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Application of MAS in Apple and Cannon

Part A of the task requires you to analyse the case given below in relation to the principles of managerial accounting. Your analysis should be followed by the conclusion and recommendations for the company. 

In Part B you should present a detailed critique of a journal articles related to the application of managerial accounting system (MAS) in Apple and Cannon and evaluation of the relevancy in making the strategic decision effectively.

Answer

HI5017

Managerial Accounting

PART-A

Analysis of the case study given

1. Sort of costing and describe three type of costing with examples. 

There are several types of costing such as fixed cost, variable cost and other operating sunk cost. 

Fixed costing—this is the costing which is incurred by company on fixed basis annually and does not change with the changes in the production unit. For instance, annual license fees paid by company is $ 225 which is incurred annually on fixed basis. 

Incremental fixed cost expenses- this is the different type of costing which is incurred by company on fixed basis but it changes gradually with the time and does not change with the changes in the unit. For instance, annual insurance fees paid by company is fixed at $ 3840 which may vary with the changes in time (Laudon, and Laudon, 2016) 

Variable costs- This variable costing of the business is the cost incurred on the basis of the incurred units. The cost of the variable cost depends upon the monthly charges. For instance, laundry service is pegged at $ 52 per month. 

2 Information which are relevant and irrelevant for the decision making of appliance 

There are several business costing which are incurred as below and would be relevant for the decision making of the appliance

  1. Costing required for making the initial investment. 
  2. Delivery charges of the appliance
  3. Installation cost incurred for the appliance
  4. Incurred cost for the appliance

However, the other cost such as laundry service pick up and cost related to the mileage, laundering and cost of detergent would be considered for the relevant to decision making (Sumpter, 2015).

The costs related to the laundry service pick up and those related to delivery of the same. 

Nonetheless, cost given below will be considered irrelevant for the considering of the decision making to buy appalling. 

  1. Last cost incurred for the existing appliance 
  2. Detergent cost 

Other cost related to the spending money for the Laundromat and time of delivery from and to Laundromat. 

3. Total cost incurred for the couple to laundry and computation 

1. Purchase of the Appliance (alternative 1)

Costing 
Amount 
Annual energy cost 
265
Depreciation 
109.84
Detergent cost 
878
Total cost
514.84



2. Self-service laundry (alternative 2)


Self-service laundry cost 


Particular
Total amount in $
Driving cost
6miles week*.56 per mile and *52 week 
174.72
Laundering costing of cloths

416
Detergent costs 
140
Total costs related to self service 
730




3.  Delivery laundry service (alternative 3)

Cost of pick up and U delivery computation

Particular
Details 
$
Cost of pickup of laundry and its delivery 
52 per month *12
624.00
Total annual cost of pickup and delivery 

624.00


It is observed that total application cost for the couple to laundry is $ 514.84.

Total annual cost required for the self-service laundry would be $ 730.72

Total annual cost of pickup and delivery cost is $ 624

Therefore, lowest cost


4. Hiring of additional employees and its computation. 

This is based on the incremental analysis in which additional employees will be hired for the increased revenue. 

Details 
Computation 
Amount
Cost of hiring three additional employee
3*$800
$2400
Reduced by 


Additional employee cost 
$9.00 / hour * 40 hrs* 4.33 wks 
$1558.80
Cost of food 
$3.20*3*5*4.33
207.84 

Total incremental cost 

$1,766.64
Incremental contribution  (profit)

$633.36

 


Frank would have revenue $ 2400

Additional cost of employees would be $ 1766.64

Additional profit to be generated = $ 633.36


5. Option to stay at current option or go forward with rental space? Number of children to be served? Additional employees to be hired? 


Remain in the current Location 

Total cost of Frank if he stays his operation his at current location and its costing for 6 and 9 children 

Details 
6 children 
9 children 
Revenue  (@ 800 per child)
4800
7200
Less: Expenses 


Meals cost
($3.20 per child*5 days a week* no of child* 4.33 weeks)
415.68
623.52
License costs 
($225.00/12)
18.75
18.75
Insurance costs 
(5,000/12)
416.67
416.67
Cost of laundry ( alternative 1) 
(514.64/12)
42.90
42.90
Depreciation Expenses 
($79,500/25 years) = $3,180.00/12 = $265.00 
265.00
265.00
Utilities expenses 
50.00
50.00
Rent expenses 
0.00
0.00
Employee costs 
0.00
1,558.80
Total costs 


Net income 
3,687.67
4,321.03


If 6 children are served then profit would be $ 3687.67 

If 9 children are served then profit would be $ 4321.03 

The incremental revue would be $ 2400 if one additional employees is hired.

