Should the franks hire the additional employee

Assignment Help Managerial Accounting
Reference no: EM132306248 , Length: word count:2800

Management Accounting Case Studies

Purpose of the assessment

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

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

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.

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. What could it cost the couple to launder clothes? Show your detailed calculations for each option.

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.

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.

Part B: Journal Article Critique
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.

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.

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].

Attachment:- Management Accounting Case Studies.rar

Reference no: EM132306248

Question on managerial accounting-uncollectible accounts

Uncollectible accounts expense is determined by the direct write-off method. Which of the following will be amount of uncollectible accounts expense?

How to compute each of the cash inflows and cash outflows

How to compute each of the cash inflows and cash outflows from operating activities under the direct method. Why is depreciation expense not generally reported on the s

Company cost of preferred stock

Tunney Industries can issue perpetual preferred stock at a price of $50 a share. The issue is expected to pay a constant annual dividend of $3.80 a share.

Determine the cost of the receiving activity

Milan Machining Company has identified the following overhead activities, costs, and activity drivers for the coming year. Determine the cost of the Receiving activity. Assign

How the purchase of the new machinery affects the cash flow

You are required to make the adjustment for the New Machinery and prepare brief notes for your manager.  The notes should answer the following questions: Explain how the pur

Does the life-cycle cost approach have limitations

Use the cost information and calculate an environmental impact cost per 1,000 kg of surfactants. Which of the two approaches would you now recommend? Does the life-cycle cos

Cvp analysis and income taxes

Diego Motors is a small car dealership. On average it sells the car for $25,000 which it buys from the manufacturer for $22,000. Each month, Diego Motors pays $50,000 in ren

Create a chart to classify and identify a cost driver

For Questions 1 through 3, create a chart to classify and identify a cost driver for each of the costs provided in the text. The chart should be included as an appendix to

Reviews

len2306248

5/15/2019 4:41:18 AM

4. With the additional (3 marks) employee, the Franks can Present an accept three additional excellent children. Should the calculation on Franks hire the additional whether the employee? Show your Franks should detailed calculations. (3 hire the marks) additional employee. 5. As their accountant, (3 marks) prepare a letter to the Present an Franks advising them on excellent their space options. analysis of Should they continue to space options. 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)

len2306248

5/15/2019 4:41:08 AM

Excellent Part A: Case Study Analysis 1. Consider the different (3 marks) types of costs discussed 3 types of costs in this unit. List any three are clearly (3) types of costs and identified and provide one specific excellent example of each cost example of each from the case. (3 marks) cost from the case provided. 2. Based on the (3 marks) information provided, Demonstrate an what information is excellent relevant to the decision to explanation of purchase the appliances? the relevant and What information is irrelevant irrelevant to the decision information to to purchase the the decision to appliances? Why? (3 purchase the marks) appliances. 3. What could it cost the (3 marks) couple to launder Present an clothes? Show your excellent detailed calculations for calculation of each option. (3 marks) cost to launder clothes.

len2306248

5/15/2019 4:40:58 AM

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%

len2306248

5/15/2019 4:40:54 AM

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%

len2306248

5/15/2019 4:40:39 AM

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%

Write a Review

 
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd