Explaining how the management accountant can help contribute design and operations of the new management accounting system for the new hospital
Being the management accountant relevant skill is needed by the individuals for adequately conducting operations. The same skills of a management accountant can help in designing and operating the new management accounting system for the new hospital. In addition, the management accounting system needs to be tailored for fulfilling the specific needs of the organisation, which reduces the burden on its operations. Moreover, the contingent factors such as internal and external needs to be evaluated with the help of new management accounting system. Furthermore, the new system needs to be like the transaction-based system, which is currently being used by the company, as it helps in reducing the excessive confusion and reduce materiality risk (Schaltegger and Burritt 2017).
The design of the new operating machine could include range of predictive information, departments budgets, and non-financial information on the ongoing operations. Moreover, management accounting staff is conducted to be the most viable persons for drafting and creating management accounting software for its use. In addition, the requirements of an adequate management accounting system can be provided by management accountant for addressing each activities of the company.
The different types of information that is needed on weekly and monthly basis by senior management in hospital are depicted as follows.
|
Different segment of operations |
Types of information |
|
Incentive care |
Needs information on bed, occupancy rate, number of patients, and average length of stay, which helps in depicting the billing rate. This section of the hospital needs to evaluate different cost in the departments for conducting operation incentive care. |
|
Radiology |
The x-rays, number of time consumed in radiology staff, referrals per doctor, billing rates, insurance revenue, medical supply, and average cost per patient. |
|
Neurology |
Bed occupancy rate, number of patient waiting, insurance revenue, medical supply, and average cost per patient. |
|
Accident and Emergency |
Number of patient treated, umber of referrals, gap revenue, medical supply, cost per bed, insurance revenue, medical supply, and average cost per patient. |
|
Cardiology |
Medical revenue, number of patients, average length of the stay, kitchen cost, medical supply cost, insurance revenue, medical supply, and average cost per patient. |
The information can be supplied to the management electronically to the managers, which could have all the relearnt information and details needed for their evaluation. In addition, the new system could help in uploading the details quickly, which could be reviewed by all the managers. This relevantly provides the management quick information about the condition of hospitals and its different departments (Renz and Herman 2016).
|
Flintoff Fashions Schedule of cost of goods manufactured |
||
|
For the year ended December |
||
|
Particulars |
Amount |
Amount |
|
Raw material inventory, 1 January |
$ 24,000 |
|
|
(+) Purchases of raw material |
$ 108,000 |
|
|
Raw materials |
$ 132,000 |
|
|
(-) Raw material inventory, 31 December |
$ 15,000 |
|
|
Total Raw materials available for the year |
$ 117,000 |
|
|
Direct labour |
$ 120,000 |
|
|
Depreciation: plant and equipment |
$ 36,000 |
|
|
Electricity: plant |
$ 24,000 |
|
|
Indirect labour |
$ 9,000 |
|
|
Indirect material |
$ 6,000 |
|
|
Other manufacturing overhead |
$ 48,000 |
|
|
Total Manufacturing Overhead |
$ 123,000 |
|
|
Manufacturing Costs |
$ 360,000 |
|
|
(+) Work in process inventory, 1 January |
$ 24,000 |
|
|
(-) Work in process inventory, 31 December |
$ 18,000 |
|
|
Cost of goods manufactured |
$ 366,000 |
|
Flintoff Fashions Schedule of cost of goods sold |
|
|
For the year ended 31 December |
|
|
Finished goods inventory, 1 January |
$ 12,000 |
|
(+) Cost of goods manufactured |
$ 366,000 |
|
Goods available for sale |
$ 378,000 |
|
(-) Finished goods inventory, 31 December |
$ 30,000 |
|
Cost of goods sold |
$ 348,000 |
|
Flintoff Fashions Income Statement |
|
|
For the year ended 31 December |
|
|
Sales revenue |
$ 570,000 |
|
(-) Cost of goods sold |
$ 348,000 |
|
Gross profit |
$ 222,000 |
|
Selling and administrative expenses |
$ 90,000 |
|
PBT |
$ 132,000 |
|
Income tax expense |
$ 54,000 |
|
Net profit |
