................13

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PART A
ANSWER NO 1
Management accounting is the process which the help the management to
ascertain the cost of the company product as this let them to know amount which the
company has spent in the production of the goods and help them to know the sale
value of the product which they can get from the customers and help them to gain
the required profit from the sale of the products (Akhavan, Ward and Bozic 2016). In
the given case study it can be seen that there are many cost and which help them to
know the value of the services which they should charge from the customers. The
classification of the cost as per the given case study is been discussed below:
1. Variable cost – The cost which vary with the production as it increase and
decrease with the change in the activity level of the company (Bebbington,
Unerman and O’DWYER 2014). It is a part of the prime cost and it directly
affect the price of the product and if company has high number of variable
cost than they may have to suffer losses in the business so the company
should manage the variable cost as per their best possible. As per the given
case study it can be see that the cost which they charge for the children is a
variable cost as if there are two children than the company will charge
accordingly so the increase and decrease in the number of the children
changes the fee so this signify that it is a variable cost.
2. Semi-Variable Cost – It is a mixed cost as it contain both the fixed and the
variable cost. In the starting up to the certain level the cost is fixed but after
the level increase it increase in proportion so this part is termed as semi-
variable cost (Bromwich and Scapens 2016). The fixed cost part remain same
and the variable part may or may not happen in all the cases. As per the given

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case it can be seen that the part which they charge for the additional hours
can be termed as fixed cost as in the timing of 8am to 4 pm the money they
charge is a fixed in nature but if someone want additional service after 4 than
for each additional hour they charge $15 so this can be termed as variable
cost, so as it contain part of the both variable and fixed so this cost can be
termed as semi-variable cost.
3. Fixed cost – The cost which remain fixed irrespective of the changes in the
activity level than this cost is classified as fixed cost. This cost are fixed even
when the company does not do the production of the product (Cooper 2017).
This cost cannot be eliminated by the company and it also form part of the
prime cost so this also help the company to know the sale value of the
product. To reduce this type of the cost company have to increase the
production unit as it is been charged as a whole so if they increase the
production than automatically this cost will be minimized (Dale and Plunkett
2017). As per the given case study it can be seen that the cost which the
company had incur in respect of the licence and insurance of the company
are the fixed cost as these cost company have to pay even when they do not
have any sale of their services.
Answer No 2
There are two types of the information which is been provided in the case
study, one which is totally relevant with the purchase of the appliance and the
second one is the one which is not relevant in regards with the purchase of the
appliance. The relevant information as per the purchase of the appliance in the case
study is that it have given three options and the company can choose as per their
need and preferences. The first option states that the company should give the

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contract of the laundry to some other company so that it can concentre upon the
business services and it can get a reasonable cost for the laundry service which will
save their time and money so it will be a good option for the company. The second
option is given in the case is that the company should do the laundry services by
itself and to do so it have to travel two ways of 3 km each and also it have to get
some additional items which will be needed in the laundry services so this require
both the time and the efforts form the company side in order to complete the laundry
services. The third option is it should invest in the appliance and should get them in
the company so that it will able to minimize the overall cost of the laundry service
and able to perform the service as per their flexible timing. So this are the relevant
information in regards with the company to make its decision in related to the
purchase of the appliances. The irrelevant information which is given in the case it
that it contains the details of the old appliance and it is not useful for the company as
what will be the use of the old amount in regards with the purchase of the new
appliances.
Answer No 3
The company have got three types of option in regards with the appliance and
each option have its pros and cons so all the three option are listed below with
proper calculation and also the analysis of the option in regards how it will affect the
company financial position.
Alternative 1
This option suggest that the company should give the laundry contract to Red
Oak Laundry and Dry cleaning as it will help the m in saving the time and efforts as it
will provide additional services like pick-up of the blanket and also it will deliver them

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back to the company and it is providing the service in low cost which can be easily
be afforded by the company.
It can be seen that the company have to incur $52 in order to give the laundry
services to other outsider company.
Alternative 2
This alternative suggest that the company should do the service itself as it to
perform the services it have to travel for 3 miles one way and also it include
additional items in which they have to invest the money. It require both the time and
efforts of the company in order to complete the laundry services.
It can be seen that the company have to incur $49.67 in order to the self-service in
regards with the laundering process and also it have to invest its time and efforts in
the process which can be a topic of discussion in the company and it should select
the option accordingly.
Alternative 3

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This alternative suggest that the company should invest in the purchase of the
appliance as this will help them to minimize the cost of the services and also help
them to do the service in regards with the flexible timing of the company.
It can be seen that the company should needed $1143.72 in order to purchase the
appliance so the company have to think before investing this much amount in the
appliance.
Answer No 4
As per the analysis of the case study, it can be seen that there is high
demand of the day care in the country so to expand their business they wanted to
recruit the new employee so the analysis of the employee on the financial statement
and the effect of additional 3 children which the company will get form the expansion.
The required calculation is done below

