Strategic Management Accounting: Case Study Analysis of HWL, ATL, QPT

This assignment presents a comprehensive analysis of three case studies in strategic management accounting. Case Study 1 focuses on HWL, examining pricing strategies, target costing, life cycle budgeting, and NPV analysis for a new product. Case Study 2 delves into ATL, evaluating a performance-related pay system, team-based cost savings, and the development of new performance measurement strategies, considering environmental sustainability and cultural differences. Case Study 3 analyzes QPT, calculating electricity costs, energy savings through temperature and flow adjustments, and the implementation of energy-efficient lighting, supported by NPV analysis. The assignment incorporates calculations, recommendations, and evaluations of different strategic approaches to enhance financial performance and sustainability.

Running head: STRATEGIC MANAGEMENT ACCOUNTING
Strategic Management Accounting
Name of the Student:
Name of the University:
Authors Note:

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STRATEGIC MANAGEMENT ACCOUNTING
Table of Contents
Case Study 1:..............................................................................................................................3
1. Explaining the pricing strategy that will be needed by HWL for 2019, 2020, and 2021:.....3
2. Calculating the target cost per unit of RayHot that HWL will need to acquire the profit of
20% on sales for 2019, 2020, and 2021:....................................................................................3
3. Calculating the total cost per unit for 2019, 2020, and 2021:................................................3
4a. Selecting one of the target cost from requirement 2, which needs to be selected before the
production of 2018:....................................................................................................................4
4b. Depicting the methods of evaluation that needs to be adopted for meeting the required
profit margin of 20%:.................................................................................................................5
4c. With the support of calculations, explaining the selection of the relevant method:............5
5a. Preparing a life cycle budget from 2018 to 2022 using tables 1, 2, and 3:..........................6
5b. Preparing a life cycle budget from 2018 to 2022 using tables 1 and target costs:...............7
5c. Providing relevant recommendations by calculating the NPV for the project:....................8
Case Study 2:............................................................................................................................10
1. Depicting the features of the trail cost saving performance-related pay system that causes
problems:..................................................................................................................................10
2. Depicting whether team-based cost savings performance is adequate for assessing
performance and awarding bonuses:........................................................................................10
3. Depicting the cost saving performance conducted by the company and identifying the
relevant incentive schemes that is more suitable:....................................................................11
4a. Developing new strategies for all the four types of strategies with relevant examples that
could portray the performance of the new strategy:.................................................................11
4b. Depicting the relevant drivers and benefits to the environment sustainability, which could
help in creating a shared vision and embed adequate sustainability culture in ATL:..............12

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5a. Depicting the modifications that is needed for the new performance evaluation and reward
scheme, which could help in involving Strategy, Vision and Organisational Culture:...........13
5b. Explaining the relevant modifications that need to be implemented to the efficiency phase
and strategic proactive phase, while depicting how difference in some societal values for
Australia and Malaysia could have impact on the business:....................................................14
5c. Providing relevant suggestions in developing a sustainability culture for employees and
value chain stakeholders in Malaysia compared to Australia to overcome these differences: 14
Case Study 3:............................................................................................................................15
1. Calculating the electricity cost to the business associated with the heating of water used to
70 degree:.................................................................................................................................15
2. Calculating the dollar saving if this lower temperature is used by the business:.................15
3. Calculating the electricity cost if the reduced water flow was heated under 70 degrees and
60 degrees:...............................................................................................................................16
4. Calculating the energy cost savings by reducing the water flow without reducing the water
temperature and reducing the temperature without reducing the water flow:.........................17
5. Calculate the annual lighting cost for the QPT using the following formula:.....................19
6. Depicting the savings in electricity by using energy-efficient lights:..................................19
7. Providing relevant recommendation with NPV analysis, which could help in identifying
relevant viability of the project:...............................................................................................20
Reference:................................................................................................................................21

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Case Study 1:
1. Explaining the pricing strategy that will be needed by HWL for 2019, 2020, and 2021:
The relevant declining pricing strategy is mainly used by the organisation, as the
popularity of the solar panels is relatively going to diminishing in three years. Hence, the
organisation could adequately choose the depicted prices of the units produced, as it might
help in identifying the overall viability of the project (Armstrong 2014).
2. Calculating the target cost per unit of RayHot that HWL will need to acquire the
profit of 20% on sales for 2019, 2020, and 2021:
Calculating target cost per unit
Year Sales forecast Proposed selling price Cost per unit Profit margin
2019 12000 $ 1,000 800 20.00%
2020 17000 $ 800 640 20.00%
2021 6000 $ 750 600 20.00%
3. Calculating the total cost per unit for 2019, 2020, and 2021:
Total cost Per unit of hot water
Direct material $ 250
Direct labour $ 125
Manufacturing overhead $ 125
Total manufacturing cost $ 500

