HI5017
Unit Title Managerial Accounting
Assessment Type Individual Assignment
Assessment Title Management Accounting Case Studies
Purpose of the assessment (with ULO
Mapping) Students are required to develop their understanding of cost concepts, and demonstrate their ability to apply their knowledge of cost concepts to a service-based company. Additionally, students are to critically evaluate a journal article to analyse the practical use of accounting information to real-life companies’ decision-making and achievement of business goals (ULO 1, 5, 6, 7, and 8)
Weight 30% of the total assessments
Total Marks 30
Word limit Not more than 3,000 words. Please use “word count” and include in assignment.
Due Date Week 10 Sunday at 11.59 p.m.
Submission Guidelines • All work must be submitted on Blackboard by the due date along with a completed Assignment Cover Page.
• The assignment must be in MS Word format, no spacing, 12-pt Arial font and 2 cm margins on all four sides of your page with appropriate section headings and page numbers.
• Reference sources must be cited in the text of the report, and listed appropriately at the end in a reference list using Harvard referencing style.
• It is the responsibility of the student who is submitting the work, to ensure that the work is in fact her/his own work. Incorporating another’s work or ideas into one’s own work without appropriate acknowledgement is an academic offence. Students should submit all assignments for plagiarism checking on Blackboard before final submission in the subject. For further details, please refer to the Unit Outline and Student Handbook.
HI5017
Individual Assignment Specifications
Purpose:
This assignment aims at developing your understanding of cost concepts, and demonstrate your ability to apply your knowledge of cost concepts to a service-based company. Additionally, you are to critically evaluate a journal article to analyse the practical use of accounting information to real-life companies’ decision-making and achievement of business goals.
Assignment Structure should be as the following:
Part A: Case Study Analysis (15 Marks)
You are to answer the 5 questions relating to the case study of a child care business. It includes both theory and calculation type questions. Do show your working for the calculations.
Case Background
Douglas and Pamela Frank are a married couple. They both worked for a railroad company for 30 years. At age 57, Douglas and age 52, Pamela retired and moved to the small town of Ovilla, Texas, which has a population of approximately 3,500 residents. When the Franks moved to the town, they decided to start a child care business in their home called Nanna’s House. Nanna’s House is licensed by the state. The state charges an annual fee of $225 to maintain the license. Insurance is required at a cost of $3,840 annually. The facility is licensed to care for a maximum of six children. The Franks charge a fee of $800 per month for each child. The monthly fee is based on a full day of care, from 8:00 a.m. to 4:00 p.m. If additional time is required beyond 4:00 p.m., parents must pay an additional charge of $15 per hour for each child. The couple provides two meals and a snack for the children. The cost of the meals and snack is $3.20 per child per day. There are six children currently enrolled.
The facility is very nice. It is an 820 square foot addition to their home that was built in 1964. The Franks purchased the home and completed the renovations for $79,500 and they believe the addition has a useful life of 25 years. The facility has a large open space for play, reading, and other activities. There is a section for sleeping which contains small cots. The facility is equipped with a small kitchen, two bathrooms and a small laundry area. The daycare increased the Franks’ utility cost by $50 each month.
During the first week of operations, the washer and dryer stopped working. Both appliances were old and had been used by the couple for many years. The old appliances cost a total of $440. While a laundry room was not initially a necessity, it became increasingly important for laundering the soiled clothes of the children, blankets, and sheets. A company nearby, Red Oak Laundry and Dry Cleaning, can launder clothing for the Franks, including pick-up and delivery, for $52 per month. Alternatively, the Franks can take clothes to the laundromat once a week, which is three miles away (one way). The applicable mileage rate is $0.56/mile. They can launder the clothes themselves at a cost of $8 per week. The self-service alternative does not include detergent or fabric sheets. The couple would need to purchase these items in order to use the laundromat. Purchasing laundry supplies in bulk from MegaMart would cost $35 every quarter. The final alternative is for the Franks to purchase a washer and dryer. The cost of the appliances is: washer $420 and dryer $380. The additional accessories for both appliances, needed for installation, cost $43.72. The store will deliver the appliances at a total cost of $35. The cost of installing the appliances is free. Both appliances are expected to last 8 years. According to the manufacturer the washer will increase energy costs by $120 per year. The dryer will increase energy costs by $145 per year.
The Franks need some assistance in decision making and evaluation. They have contacted you, their accountant, to provide some advice.
Required:
Respond to the following questions to help Douglas and Pamela make their decisions. (If necessary, the Franks will use straight line depreciation. For monthly calculations, use 4.33 weeks per month.)
