management Accounting

Page 1 of 3 AC C/ACF 2200 Introduction to Management Accounting 201 6- S2 Assignm ent Mal Ltd Mal Ltd. is a p roduc er a nd im port er o f fre shl y cu t flowers ba sed in th e count ry side villag e o f T agu s. It has made a na me for from its gerb eras, ro se s, c arnations, and tulips, alt h ough the port fo lio inc ludes a r a nge of itself o th e r produ cts. T ulips and som e spe cial flowers a re im ported fr o m th e N e therland s. Prod u cts are so ld at its pr em is es to florists, in th e tr a de ma rket to w hol esa lers a nd retailers, and dir e ctly to a l a rg e ret ail cha in . T he m ark et fo r fr e sh flowers is very compe tit ive, w ith significant pre ssure over price s. T he re is hig h seasonality in supp ly (e. g. spri ng and e arly summ er) and d ema nd (e. g. v a le ntin e d a y, m o ther’s day , Chr istmas). W hen th ere is a significant mismatch b e tw een those supp ly a nd dem and, pr ic e s ca n flu ctu a te wid ely, fr o m ‘r o ck botto m ’ pr ic es that d o not cove r p roduc tio n costs to ‘sky hi gh ’ pr ices that mak e very generous pro fit m ar gins. In a dd itio n to p ric e , t h e m arket va lu e s highly produc t f re shn ess , reliab ility of suppl y, spe ed of deliver y, an d rang e prod u cts a va ilab le (in cludi ng co l our variations). T he compan y ow ns part o f its p ro duc tive la nd a n d p art o f it is o n a lo ng-te rm la nd le ase . A ll p rodu ctio n o f flowers is ca rried out in a series of g re enhous es to Sun flower built and fully o w ns. Flower p rod uctio n fa cilities ( g reenhou ses ) a re fit te d w ith te m pera tu re a nd hu midity cont ro l equi pmen t that aut om atic a lly opens th e gre enhou ses to air cir cu la tio n w hen t e m per atu re is to o h ig h and heats it u p w hen t h e te m per atu re is to o lo w . T he compan y uses its o w n tw o tractors to p lou gh t h e land and to h aul trailers. T he trailers ca rry fertilizers, s e edlin g s for pla nting, and occa siona lly pesticides to the gree nhous es. T he plants, see dli n g s, sh rubs , a nd b u lbs planted b y Mal a re mo stly im port ed to e ns ure the highest qua lity, p roduc tiv ity, and diversity of co lo ur variations. T he trailers a ls o ca rr y fre sh ly cu t flowers b ack fr o m th e gree nhous es to th e pr oc ess ing and pac king f a cility (a s w ell as th e g re en w aste th a t is sent t o a loc al dum p). A fter pr oc essi ng and pac ka gin g, prod u cts a re ke pt in one o f th ree re fri ge ra tio n un its to pro l o ng th e lif e o f flowers. Page 2 of 3 Mal cu rre ntly em ploy s 7 0 fu ll-tim e staff, w hic h represents t h e doub le of its s ize just four years ago. T he compa ny’s m ana ger and foun der, Mr Peter Long , is a n e ntr e pre neur w ith t w enty ye ars of w ork exp erie nce in th e sector but n o tr ain in g in mana gement. H e is d ir e ctly assisted b y his wif e , M r s Nancy Long , w ho m ana ges th e sa les offic e and inventories. L ike her h usband , sh e ha s n o fo rm al tr a in in g in m ana gemen t, but sh e is extremely e nerg etic a nd outstand ing in dea lin g w ith custom ers, a t r u e asset to th e co mpa ny. Mal has a d e dica te d te am o f th ree sa le sp e rs on s w ork in g i n th e offic e a t its pr em is es , one a ccount ant, two distribu tion em ployee s, one fo re m en and one fore w om an. The re main ing e m ploy ees w ork in th e p ro ductio n , pr oc ess ing , a nd p a ckagi ng of f lo wer s, m aki ng f lo w er p ro du ctio n a labou r- intensiv e ac tivit y. D uri ng peak times o f p rodu ctio n , p a rt -time em ployees are h ir e d o n a n e ed basis and on-g oi ng staff is pa id fo r o ve rti me w ork. A ll o f th e co m pa ny’s e m ploy ees are paid a f ix ed sa la ry, pl us a ny e xtras f r o m o ve rti me w ork . T he m ain b u il d in g w here th e co m pa ny operates hous es th e a ll administrativ e staff, th e sales offi ce , a p rodu ct di spl ay a re a , t h e pr oc essi ng and pac ka gi ng fac ility, and th e re fr ig er atio n u n its. W ork e rs are m oved to and fr o m t he co mpany ’s t h e m ain bu ildin g, a s w ell a s bet wee n green house s, us in g tw o fu lly o w ned mi ni- v a ns. The c o m pan y als o u ses its o w n fle et o f th ree trucks (wi th co olin g) to distribu te produ cts to custom ers and to ta ke p roduc tio n to th e tr ad e m ark et. The com pan y’s g row th ha s c reated difficulties to Mr Long in ens uring th e tim ely payments to em ploye es and supplie rs . H e is a ls o findi ng a bi t o ve rw helmi ng to ha ve a fe el fo r h ow the co mpany is doi ng, now th a t th e sca le of operations h a s g ro w n to a n unp recedented level. At t h e m om ent, th ere is no fo rm al p la nn in g in th e co mpa ny; only ro ugh estimates o f re ve n u es a nd th e m ain cost items a re p re pared b y Mr Long in his pap er not ebook . T he com pany’s a ccou ntant r o le ha s b een th at o f dea li n g w ith fin a ncia l a cc ou n ting matters an d e ns uri ng the co mpany mee ts it s le ga l t a x oblig ations. A noth er iss ue th a t Mal cu rre ntly faces is th e mana gement o f s a les of prod u cts in short s u ppl y. T he se produ cts cannot b e sol d to th e first custo m er tha t co mes th rough the door , but ra th er t h ey n eed to be meticulously m ana ged so th at th e ord e rs fr o m re gula r custom ers ca n b e a t least par tia lly satisfied. M r s Long not ed that th e sa le sp er son s, w ho hav e be en in fo rm ally assi gned to spec if ic custom ers, f re qu ently lac ke d an app reciation fo r this iss ue in th eir eager ne ss to me et th eir a ss igne d custom er’s requ irements. N o d oubt Mal wanted a p roac tive sa les te am, but th e sa les pus h need ed to b e d ir e cted to produ cts in g ood su pp ly , n o t f o r those t h a t c a n “sell f o r themselves”. Page 3 of 3 Required: 1. Conduct some research to explain the value of cost classifications for Mal Ltd. and how this may assist Mr and Mrs Long in improving their decision- making processes. 2. Conduct some research into costing techniques that Mal Ltd. might find useful. Based on this research and using the detail in the case , choose a specific technique (or set of techniques) that you believe would be most suitable. Describe specifically how your chosen technique(s) could be used by providing tangible examples of how they would operate within Mal Ltd . It should be clear from these examples how Mal would determine a product cost for their products. Also, briefly describe why you consider your chosen technique(s) to be superior to other techniques .