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Forecasted sales
Yea
r
Sales forecast Proposed selling price
2019 12000 $ 1,000
2020 17000 $ 800
2021 6000 $ 750
Particulars 2019 2020 2021
Revenue $ 12,000,000 $ 13,600,000 $ 4,500,000
Direct material $ 3,000,000 $ 4,250,000 $ 1,500,000
Direct labour $ 1,500,000 $ 2,125,000 $ 750,000
Manufacturing overhead $ 1,500,000 $ 2,125,000 $ 750,000
Operating income $ 6,000,000 $ 5,100,000 $ 1,500,000
Research and Development 500,000 500,000 500,000
Product and Process Design 1,233,333 1,233,333 1,233,333
Marketing 900,000 900,000 900,000
Supplier training 145,000 145,000 145,000
Customer Support 433,333 433,333 433,333
Total cash flow 2,788,333 1,888,333 (1,711,667)
cost per unit 767.64 688.92 1,035.28
4a. Selecting one of the target cost from requirement 2, which needs to be selected
before the production of 2018:
Target cost

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Particulars 2019 2020 2021
Cost per unit $ 800 $ 640 $ 600
Total cost per unit
Particulars 2019 2020 2021
Cost per unit $ 768 $ 689 $ 1,035
From the relevant evaluation the overhead cost could be taken into consideration for
the target costs, which could directly allow the organisation to achieve 20% profitability from
operations.
4b. Depicting the methods of evaluation that needs to be adopted for meeting the
required profit margin of 20%:
The overall evaluation mainly helps in depicting that value engineering method needs
to be conducted for achieving the margin of 20%. Moreover, the value engineering part
directly indicates that overhead expenses that is incurred by the organisation needs to be
evaluated to determine the actual profitability from operations.
4c. With the support of calculations, explaining the selection of the relevant method:
Value engineering method could eventually reduce the expenses of overhead costs,
which is directly incurred from operations. Moreover, the adequate reduction in could
directly return the total expense incurred from operations as depicted in the below table from
2018 to 2022.
Particulars 2018 2019 2020 2021 2022
Cost of expenses $ $ $

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STRATEGIC MANAGEMENT ACCOUNTING
9,600,000 10,880,000 3,600,000
Research and
Development
1,5
00,000
Product and Process
Design
3,0
00,000
Marketing 1,0
00,000
Supplier training 1
00,000
Customer Support 1
00,000
Total cash flow (5,6
00,000)
2,4
00,000
2,72
0,000
900
,000
(1
00,000)
5a. Preparing a life cycle budget from 2018 to 2022 using tables 1, 2, and 3:
Total cost Per unit of hot water
Direct material $ 250
Direct labour $ 125
Manufacturing overhead $ 125
Total manufacturing cost $ 500
Forecasted sales

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STRATEGIC MANAGEMENT ACCOUNTING
Yea
r
Sales forecast Proposed selling price
2019 12000 $ 1,000
2020 17000 $ 800
2021 6000 $ 750
Particulars 2018 2019 2020 2021 2022
Revenue $ 12,000,000 $13,600,000 $ 4,500,000
Direct material $ 3,000,000 $ 4,250,000 $ 1,500,000
Direct labour $ 1,500,000 $ 2,125,000 $ 750,000
Manufacturing
overhead
$ 1,500,000 $ 2,125,000 $ 750,000
Operating
income
$ 6,000,000 $ 5,100,000 $ 1,500,000
Research and
Development
1,500,000
Product and
Process Design
3,000,000 700,000
Marketing 1,000,000 800,000 500,000 400,000
Supplier training 100,000 175,000 105,000 55,000
Customer
Support
250,000 600,000 350,000 100,000
Total cash flow (5,600,000) 4,075,000 3,895,000 695,000 (100,000)

