MANAGEMENT ACCOUNTING: HAWTHORNLEISURE WORKS (HLW) AND US BRIGHT Table of Contents   Introduction. 2 Assignment A: Calculation of bill of activities and cost per unit for US Bright 2 Assignment B: Close analysis of budgetary elements of HLW…

6 Conclusion. 10 References. 11    IntroductionIn the era of global competitive domain,the quest for increasing the efficiency by maintaining transparency has becomethe vital element for smoothing the decision making process. In the complexindustrial juncture, management accounting acts as the guideline promoting themanagers in adopting innovative steps for satisfying the customers. Performancemeasurement and involvement of active collaboration help in maximising profitsthereby introducing brand popular among the customers. In the assignment, costper unit and bill of activities preparation for US Bright has been reviewed.Relevant budgetary decisions related to effective decision making for HLW hasalso been focused on this assignment.

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  Assignment A: Calculation of billof activities and cost per unit for US BrightA. Estimation of cost per unit According to Öker and Ad?güzel (2016,p.39), cost per unit for each activity has been deduced by dividing the costdrivers with total cost.

In thiscase, cost activities and their drivers have been identified.  As per the case study cost, drivers of twoactivities has not been provided, which needs to be assumed for calculating thecost per unit of that two cost. In this case, annual reports can be formed overthe batch orders activity as annual reports need to be presented for eachbatch. Therefore, direct link can be established with the annual report andbatch orders. Furthermore, the testing and developing products have beenassumed to be taken over number of purchase orders. Testing and development ofproducts have been assumed to be done for products purchased. As productdevelopment is done, therefore, link can be established with the productdevelopment and product cost.

Estimation of cost per unit of US Bright Activity  Activity cost  Activity Driver Annual Quantity of activity driver   Prepare annual accounts 5000 Assumed batch orders 1000 5 Process receivables 15000 No if invoices 5000 3 Process payable 25000 No of purchase orders 2500 10 Program production 28000 No of production orders 1000 28 Process sales order 40000 No of sales order 4000 10 Dispatching sales order 30000 No of dispatches 2500 12 Testing and developing products 60000 Assigned to the products directly 2500 24 Load mixers 14050 No to batches 1000 14.05 Operate mixers 45900 No of kilograms 200000 0.2295 Clean mixers 6900 No of trays 1000 6.

9 Move mixture to the fillings 3450 No of cakes 200000 0.01725 Clean trays 20000 No of trays 16000 1.25 Fill trays 16000 No of Pastries/cakes 800000 0.02 Move to baking 8000 No of trays 16000 0.5 Set up of the ovens 50000 No to batches 1000 50 Bake pastries/ cakes 130000 No to batches 1000 130 Move to packing 40000 No of trays 16000 2.5 Pack pastries/ cakes 80000 No of pastries/ cakes 800000 0.1 Inspect pastries 2500 No of pastries 50000 0.

05     Total cost per unit   297.61675 Table 1: Estimation of Cost per unit for US Bright(Source: Created by Author)It has been deduced that total cost per unit,in this case, has been $297.61675.Total cost of the product after dividing with the activity drivers helps inunderstanding the cost per unit for each cost activity. B. Presentation of bill of activities According to Storey (2014,p.

10), Bill ofactivities includes total cost of product (Lamington) including cost of labor,materials and manufacturing overhead for calculating the total cost of theproduct. In this case, the bill of activities preparation is to be done basedon the activities provided in the list of lamington product cost. Furthermore,the activities related to batch cost has been estimated on batch cost and otheractivities have been allocated on volume cost. Mixer related cost has been provided and calculated on batch cost. Costper product price has been estimated to be $ 2.29 in ‘000’) amount. The bill ofactivities provides details of the cost incurred for producing the specificproduct.

Preparation of bill of activities     Total volume 100000     Batch size 1000 Bill of activities       Activity Activity cost rate Total cost in 000 Process receivables 500 50000000   Process payables 200 20000000   Program production 100 10000000   Process order for sales 400 40000000   Load mixers 100 100000   Operate mixers 30000 30000000   Clean mixers 100 100000   Move to filling mixtures 30000 30000000   Clean trays 2000 200000000   Fill trays 100000 10000000000   Move to the process of baking 2000 200000000   Bake pastries and cakes 100000 100000000   Set up ovens 100 100000   Move to packing 2000 200000000   Pack cakes 100000 10000000000   Dispatch order for sales 500 50000000   Test and develop products   60000000     Total cost 20990300000     Cost per unit 209903 2.29903 Table 2: Bill of activities(Source: Created By Author)C.  Inclusion of other relatedcosts for bill of activities preparationEstimation of total cost including directmaterials, direct labor, and other manufacturing overhead cost helps indetermining the total product cost (Coronel andMorris, 2016, p.12).

In thiscase, all the cost related to direct materials, direct labor and manufacturingoverhead has been provided. However, cost related to segregation ofsubcomponents, subassemblies, and bill of materials needs to be included.Furthermore, cost related to intermediate assemblies and other cost related tothe manufacturing products needs to be included in the bill of materials.

Moreover, in this context cost related to sale bill of materials, manufacturingbills and service materials needs to be included in the bill of materials list.As stated by Nagle et al. (2016,p.14), production BOM and component cost for each item forms an important partof BOM and therefore need to be included. Unit cost and other associated costrelated to inspection and accounts presentation need to be included in thislist.Therefore, apart from the cost mentionedin the table of the case study, all the above-mentioned cost needs to beincluded further in preparing a complete BOM list. Aforesaid activity list ofcots further helps in understanding the cost of each sub segments.