The incremental cost of hiring employees would be $ 1766.64.

Therefore, profit would be $633.36

 Therefore, this option should be accepted by Frank

Option B: Move to a larger facility 

Providing service to 12 and 14 children by moving to take larger space



12 children 
14 children 
Revenue  (@ 800 per child)
9,600
11,200
Less: Expenses 


Meals cost
($3.20 per child*5 days a week* no of child* 4.33 weeks)
831.36
969.92
License costs 
($225.00/12)
18.75
18.75
Insurance costs 
(5,000/12)
416.67
416.67
Cost of laundry ( alternative 1) 
(514.64/12)
42.90
42.90
Depreciation Expenses 
0.00
0.00
Utilities expenses 
125.00
125.00
Rent expenses 
650.00
650.00
Employee costs 
($9/hour x 40 hours/week x 4.33 weeks/month=1,558.80*2 and *3)
3,117.60 
4,676.40 
Total costs 
5,202.28
6,899.64
Net income 
4,397.72 
4,300.36

If 12 children are served then profit would be $ 4397.32

The incremental revenue would be $ 4397 if one additional employees is hired for 12 children.

The incremental cost of hiring employees would be low as compared to the profit. 

If 14 children are served then profit would be $ 4300.36  (Nerger, Nagpal,  and Assenmacher, 2015).

The incremental cost of hiring employees would be higher as compared to the profit. 

Therefore, the option of serving only 12 children should be accepted by Frank (Ainsworth, and Deines, 2019).

Part B: Journal Article Critique 

1. Parts of MAS in Apple and Cannon and evaluation of the relevancy in making the strategic decision effectively.

The Management Accounting System is based on the three main components which are Risk management system, Performance management system and the Strategic management system. All these components help the Management Accounting System of canon to analyze the data of the existing business and make a good decision in selecting resources for the business manpower so that in future it can put a great impact on the business which lasts longer. The three components are listed below in details (Cooper,  Ezzamel, and Qu, 2017).

Risk management system- 

The risk management system is the contribution of the effective practices which is used for the development of a framework and work on the determination of gauging, and managing the risk which has arisen to overcome that risk and operational efficiency goals are predetermined in the business (Coffman, et al. 2017).

Also, the identification of the existing business possible disruption is one of the primary components which is known as a management accounting system, and it also identifies all the other disruption and collects it so that the large data can pertain from these risk. The data which is collected and identifies in the time management, it also analyzed all the data to make best possible which might hinder the company’s possible process and help it to frame the resources in each possible alternatives. Identifying the problems engaged in machine drums linked to identifying hazards that can interrupt the company and in the situation of Canon can be highly expensive in the lengthy run (Gazafroudi, et al. 2017).

Process Management system-

The Process Management system is the most inherent part of all around the management accounting system which assesses the actual performance on the given time period and compares the effectiveness of the performance whether it is actual or not and whether it is predetermining the goals of the business or it has been lagged in performance. The business manager also allows the possible structure of the system which presents and allow the effective variation in the device and in the migration programs.

Canons output declined in the mid-1970s and it was necessary to introduce something fresh to the industry to combat Xerox's increasing threats, while at the same moment introducing something that would be useful to tiny businesses and less expensive. Both of them had hardly any technology to show their effect. It also showed that the management team was planning for the future to make the performance better and something new so that the entire market would decades on the Mini Copper copies (González-Briones, Chamoso,  Yoe,  and Corchado, 2018).

Strategic Management system

The main and the third components of the system is the Strategic Management system which is used for preparing a blueprint of the planned decisions in the aspect of the qualitative and the quantitative business and also set the benchmark for the benefits of the business which is ensured. The system jobs are also been studied for exploring the more new technologies and existing trends so that it can help in making correct decisions which would create a great impact on the business for the long term. Apple's creation of low-cost Mac computers initiative was an example of working towards achieving a revolutionary objective and introducing to the masses the low-cost universal pcs. Therefore, the success of the project is displayed on the company committee to engage the team member in the development process (Abbas, Shaheen, and Amin, 2015).

