Reference no: EM13502478

Question 1

In order to assist the manager you are compiling a resource which will define the various management accounting terms used in the process of strategic analysis. Provide an explanation of the following terms, with examples specifically relating to Boutique Catering, to include in a resource file which incorporates a reason why each concept is relevant or not relevant to decision-making:

Satisficing model

Simulation

Opportunity Cost

Sunk cost

Break-even point

 

Question 2

It's your second day with Boutique Catering and the general manager has received a report summarising client complaints which she would like you to investigate. There is a consistent theme of clients being unhappy with the service time when receiving their meals. The general manager would like you to establish if additional staff should be employed to improve the service time. Meals are served in a general area and often the clients will stand around talking before placing an order. The following pattern records customer arrivals and the time it takes for the clients to receive their meals.

 

Time between arrivals (minutes)	Frequency
1	0.08
2	0.25
3	0.20
4	0.12
5	0.35

Service time (minutes)	Relative Frequency
1	0.10
2	0.25
3	0.25
4	0.40

 

a) Using the random number function in excel simulate the arrival of 25 customers.

b) Calculate the total simulated hours, total waiting time for the customer service team member, and the total wait time for the customer?

c) Do you think that enough simulations have been completed to report an outcome to the general manager, explain your answer?

 

Question 3

On the third day in your role as accountant the general manager has asked you to review the results of 2012 and 2013 to try and determine if there is a relationship between the number of meals prepared per month and the administration costs which she believes to be too high. Data regarding the number of conferences per month, number of meals prepared for that month and the administration costs for the months of 2012 and 2013 are as follows:

Year    Month Number of conferences   Total number of meals prepared       Administrative cost

2012    Jan                  20                                            700                              27800

2012    Feb                  22                                            250                             14000

2012    Mar                  10                                            200                              12000

2012    Apr                  20                                            500                              20000

2012    May                24                                            650                              23800

2012    Jun                   28                                          450                               18400

2012    Jul                    16                                            650                             20400

2012    Aug                14                                            150                              8200

2012    Sep                 24                                            350                             18800

2012    Oct                  24                                            600                             22200

2012    Nov                16                                             300                              16600

2012    Dec                 32                                           750                              32200

2013    Jan                  18                                            850                             41500

2013    Feb                 19                                            175                              19000

2013    Mar                 12                                            100                             17800

2013    Apr                 18                                            775                              35500

2013    Jun                  24                                            475                             27400

2013    Jul                   16                                            775                             30400

2013    Aug                14                                            25                               12100

2013    Sep                  23                                           325                             28000

2013    Oct                 21                                           700                             33100

2013    Nov                 16                                            250                              24700

2013    Dec                 26                                            925                              48100

 

Required:

a)         Draw a scatter diagram of Boutique Catering's Number of meals prepared and administrative costs for the year.

b)         The relevant range has been identified as between 200 and 800 meals prepared. Mark the range on the scatter graph. Do you think this is an appropriate range? Why?

c)         The high-low method in another way of estimating the cost behavior of Boutique Catering. Using administration costs and number of meals prepared within the relevant range create an equation to express the results.

d)         A third method that can help understand the cost behavior relationship is by using regression analysis. Construct an excel spreadsheet and use regression analysis to estimate the;

a. Number of meals and administration cost. What is the administration costs' equation when 600 meals are prepared?

b. Number of meals, administration costs and number of conferences. What is the administration cost when 600 meals are prepared?

e)         From the methods used which method would you feel most confident to report the findings to the General Manager? In your answer make particular reference to the advantages and disadvantages of each method and in addition discuss the cost-benefit of each method.

 

Question 4

The forecast for the financial year 2013/2014 shows there will be a significant increase in the number of conferences that Boutique Catering will need to prepare meals for. The general manager is concerned that she will need to double the staff numbers to allow for such an increase. She has mentioned that because of the learning curve phenomenon it will be too difficult to accurately budget for the expected increase.

Required:

a)         Explain to the General Manager what the learning curve is? In your explanation make reference to the two variant methods. Include in your response the conditions under which a learning curve could be used to assist in forecasting for future operations.

NB: To respond to this question you will be required to research beyond the prescribed textbook

Question 5

Boutique Catering is considering expanding the business structure by preparing frozen meals that will be home-delivered. The meals will then only require to be heated up by the customer. As a point of difference the meals will be cooked according to the CSIRO total wellbeing recipe book. The meals Boutique Catering will offer are 'everyday', 'vegetarian' and 'speciality' meals (for people who have allergies). To prepare and cook the meals Boutique Catering is looking at purchasing Frozen Delights which already has the capital equipment to prepare the three types of meals. Frozen Delights provides supermarkets with frozen meals and has spare capacity to supply Boutique Catering with the frozen meals as well as maintain its current customer base. In the table below is an estimation of the cost and hours required to prepare, cook and freeze the meals and hours available to supply Boutique Catering with the meals.

 

	Cost per meal	Preparation (hours)	Cooking (hours)	Freezing (hours)
HOURS REQUIRED
Everyday meals	$8.00	4	8	3
Vegetarian meals	$9.00	10	3	2
Speciality meals	$12.00	8	8	2
HOURS AVALIABLE		800	1200	1000

 

Required

a)     Using solver derive the optimal solutions for how many meals should be prepared to maximize profit.

b)   State the optimum meal mix and the resulting profit

c)   Explain to the General Manager what transfer pricing is and what are two methods that can be used to set the price between divisions?

 

Question 6

The decision making process is a series of steps or stages that we work through to make a choice from an array of alternatives. Making decisions is an important role that management accountants need to undertake in their position. Explain the utility curve with reference to the three perceptions of risk. Which of these best describes your attitude toward risk? In your role as a management accountant explain how your choice may affect your decision-making process and behavior.