1. Consider the different types of costs discussed in this unit. List any three (3) types of costs and provide one specific example of each cost from the case. (3 marks)
2. Based on the information provided, what information is relevant to the decision to purchase the appliances? What information is irrelevant to the decision to purchase the appliances? Why? (3 marks)
3. What could it cost the couple to launder clothes? Show your detailed calculations for each option. (3 marks)
4. The Franks have a waiting list for their day care. They can hire an employee for $9 per hour for 40 hours each week. With the additional employee, the Franks can accept three additional children. Should the Franks hire the additional employee? Show your detailed calculations. (3 marks)
5. The Franks home can accommodate a maximum of nine children. They can move the day care from their home to rented space in town, which can accommodate up to 14 children. The space will cost $650 per month and the utilities will cost $125 per month. Additionally, insurance will now cost the Franks $5,000 per year. Per state regulations, each adult can supervise no more than three children. As their accountant, prepare a letter to the Franks advising them on their space options. Should they continue to operate the facility at home or should they rent space in town? How many children should they accept? How many employees will they need to hire? Show your detailed calculations for each scenario. (3 marks)
Part B: Journal Article Critique (12 Marks)
You are to read the journal article by Nonaka and Kenney (1991), “Towards a new theory of innovation management: A case study comparing Canon, Inc. and Apple Computer, Inc.”, Journal of Engineering and Technology Management, 8, p. 67-83. The journal article is attached as a separate file in Blackboard under the folder Assignment .
Required:
Critically evaluate the role of management accounting systems and the provision of accounting information in the innovation process of these two companies by answering the 3 questions below:
1. Identify the components of the management accounting system in each of the two companies, and discuss their relevance in enabling decisions to be made efficiently and effectively. Include examples in your answer. (4 marks)
2. The article describes the innovation process in a firm as ‘a process of information creation’, and a firm needs to organise themselves ‘to transmit the new information’. Explain how management accounting contributes to this innovation process. Include in your discussion two (2) specific examples from each of the two companies mentioned in the journal article. (4 marks)
3. Provide four (4) specific outcomes or lessons learned from the article’s research findings that will be useful for management accountants in Australian companies to learn from, and justify your answer [i.e. provide 2 outcomes from each company]. (4 marks)
Marking Criteria
Marking Criteria Weighting
Part A: Case Study Analysis
1. Consider the different types of costs discussed in this unit. List any three (3) types of costs and provide one specific example of each cost from the case. 3%
2. Based on the information provided, what information is relevant to the decision to purchase the appliances? What information is irrelevant to the decision to purchase the appliances? Why? 3%
3. What could it cost the couple to launder clothes? Show your detailed calculations for each option. 3%
4. The Franks have a waiting list for their day care. They can hire an employee for $9 per hour for 40 hours each week. With the additional employee, the Franks can accept three additional children. Should the Franks hire the additional employee? Show your detailed calculations. 3%
5. The Franks home can accommodate a maximum of nine children. They can move the day care from their home to rented space in town, which can accommodate up to 14 children. The space will cost $650 per month and the utilities will cost $125 per month. Additionally, insurance will now cost the Franks $5,000 per year. Per state regulations, each adult can supervise no more than three children. As their accountant, prepare a letter to the Franks advising them on their space options. Should they continue to operate the facility at home or should they rent space in town? How many children should they accept? How many employees will they need to hire? Show your detailed calculations for each scenario. 3%
Part B: Journal Article Critique
1. Identify the components of the management accounting system in each of the two companies, and discuss their relevance in enabling decisions to be made efficiently and effectively. Include examples in your answer. 4%
2. The article describes the innovation process in a firm as ‘a process of information creation’, and a firm needs to organise themselves ‘to transmit the new information’. Explain how management accounting contributes to this innovation process. Include in your discussion two (2) specific examples from each of the two companies mentioned in the journal article. 4%
3. Provide four (4) specific outcomes or lessons learned from the article’s research findings that will be useful for management accountants in Australian companies to learn from, and justify your answer [i.e. provide 2 outcomes from each company]. 4%
Overall Presentation 3%
TOTAL Weight 30%
Marking Rubric
Excellent Very Good Good Satisfactory Unsatisfactory
Part A: Case Study Analysis
1. Consider the different types of costs discussed in this unit. List any three (3) types of costs and provide one specific example of each cost from the case. (3 marks) (3 marks) 3 types of costs are clearly identified and excellent example of each cost from the case provided. (2 mark)
3 types of costs are clearly identified with very good example of each cost from the case provided. (1.8 mark) 3 types of costs are clearly identified with good example of each cost from the case provided. (1.5 mark) 3 types of costs are identified with adequate example of each cost from the case provided. (0 – 1 mark) Unable to identify the 3 types of costs or provide example of each cost.