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5b. Preparing a life cycle budget from 2018 to 2022 using tables 1 and target costs:
Particulars 2018 2019 2020 2021 2022
Revenue $
12,000,000
$
13,600,000
$
4,500,000
Cost of expenses $
9,600,000
$
10,880,000
$
3,600,000
Total cash flow 2,4
00,000
2,72
0,000
900
,000
Research and
Development
1,5
00,000
Product and Process
Design
3,0
00,000
Marketing 1,0
00,000
Supplier training 1
00,000
Customer Support 1
00,000
Total cash flow (5,6
00,000)
2,4
00,000
2,72
0,000
900
,000
(1
00,000)
5c. Providing relevant recommendations by calculating the NPV for the project:
Total cost
Particulars 2018 2019 2020 2021 2022

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Total cash
flow
(5,6
00,000)
4,0
75,000
3,89
5,000
69
5,000
(
100,000)
Discounting
rate
1 0.92593 0.85734 0.79383 0.73503
Discounted
cash flow
(5,6
00,000)
3,7
73,165
3,33
9,339
55
1,712 (73,503)
NPV 1,990,713
Target cost
Particulars 2018 2019 2020 2021 2022
Total cash
flow
(5,6
00,000)
2,4
00,000
2,72
0,000
90
0,000
(
100,000)
Discounting
rate
1 0.92593 0.85734 0.79383 0.73503
Discounted
cash flow
(5,6
00,000)
2,2
22,232
2,33
1,965
71
4,447 (73,503)
NPV (404,859)
From the overall evaluation of the NPV the total cost expense is relatively adequate,
as it is providing a positive NPV valuation. However, the target cost method is directly
increasing the overall costs and forcing the NPV to be negative, which directly indicates that
the product is not viable. Hence, it could be stated that total cost method is a viable approach
for generating higher revenue from investment (DRURY 2013).

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Case Study 2:
1. Depicting the features of the trail cost saving performance-related pay system that
causes problems:
From the relevant evaluation of the case study it could be identified that Different
teams are not supporting each other in lieu of relevant benefits that could be provided in form
of incentives. They are all $30,000 incentive is directly forcing the things to sabotage each
other overall work so that they are not able to perform in their 100%. From the evaluation of
complaints provided from different team it could be identified that Team Scuba Assembly is
facing the maximum challenge for improving is performance, as a relevant sabotage is being
conducted (Christ and Burritt 2013). Moreover, the case study also helps him depicting that
only 4 team were introduced with the new incentive scheme, why the supporting things that
will provide irrelevant materials and on the old scheme. This is mainly not forcing the overall
production line to reduce the cost incurred from operation and help the 4 teams to perform
adequately. Lastly, well control system also increasing rage and unhealthy competition
among the employees, which could result in negative productivity and might hamper
operations of the organisation.
2. Depicting whether team-based cost savings performance is adequate for assessing
performance and awarding bonuses:
The evaluation of the case study also indicates that overall team-based for saving
performance measure is not adequate to measure relevant performance in awarding bonus to
employees. This directly indicates that a current use of team-based cost saving measures is
relatively not providing the maximum saving performance that could be provided by the
company. Hence, accompany could use different cost saving measures such as activity based
management (ABM), and Labour input, which could allow appropriate recognition method

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for activities conducted by the teams and provide relevant price to the winner. Furthermore,
the current situation only one team is getting all the relevant benefits while that use exempted
from the benefits (Contrafatto and Burns 2013).
3. Depicting the cost saving performance conducted by the company and identifying the
relevant incentive schemes that is more suitable:
After seeing the relevant discussion regarding activity based management (ABM) is
been conducted, which could help in detecting the actual value of the organisation. The case
study mainly indicates that adequate performance measure incentive scheme needs to be
implemented by the organisation for increasing performance and conducting cost saving
measures. The incentive scheme is directly proportional to the overall cost savings that is
conducted by the organisation from its production facility. Therefore, activity based
management (ABM) could directly allow the organisation to detect the overall activities that
is conducted by a particular team of process. This relevant detection of the activities could
eventually help in deciding whether the team has reduced the overall expenses incurred from
production. Procurement ROI is also identified as one of the adequate measure for calculating
the overall savings that is conducted on expenses (Fullerton, Kennedy and Widener
2013). However, the use of activity based management system could provide detection for
both relevant cost features and incentives that needs to be provided to the Employees.
Therefore, the organisation could implement activity based management system and its
operations for reducing the overall cost and improving profitability.
4a. Developing new strategies for all the four types of strategies with relevant examples
that could portray the performance of the new strategy:
The newly design performance measurement system could eventually accommodate
Activity based management, which could help in detecting performance of the employees.