HOLMES INSTITUTE

FACULTY OF
HIGHER EDUCATION

Assessment Details and Submission Guidelines

Trimester T1 2019
Unit Code HI5017
Unit Title Managerial Accounting
Assessment Type Individual Assignment
Assessment Title Management Accounting Case Studies
Purpose of the Students are required to develop their understanding of cost concepts, and
assessment (with ULO demonstrate their ability to apply their knowledge of cost concepts to a service-based
Mapping) 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  All work must be submitted on Blackboard by the due date along with a completed
Guidelines 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.

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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.

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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)

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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 3%
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 3%
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 3%
each option.
4. The Franks have a waiting list for their day care. They can hire an employee for $9 3%
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 3%
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
1. Identify the components of the management accounting system in each of the two 4%
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 4%
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 4%
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].
Overall Presentation 3%
TOTAL Weight 30%

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Marking Rubric
Excellent Very Good Good Satisfactory Unsatisfactory

Part A: Case Study

Analysis
1. Consider the different (3 marks) (2 mark) (1.8 mark) (1.5 mark) (0 - 1 mark)
types of costs discussed 3 types of costs 3 types of costs 3 types of 3 types of costs Unable to
in this unit. List any three are clearly are clearly costs are are identified identify the 3
(3) types of costs and identified and identified with clearly with adequate types of costs or
provide one specific excellent very good identified with example of each provide
example of each cost example of each example of each good example cost from the example of each
from the case. (3 marks) cost from the cost from the of each cost case provided. cost.
case provided. case provided. from the case
provided.
2. Based on the (3 marks) (2 mark) (1.8 mark) (1.5 mark) (0 - 1 mark)
information provided, Demonstrate an Demonstrate a Demonstrate a Demonstrate an Unable to
what information is excellent very good good adequate explain the
relevant to the decision to explanation of explanation of explanation of explanation of relevant and
purchase the appliances? the relevant and the relevant the relevant the relevant and irrelevant
What information is irrelevant and irrelevant and irrelevant irrelevant information to
irrelevant to the decision information to information to information to information to the decision to
to purchase the the decision to the decision to the decision to the decision to purchase the
appliances? Why? (3 purchase the purchase the purchase the purchase the appliances.
marks) appliances. appliances. appliances. appliances.
3. What could it cost the (3 marks) (2 mark) (1.8 mark) (1.5 mark) (0 - 1 mark)
couple to launder Present an Present a very Present a good Present Unable to
clothes? Show your excellent good calculation of adequate present proper
detailed calculations for calculation of calculation of cost to launder calculation of calculation of
each option. (3 marks) cost to launder cost to launder clothes. cost to launder cost to launder
clothes. clothes. clothes. clothes.
4. With the additional (3 marks) (2 mark) (1.8 mark) (1.5 mark) (0 - 1 mark)
employee, the Franks can Present an Present a very Present a good Present an Unable to
accept three additional excellent good calculation on adequate present proper
children. Should the calculation on calculation on whether the calculation on calculation on
Franks hire the additional whether the whether the Franks should whether the whether the
employee? Show your Franks should Franks should hire the Franks should Franks should
detailed calculations. (3 hire the hire the additional hire the hire the
marks) additional additional employee. additional additional
employee. employee. employee. employee.
5. As their accountant, (3 marks) (2 mark) (1.8 mark) (1.5 mark) (0 - 1 mark)
prepare a letter to the Present an Present a very Present a good Present a Unable to
Franks advising them on excellent good analysis of analysis of reasonable present a
their space options. analysis of space options. space options. analysis of proper analysis
Should they continue to space options. space options. of space
operate the facility at options.
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)

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Part B: Journal Article
Critique

1. Identify the (4 marks) (3.5 mark) (3 mark) (2.5 mark) (0 – 1.5 mark)
components of the Clear, concise, A very good A good An adequate Unable to
management accounting compelling discussion of discussion of discussion of present a
system in each of the two discussion of components of components of components of proper
companies, and discuss components of management management management discussion of
their relevance in management accounting accounting accounting components of
enabling decisions to be accounting systems and systems and systems and management
made efficiently and systems and their relevance their relevance their relevance accounting
effectively. Include their relevance with very good with good with adequate systems or the
examples in your answer. with excellent examples. examples. examples. discussion is not
(4 marks) examples. supported by
examples.
2. The article describes (4 marks) (3.5 mark) (3 mark) (2.5 mark) (0 – 1.5 mark)
the innovation process in Clear, concise, A very good A good Adequate Unable to
a firm as ‘a process of compelling discussion of discussion of discussion of present a
information creation’, discussion of ways that ways that ways that proper
and a firm needs to ways that management management management discussion of
organise themselves ‘to management accounting accounting accounting ways that
transmit the new accounting contributes to contributes to contributes to management
information’. Explain how contributes to innovation innovation innovation accounting
management accounting innovation process with process with process with contributes to
contributes to this process with very good good adequate innovation
innovation process. excellent examples. examples. examples. process or the
Include in your discussion examples. discussion is not
two (2) specific examples supported by
from each of the two examples.
companies mentioned in
the journal article.
(4 marks)
3. Provide four (4) specific (4 marks) (3.5 mark) (3 mark) (2.5 mark) (0 – 1.5 mark)
outcomes or lessons Clear, concise, A very good A good An adequate Unable to
learned from the article’s compelling discussion of 2 discussion of 2 discussion of 2 present a
research findings that will discussion of 2 lessons learned lessons lessons learned proper
be useful for lessons learned from each learned from from each discussion of
management accountants from each company. each company. company. lessons learned
in Australian companies company. from each
to learn from, and justify company.
your answer [i.e. provide
2 outcomes from each
company]. (4 marks)

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Overall Presentation (3 marks) (2 mark) (1.8 mark) (1.5 mark) (0 - 1 mark)
marks Include all Include all Include all Include most Lack key
(3 marks) elements and is elements and is elements and elements and is elements and is
very well well presented. is generally adequately poorly
presented. Writing flows presented presented. presented.
Writing flows clearly and appropriately. Writing Writing does
clearly and sections are Writing mostly sometimes does not flow clearly
sections are linked flows well and not flow clearly leaving the
linked very effectively. sections are leaving the paper to seem
effectively. Referencing is linked. paper to seem disjointed.
Referencing is of a high Referencing is disjointed in Referencing is
exemplary. standard. in accordance areas. not in
English is used English is used with Referencing is accordance with
very effectively effectively with guidelines. somewhat in relevant
and error-free. very few errors English is used accordance with guidelines. Basic
present. effectively guidelines. Basic English is used
with few English is used with errors
errors present. with some present.
errors present.
Total Marks (30) /30

HI5017 Managerial Accounting Individual Assignment T1 2019