$ 78,000 |
|
Flintoff Fashions Schedule of cost of goods manufactured |
||
|
For the year ended 31 December |
||
|
Particulars |
Amount |
Amount |
|
Raw material inventory, 1 January |
$ 24,000 |
|
|
(+) Purchases of raw material |
$ 110,400 |
|
|
Raw materials |
$ 134,400 |
|
|
(-) Raw material inventory, 31 December |
$ 15,000 |
|
|
Total Raw materials available for the year |
$ 119,400 |
|
|
Direct labour |
$ 120,000 |
|
|
Depreciation: plant and equipment |
$ 36,000 |
|
|
Electricity: plant |
$ 24,000 |
|
|
Indirect labour |
$ 9,000 |
|
|
Indirect material |
$ 6,000 |
|
|
Other manufacturing overhead |
$ 48,000 |
|
|
Total Manufacturing Overhead |
$ 123,000 |
|
|
Manufacturing Costs |
$ 362,400 |
|
|
(+) Work in process inventory, 1 January |
$ 24,000 |
|
|
(-) Work in process inventory, 31 December |
$ 18,000 |
|
|
Cost of goods manufactured |
$ 368,400 |
|
Flintoff Fashions Schedule of cost of goods sold |
|
|
For the year ended 31 December |
|
|
Finished goods inventory, 1 January |
$ 12,000 |
|
(+) Cost of goods manufactured |
$ 368,400 |
|
Goods available for sale |
$ 380,400 |
|
(-) Finished goods inventory, 31 December |
$ 30,000 |
|
Cost of goods sold |
$ 350,400 |
|
Flintoff Fashions Income Statement |
|
|
For the year ended 31 December |
|
|
Sales revenue |
$ 570,000 |
|
(-) Cost of goods sold |
$ 350,400 |
|
Gross profit |
$ 219,600 |
|
Selling and administrative expenses |
$ 90,000 |
|
PBT |
$ 129,600 |
|
Income tax expense |
$ 54,000 |
|
Net profit |
$ 75,600 |
|
Flintoff Fashions Schedule of cost of goods manufactured |
||
|
For the year ended 31 December |
||
|
Particulars |
Amount |
Amount |
|
Raw material inventory, 1 January |
$ 24,000 |
|
|
(+) Purchases of raw material |
$ 108,000 |
|
|
Raw materials |
$ 132,000 |
|
|
(-) Raw material inventory, 31 December |
$ 15,000 |
|
|
Total Raw materials available for the year |
$ 117,000 |
|
|
Direct labour |
$ 120,000 |
|
|
Depreciation: plant and equipment |
$ 36,000 |
|
|
Electricity: plant |
$ 24,000 |
|
|
Indirect labour |
$ 9,600 |
|
|
Indirect material |
$ 6,000 |
|
|
Other manufacturing overhead |
$ 48,000 |
|
|
Total Manufacturing Overhead |
$ 123,600 |
|
|
Manufacturing Costs |
$ 360,600 |
|
|
(+) Work in process inventory, 1 January |
$ 24,000 |
|
|
(-) Work in process inventory, 31 December |
$ 18,000 |
|
|
Cost of goods manufactured |
$ 366,600 |
|
Flintoff Fashions Schedule of cost of goods sold |
|
|
For the year ended 31 December |
|
|
Finished goods inventory, 1 January |
$ 12,000 |
|
(+) Cost of goods manufactured |
$ 366,600 |
|
Goods available for sale |
$ 378,600 |
|
(-) Finished goods inventory, 31 December |
$ 30,000 |
|
Cost of goods sold |
$ 348,600 |
|
Flintoff Fashions Income Statement |
|
|
For the year ended 31 December |
|
|
Sales revenue |
$ 570,000 |
|
(-) Cost of goods sold |
$ 348,600 |
|
Gross profit |
$ 221,400 |
|
Selling and administrative expenses |
$ 90,000 |
|
PBT |
$ 131,400 |
|
Income tax expense |
$ 54,000 |
|
Net profit |
$ 77,400 |
|
Particulars |
Bali Adventure |
Thailand Discovery |
|
|
Revenue |
$ 900,000 |
$ 1,440,000 |
$ 1,120,000 |
|
Direct cost per package: |
|||
|
Tour leader |
$ 50,000 |
$ 240,000 |
$ 90,000 |
|
Tour assistant |
$ 20,000 |
$ 60,000 |
$ 60,000 |
|
Air travel |
$ 280,000 |
$ 600,000 |
$ 320,000 |
|
Accommodation |
$ 150,000 |
$ 520,000 |
$ 240,000 |
|
Equipment hire |
$ 40,000 |
$ 0 |
$ 90,000 |
|
Meals |
$ 180,000 |
$ 300,000 |
$ 80,000 |
|
Gross profit |
$ 180,000 |
$ (280,000) |
$ 240,000 |
|
Overhead cost |
$ 59,826.59 |
$ 95,722.54 |
$ 74,450.87 |
|
Profit |
$ 120,173.41 |
$ (375,722.54) |
$ 165,549.13 |
|
Particulars |
Bali Adventure |
Thailand Discovery |
Malaysian Orienteering |
|
Profit |
$ 120,173.41 |
$ (375,722.54) |
$ 165,549.13 |
The above table mainly depicts the overall profits that is been generated by three different packages. In addition, from the evaluation Malaysian Orienteering is identified to be the most viable packages, which could generate adequate profits for Asian Adventure Holidays. Moreover, Thailand Discovery package depicts loss, which might hamper the actual profitability of Asian Adventures Holidays. In addition, the Bali Adventure package provides the second-best profits for the company, which helps in inclining their profitability. Messner (2016) mentioned that with the help direct and overhead cost evaluation companies can detect their financial capability in generating high level of returns.