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Answer No 5
As per the case study it is seen that due to high demand of the care centre
the company wanted to expand its business and for the purpose of expansion of the
company they have seen a big place for the business so the analysis of the current
situation and the new proposal the calculation is been given below:
So it can be seen from the above calculation the calculation of the both old area of
the business and the new area of the business so it can be clearly see that the
company is earning better in the current situation and it should not shift the new area

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so this will not able to generate the amount of the profit which is been require by the
company or which is the company is earning in current situation so it should not
change or expand the business. So the company should only comprises in regards
with the 9 children in the daily care centre and should focus upon the recruiting only
1 employee in the company as it able to give them the fuller utilization of the
resources.
PART B
Answer No 1
Management accounting helps the company to know each details which is
very helpful for the company in regards with the decision of the business. It is a very
widely accounting practice and is been used by all the types of firm. This help the
company to manage the process of the business effectively and also help them to
assess the desired amount of business risk which is there in the company (Fullerton,
Kennedy and Widener 2014). It help them to prepare the budget of the company and
with the help of the budget the company can able to forecast the profit of the
company and it help them to make the future strategies in regards with the
forecasted data. This help the company to creation and innovation of the product
which the company made and also help them to know where they are lacking behind
and how should they able to recover from the lack (Gunarathne and Lee 2015). This
help the company to know more about of the product and how they should
implement the cost and other activities in the product.
In the given case which is related to the company cannon so it can be
observe that the profit of the company is not there as per the needs and requirement
of the business so this signify that the company is not able to earn proper amount of

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income. In order to increase the profit of the company the company have changed
their plan in regards with the market and shifted their product to the larger market so
to increase the product demand and to innovative their product, the company help
the camp session in the business organization. This session help the employee of
the company to interact with each other and are their idea and creation with each
other so that it can help the company to innovate their product more effectively. This
process will help them develop the product as per the customer need and
preference. As the product is been designed as per the need of the customer so it
able to gain a high advantage in the market and help them to get more amount of
profit from the business. It also help the top managers to take decision in regards
with the product and also help to overview the management process of the company.
The next case study which is based upon the company Apple. Apple is one of
the biggest leading company which provide high quality of the product for premium
number of clients. It always maintain its quality and specification of the product so it
always able to manage its market well and able to get an edge over the competitors
of the company. As they have budgeted that the company is able to earn more in the
personal computer section so they introduced their product in the personal computer
section and also help them to get a diversify market which lead them to get an edge
over the personal computer market as the company have got a good brand value so
it able to obtain a good amount of business in the new market. Management
accounting help them to diversify their requirement and also help them to know the
forecasted figure which lead them to change the market easily and confidentiality. It
also help the management to take necessary decision in regards with the company
product and also it able them to know in which type of the market they will able to
earn the level of profit which is require by the company.

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Answer No 2
Creation and innovation are the two process which help the company to
change and develop its product. The change is required in the product as to gain
new number of customers and also help them to get an edge over the market with
the changes it made in the product. The innovation need to be done in the both
current product as well in the upcoming products of the company. The process which
help them to identity the problem and plan according to the problem is done by
management accounting. This method help the company to know how its product is
been performing in the market and also give an overview what are the need and
preferences of the customers. So this process help the company to do the required
innovation in the product and also help them to identify the potential market in
related to the company product. From the case study it is clearly seen that the given
both companies somehow have innovated their products. As per the cannon
company is been concern it was not able to get the required number of business in
the market so to overcome that it did innovation and changed in the product so that it
able to get an edge in the market and also able to satisfy the need and preferences
of the customers in regards with the old products. As per the Apple company is been
concern it can be seen that company stay with the same product but changed its
customers as it shifted it market to the personal computer as it saw that in personal
computer market MacBook will able to get more amount of the customers so they
shifted their market and as a result it able to gain a huge business from the market
and also help them to gain a good position in the market.
Answer No 3
In the case study there are many process which help to learn about the
management accounting and how it help the management in regards with the

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decision making of the company product. As the management accounting help the
company to various aspects of the business and also help to ascertain the business
risk and how the company can overcome or lower the business risk. It help them to
forecast the required result and help them to plan accordingly to the forecasted data
and it can even compare the actual performance with the budget performance so
that it able to know how the company is performing and what are the areas it need to
take more into consideration. It help them to innovate the product and also help them
to meet the need and preference of the customers.
As per the case study of cannon it can be see the profit of the company was
decreasing with years and it not able to sustain in the market, so to overcome the
business risk the company have innovated the product and also it help them to know
the taste and preferences in regard with the customers. The outcomes which is been
establish after reading the case study is that it help them to innovate the process of
planning in the company and help them to take decision accordingly. The second
outcomes is that it help to get the budgeted data of the company business and help
to make their strategy in regards with the budgeted data so that it can compare its
performance by actual and budgeted data and can take necessary changes which is
required in the business structure.
As per the case of Apple they were not getting proper response from the
customer in the market so to overcome this they have changed their market by
shifting to the personal computer market. This change help them to overcome the
loss and also help them to gain an edge in the market of the company. The learning
outcome which is established by this case is that the process help them to get an
overview of the market and allow them to change its market easily and effectively.
The second learning is that the company able to change as per the need of new