2. Based on the information provided, what information is relevant to the decision to purchase the appliances? What information is irrelevant to the decision
to purchase the appliances? Why? (3 marks) (3 marks)
Demonstrate an excellent explanation of the relevant and irrelevant information to the decision to purchase the appliances. (2 mark) Demonstrate a very good explanation of the relevant and irrelevant information to the decision to purchase the appliances. (1.8 mark) Demonstrate a good explanation of the relevant and irrelevant information to the decision to purchase the appliances. (1.5 mark) Demonstrate an adequate explanation of the relevant and irrelevant information to the decision to purchase the appliances. (0 – 1 mark) Unable to explain the relevant and irrelevant information to the decision to purchase the appliances.
3. What could it cost the couple to launder clothes? Show your detailed calculations for each option. (3 marks) (3 marks) Present an excellent calculation of cost to launder clothes. (2 mark)
Present a very good calculation of cost to launder clothes. (1.8 mark) Present a good calculation of cost to launder clothes. (1.5 mark) Present
adequate calculation of cost to launder clothes. (0 – 1 mark) Unable to present proper calculation of cost to launder clothes.
4. With the additional employee, the Franks can accept three additional children. Should the Franks hire the additional employee? Show your
detailed calculations. (3 marks) (3 marks) Present an excellent calculation on whether the Franks should hire the additional employee. (2 mark)
Present a very good calculation on whether the Franks should hire the additional employee. (1.8 mark) Present a good calculation on whether the Franks should hire the additional employee. (1.5 mark) Present an adequate calculation on whether the Franks should hire the additional employee. (0 – 1 mark) Unable to present proper calculation on whether the Franks should hire the additional employee.
5. As their accountant, prepare a letter to the Franks advising them on their space options. Should they continue to operate the facility at home or should they rent space in town? How many children should they accept? How many employees will they need to hire? Show your detailed calculations for each scenario. (3 marks) (3 marks) Present an excellent analysis of space options. (2 mark) Present a very good analysis of space options. (1.8 mark) Present a good analysis of space options. (1.5 mark) Present a reasonable analysis of space options. (0 – 1 mark) Unable to present a proper analysis of space options.
Part B: Journal Article Critique
1. Identify the components of the management accounting system in each of the two companies, and discuss their relevance in enabling decisions to be made efficiently and effectively. Include examples in your answer. (4 marks) (4 marks) Clear, concise, compelling discussion of components of management accounting systems and their relevance with excellent examples.
(3.5 mark) A very good discussion of components of management accounting systems and their relevance with very good examples. (3 mark) A good discussion of components of management accounting systems and their relevance with good examples. (2.5 mark)
An adequate discussion of components of management accounting systems and their relevance with adequate examples. (0 – 1.5 mark) Unable to present a proper discussion of components of management accounting systems or the discussion is not supported by examples.
2. The article describes the innovation process in a firm as ‘a process of information creation’, and a firm needs to organise themselves ‘to transmit the new information’. Explain how
management accounting contributes to this innovation process. Include in your discussion two (2) specific examples from each of the two companies mentioned in the journal article. (4 marks) (4 marks) Clear, concise, compelling discussion of ways that management accounting contributes to innovation process with excellent examples.
(3.5 mark) A very good discussion of ways that management accounting contributes to innovation process with very good examples. (3 mark) A good discussion of ways that management accounting contributes to innovation process with good examples. (2.5 mark) Adequate discussion of ways that management accounting contributes to innovation process with adequate examples. (0 – 1.5 mark) Unable to present a proper discussion of ways that
management accounting contributes to innovation process or the discussion is not supported by examples.
3. Provide four (4) specific outcomes or lessons learned from the article’s research findings that will be useful for
management accountants in Australian companies to learn from, and justify your answer [i.e. provide 2 outcomes from each company]. (4 marks) (4 marks) Clear, concise, compelling discussion of 2 lessons learned from each company.
(3.5 mark) A very good discussion of 2 lessons learned from each company. (3 mark) A good discussion of 2 lessons learned from each company. (2.5 mark)
An adequate discussion of 2 lessons learned from each company.
(0 – 1.5 mark) Unable to present a proper discussion of lessons learned from each company.
Overall Presentation
marks
(3 marks)
(3 marks)
Include all elements and is very well presented. Writing flows clearly and sections are linked very effectively. Referencing is exemplary.
English is used very effectively and error-free. (2 mark)
Include all elements and is well presented. Writing flows clearly and sections are linked effectively. Referencing is of a high standard. English is used effectively with very few errors present. (1.8 mark) Include all elements and is generally presented appropriately. Writing mostly flows well and sections are linked.
Referencing is in accordance with guidelines. English is used effectively with few errors present. (1.5 mark) Include most elements and is adequately presented. Writing sometimes does not flow clearly leaving the paper to seem disjointed in areas.
Referencing is somewhat in accordance with guidelines. Basic English is used with some errors present. (0 – 1 mark) Lack key elements and is poorly presented. Writing does not flow clearly leaving the paper to seem disjointed. Referencing is not in accordance with relevant guidelines. Basic English is used with errors present.
Total Marks (30) /30
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