The actual sales revenue is used for calculating the corporate department overhead, it does not depict the actual cost incurred by the company during the period. In addition, the actual sales method can be dropped by the company, while relevant direct cost evaluation method can be used. This use of direct cost method percentage could help in depicting the actual cost incurred from operations (Quattrone 2016). The measure could help in detecting actual expenses that is conducted by the company on the relevant packages.
The Malaysian Orienteering and Bali Adventure package needs no amendment, as they are providing adequate revenue and profits for the organisation. On the other hand, the changes in package of Thailand Discovery needs to be conducted, as it incurs loss from operations without deducting overhead cost. This relevantly indicates that costing of the project is not adequate, while increasing the selling price or reducing the expenses can help in improving the benefits provided by the package.
|
Particulars |
Amount |
|
Direct Material |
$ 26,000 |
|
(+) overhead |
$ 30,000 |
|
(+) Direct labour |
$ 20,000 |
|
Cost of goods manufactured |
$ 76,000 |
|
Particulars |
Amount |
|
Manufacturing overhead incurred |
$ 32,000 |
|
Overhead absorbed |
$ 30,000 |
|
Under absorbed overheads |
$ 2,000 |
Reference and Bibliography:
Bromwich, M. and Scapens, R.W., 2016. Management accounting research: 25 years on. Management Accounting Research, 31, pp.1-9.
Coad, A., Jack, L. and Kholeif, A.O.R., 2015. Structuration theory: reflections on its further potential for management accounting research. Qualitative Research in Accounting & Management, 12(2), pp.153-171.
Eldenburg, L.G., Wolcott, S.K., Chen, L.H. and Cook, G., 2016. Cost management: Measuring, monitoring, and motivating performance. Wiley Global Education.
Fullerton, R.R., Kennedy, F.A. and Widener, S.K., 2014. Lean manufacturing and firm performance: The incremental contribution of lean management accounting practices. Journal of Operations Management, 32(7-8), pp.414-428.
Klychova, G.S., Zakirova, A.R., Zakirov, Z.R. and Valieva, G.R., 2015. Management aspects of production cost accounting in horse breeding. Asian Social Science, 11(11), p.308.
Messner, M., 2016. Does industry matter? How industry context shapes management accounting practice. Management Accounting Research, 31, pp.103-111.
Otley, D., 2016. The contingency theory of management accounting and control: 1980–2014. Management accounting research, 31, pp.45-62.
Quattrone, P., 2016. Management accounting goes digital: Will the move make it wiser?. Management Accounting Research, 31, pp.118-122.
Renz, D.O. and Herman, R.D. eds., 2016. The Jossey-Bass handbook of nonprofit leadership and management. John Wiley & Sons.
Schaltegger, S. and Burritt, R., 2017. Contemporary environmental accounting: issues, concepts and practice. Routledge.
Suomala, P., Lyly-Yrjänäinen, J. and Lukka, K., 2014. Battlefield around interventions: A reflective analysis of conducting interventionist research in management accounting. Management Accounting Research, 25(4), pp.304-314.
Wagenhofer, A., 2016. Exploiting regulatory changes for research in management accounting. Management Accounting Research, 31, pp.112-117.
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