2. Article focuses on the innovation process in firm and creation of the innovative and transmit information in process. Explain how MAS contributes to innovation process. 

According to the given example, Innovation is the end results in which the social interaction process create new information. The inventions would not have been feasible without enhanced social communication. Accounting management adds to the development method by analyzing the following points such as (Maskell, Baggaley,  and Grasso, 2016).

  • All the data are being gathered for identifying the exact issue and problem which are present in the processes and the products.
  • It also enables the management so that it can soon accept the problems which may cause harm and also inform to the leadership team and begin to define and analyze multiple problems which can arise and may result in disruption.
  • These records and information submitted by the leadership accounting scheme would also include financial patterns and developments in the sector, which leadership can use efficiently to initiate fresh relationships and discover significant fresh thoughts (Otley, 2016).
  • The Ideas created from the new interactive method has involved in the validation which is in the form of expenses by which the leadership accounting scheme and a choice can only be made using these inputs.
  • Thus the leadership accounting scheme enables in the fresh concept to generate and settle and implement the innovation method and without the leadership accounting scheme, the creation of fresh tech and fresh benchmarking would not be feasible in profound cooperation.
  • Whether the innovation includes the product overhaul as in the situation of a canon or the creation of a completely fresh item as illustrated in the situation of Apple, the leadership billing scheme stays engaged at each phase (Schaltegger, and Burritt, 2017).

3. 4 lesson learned from the article and its implication on the companies and given justification of answers related to 2 outcomes from each companies. 

The outcome of this research depends on the following points which have been described below in the form of summarization (Maas, Schaltegger, and Crutzen, 2016).

a) Japanese companies were existed before the Silicon Valley revolution and have already established excellent and lucrative current product lines. The staff provided by the companies was also quite formalized. However, these companies required to innovate and take in fresh technology on a continuous basis to expand quickly. This needed a renewed interest in the method of development and fresh concepts were provided priority by evaluating them carefully if they create company sense or not. The canon pattern demonstrated that regardless of whether there is any disarray, the equivalent can be useful if the objective is to contend for a superior thought than what as of now exists. The MC scheme set in motion by the group, the organization is a precedent how expanding social collaboration and can prompt compelling examination (Bobryshev, et al. 2015).

b) Anyway, it must be recollected that making tumult isn't the thought process. This includes setting up of a domain wherein individuals can partake and it tends to be disorganized yet the equivalent may be an antecedent to better thoughts. Thoughts can be innovative and left contentions. In some cases, thoughts can be a mix of various thoughts. Anyway, the administration and the members of the social procedure would need to perceive the way that mayhem cannot be permitted to come first and the organization the board must have the integrative capacity to change over these thoughts into the real world. Organizations would need to work entire heartedly into creating and giving the thoughts a shape. Be that as it may on the off chance that various thoughts are being worked upon by various groups, at that point it must be guaranteed they don't cover and if this not stayed away from the equivalent would not result in any type of cooperative energy (Klychova, Zakirova, Zakirov,  and Valieva, 2015).

c) According to this research, the main highlighted point indicates the position of the leaders and a different situation arise in the company’s management which involves in introducing the new processes and the products with huge down cost due to this situation the company comes under tremendously big pressure. In this situation, the leaders started to innovate new ideas so that it can prevent the company from a chaotic situation by making a good decision. This whole process undertakes the exact situation which would be very important for the company to demonstrate the deep slumber, stated by the Canon (Zhang, Qian, Lv, and Liu, 2016).

d) After researching on the given case study, it is clear that the companies have to develop smaller but very capable group core which can take part in the social interactive sessions and bring out various new ideas which could be beneficial for the company’s growth. The high level of the commitment is needed for making the development and demonstration easy. Also, the company acquired to be as one of the self-organizing company. The Self-organizing necessities extremely high in today’s condition as their cooperation’s would be progressively new and they would probably grow new implications from any such type of circumstances (Leitão, Colombo, and Karnouskos, 2016).

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