(Please note: you are not required to actually calculate any costs here, just outline how costing could be done differently. Therefore, you may wish to provide a table or diagram outlining the operation of your proposed costing technique(s).

3. Using the detail in the case , describe how your chosen method of calculating product cost will be beneficial within Mal Ltd. and have relevance to management. Word Limit: 1,200 words Page Limit: 6 pages Please note: This word and page limit includes any tables, diagrams, figures or appendices that are used. Exceptions to the word and page limit are the cover page, table of contents, and reference list. Referencing: Please use APA style referencing 1 .

Submission: You are required to submit your assignment to Turnitin via Moodle. Please e-mail your assignment coversheet to your tutor (the coversheet is available on Moodle) .There is no requirement for hard copy submission. Turnitin is a text -matching software that checks a student's written work against electronic texts on the internet, published works (such as journal articles and books), and assignments submitted to Turnitin by other students. In order to gain access to the Turnitin submission dropbox you must first complete an ‘Academic Integrity’ quiz on Moodle. The link to the dropbox will be available once you score full marks in the quiz – you can attempt the quiz as many times as is necessary. To prepare for the quiz, you should complete all of the modules at the following link: http://www.monash.edu/library/skills/resources/tutorials/academic - integrity It is likely that you may requir e to make some assumptions when answering the questions. You are strongly encouraged to go through the ‘ Guidelines on Assignment Submission’ on Moodle before you start working on the Assignment. 1 http://guides.lib.monash.edu/citing -referencing/apa