Strategic Management Accounting Case Study: Bream Hot Water Ltd

This case study provides an analysis of Bream Hot Water Ltd's strategic management accounting practices. It begins by calculating the target cost for the Sunstruck solar hot water system, comparing it with estimated manufacturing costs to determine the feasibility of its development and introduction. A lifecycle budget is then prepared, covering a five-year period, to estimate the average unit cost of the Sunstruck over its entire lifecycle. The study further explores how Bream could utilize lifecycle management to reduce manufacturing costs, identifying the design phase as a potentially high-expenditure area within the value chain. The document also includes external scholarly sources to broaden the scope of understanding. Desklib provides solved assignments for students.

Running head: STRATEGIC MANAGEMENT ACCOUNTING 1
Strategic Management Accounting
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STRATEGIC MANAGEMENT ACCOUNTING 2
Question 4
Explanation of how Bream could utilize the lifecycle management to decrease the cost of
manufacture for the Sunstruck solar hot water system and the part of the value chain
that may allow extra expense
Essentially, lifecycle management is regarded as a flexible and integrated method to
company management that basically draws on the ideologies of life cycle rational so as to
assist companies of all forms such as retailers, manufacturers and professionals to apprehend
their respective environmental effects and where they arise in the operation lifecycle from
raw materials to finished goods (Stark, 2015). Basically, there are a number of different
approaches which can help product designers, manufacturers and developers to evaluates the
effects of a product and environmental benefits and this includes; life cycle matrix, life cycle
map, life cycle assessment and streamlined life cycle evaluation tools.
In this case, Bream could use the lifecycle management to decrease the cost of
manufacture for the Sunstruck solar hot water system by basically putting more capitals into
the products and process design phase and the develop diverse ways that could be utilized in
manufacturing (Gmelin, & Seuring, 2014). The product lifecycle demonstrates the overall
costs that include incurred and committed costs over each period of the product life. In this
case, almost all of the costs of the product are actually used in the stage of production of the
product lifecycle. For instance, planning of the product and the design of the concept which
often stages one and design and development as stage two (Frangopol, 2011). Moreover,
these two stages of the product life may incur extra expenses because the technology utilized
is newly developed and regarded as immature which leads to a significantly large amount of
capital for its development.
Evidence derived from the life cycle behaviour basically advocates that most costs of
manufacture are actually used in the phase of designing and thus it is challenging to attain

STRATEGIC MANAGEMENT ACCOUNTING 3
major significance once the product moves to the production stage. Therefore, the part of the
value chain that may allow extra expense is design phase as this part requires a significant
amount of capital for its initiation (Bey, 2018). Product design basically enhances the overall
product sale because customers will always go for a unique product in the market that meets
their preferences and satisfies their needs. This can be equalized by the successive savings in
the costs of manufacture and also in the consumer’s costs of services.

STRATEGIC MANAGEMENT ACCOUNTING 4
References
Bey, N. (2018). Life Cycle Management. In Life Cycle Assessment (pp. 519-544). Springer,
Cham.
Frangopol, D. M. (2011). Life-cycle performance, management, and optimisation of
structural systems under uncertainty: accomplishments and challenges 1. Structure
and Infrastructure Engineering, 7(6), 389-413.
Gmelin, H., & Seuring, S. (2014). Achieving sustainable new product development by
integrating product life-cycle management capabilities. International Journal of
Production Economics, 154, 166-177.
Stark, J. (2015). Product lifecycle management. In Product Lifecycle Management (Volume
1) (pp. 1-29). Springer, Cham.