 Assignment B: Close analysis of budgetary elements of HLW 1. Relevance of membership fees towards cash position improvementIn the present scenario, two importantsources of income have been seen in the organisational structure of HawthornLeisure works (HLW). The two sources of income have been court fees andmembership fees. Furthermore, the hourly court fees and annual membership feescan be replaced by the advance fees collection. This further reduces the lossarising due to collection of hourly fees thereby improving the cash viabilityand position in the business.

According to Kroes and Manikas (2014, p.37), cashposition improvement serves as the key element for success as it createsdifferent areas of opportunities thereby enhancing the revenue of the company.Therefore, introduction of new membershipplan can improve the ability of the company in preparing effective planningprogram denoting sources of total receipts in HLW.

Advance membership feesprogram reduces the administrative cost thereby improving the cash position ofthe company. Exclusion of hourly fees collection reduces the potential lossarising due to new membership fees and redrafting the strategies for cashmanagement encourages debt reduction. Advance collection of fees as per the newmanagement plan acts as guideline for managers in determining the areas whereeffective utilisation of fees can be done. As stated by Donate and de Pablo(2015, p.

360), effective and judicious use of resources helps in meeting theobligations thereby enhancing the cash position viability of HLW. Therefore,introduction of new membership plan can be effective and advantageous for HLWas it can improve the cash position of the company. Better utilisation of theresources and advance payment of fees helps the managers in getting an ideaabout the total amount of resource available. This further helps in betterutilisation of cash resources that further enhance the financial position ofthe business. Better cash position and better operational viability lead toimprovement in cash position of HLW.  2. Estimation of sales revenue effects Estimation of earned list of revenue in respect of Old membership feesin HLW  Particulars Calculations Amount ( 000) Individual 500*45 = 22500 22.

5 Student 500*30 = 15000 15 Family 1000*100= 100000 100 Total   137.50 (22.5+15+100)  Table 3: Estimation of earnedlist of revenue(Source: Created by Author)  Estimation of Total receipts from Court fees Particulars Calculations Amount ( 000) Primetime (2000*90%) (181 days) * 4 hours @ 12 86.4 Nonprime time (2000* 50%) (181 days)*7@8 56 Offseason ( 2000*30%)(184 days) *6 hours @6 21.6 Total   164 Table 4: Cost Estimation(Source: Created by Author)Therefore, based on the above calculationit is seen that total receipts from the two sources are (137500 + 164000) = $301500. Determination of total receipts after the introduction of new membershipplanIn this case, new members are (2000*70%)= 1400 Members. Under Campaign Particulars Calculation Amount (000) Family 700*450*45% $141750 Individual 700*250*45% $78750 Total   $220500  Table 5: Cost Estimation(Source: Created by Author) Under No CampaignIn the case of no campaign situation,cost estimation needs to be done.

In this case, 45% of the current members areto be included in the list (700*45%) = 315. Particulars Calculation Amount (000) Family (700-315) *500 $192500 Individual (700-315) * 300 $115500 Total   $308000 Table 6: Cost Estimation(Source: Created by Author)Total receipts derived from newmembership plan Particulars Amount Under Campaign $220500 Under no campaign $308000 Total amount of receipts $ (220500+308000) = $ 528500 Table 7: Cost Estimation(Source: Created by Author)Certain assumptions that have been takenfor calculating the above list can be deduced in the form of a table. The listof occupancy has been taken as the rate ranges reported in the case study.Effective calculation based on the assumptions has made the task moreefficiently.

     Particulars Amount Prime occupancy time 90%               Nonprime occupancy time 50% Off seasonal occupancy 30%  Table 8: Assumption list (Source: Created by Author)Moreover, it can be stated that thechanges in the collection (Membership fees and Court fees) has created apositive impact on the earnings of HLW. Processing efficiency and increase inrevenue to $ 227000 ($528500-301500) can introduce value incrementation in thebusiness. Reduction of administrative fees and effective resource utilisationcan improve the sales position of the company. 3. Identification and derivation of key factors before evaluation of newmembership planHLW before implementing new membershipplan needs to develop a planning sketch showing the positive and negativeeffects of this implementation.

According to Linder and Williander (2017,p.182), elimination of regular record keeping tactics can be treated as the positiveoutcome of the new membership plan implementation. On the contrary Alshurideh(2016,  P.382), reduction in the numberof members due to shifting to advance fees paid from annual fees payment can betreated as negative outcome arising due to this new plan implementation.

Memberretention can be taken as the main challenge arising due to this new planimplementation. Reaction of the members after implementation of new plan can betreated as the major factor, which must be kept in mind before evaluating theoverall plan. Furthermore, introduction of specialreduction in fee structure can be used as the attractive package for themembers opting for new membership plan. Attractive packages and the customerretention strategies need to be focused on implementing new membership program.Moreover, different facilities to be provided to the members and customerspreference pattern can be deduced as one of the factors required for analysedbefore implementing new plan.

ConclusionCost per unit deducted from differentactivity drivers has been used for estimating the total cost per unit for thecake activities for US Bright. Furthermore, the bill of activities for aspecific product has helped in comparing the total cost with the specific costof a product. In the second assignment, the notion showing importance of newmembership plan towards cash position improvement has formed the main part ofthis assignment. Sales effects due to new membership plan have helped inunderstanding the profitability levels due to implementation of new plan.Lastly, the factors that must be kept in mind while evaluating a new plan ofHLW has been stated in the assignment.

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