ACF2200 - Introduction to Management Accounting - Management Assignment Help

Assignment Task

Hana Ltd. is a producer and importer of freshly cut flowers based in the country side village of Tagus. It has made a name for from its gerberas, roses, carnations, and tulips, although the portfolio includes a range of itself other products. Tulips and some special flowers are imported from the Netherlands. Products are sold at its premises to florists, in the trade market to wholesalers and retailers, and directly to a large retail chain. The market for fresh flowers is very competitive, with significant pressure over prices. There is high seasonality in supply (e.g. spring and early summer) and demand (e.g. Valentine’s Day, Mother’s Day, Christmas). When there is a significant mismatch between those supply and demand, prices can fluctuate widely, from ‘rock bottom’ prices that do not cover production costs to ‘sky high’ prices that make very generous profit margins. In addition to price, the market values highly product freshness, reliability of supply, speed of delivery, and range products available (including color variations).

The company owns part of its productive land and part of it is on a long-term land lease. All production of flowers is carried out in a series of greenhouses that Hana built and fully owns. Flower production facilities (greenhouses) are fitted with temperature and humidity control equipment that automatically opens the greenhouses to air circulation when temperature is too high and heats it up when the temperature is too low. The company uses its own two tractors to plough the land and to haul trailers. The trailers carry fertilizers, seedlings for planting, and occasionally pesticides to the greenhouses. The plants, seedlings, shrubs, and bulbs planted by Hana are mostly imported to ensure the highest quality, productivity, and diversity of color variations. The trailers also carry freshly cut flowers back from the greenhouses to the processing and packing facility (as well as the green waste that is sent to a local dump). After processing and packaging, products are kept in one of three refrigeration units to prolong the life of flowers

Hana currently employs 70 full-time staff, which represents the double of its size just four years ago. The company’s manager and founder, Mr Ting Tong, is an entrepreneur with twenty years of work experience in the sector but no training in management. He is directly assisted by his wife, Mrs Ming Tong, who manages the sales office and inventories. Like her husband, she has no formal training in management, but she is extremely energetic and outstanding in dealing with customers, a true asset to the company. Hana has a dedicated team of three salespersons working in the office at its premises, one accountant, two distribution employees, oneforeman and one forewoman. The remaining employees work in the production, processing, and packaging of flowers, making flower production a labor- intensive activity. During peak times of production, part-time employees are hired on a need basis and on-going staff is paid for overtime work. All of the company’s employees are paid a fixed salary, plus any extras from overtime work.

The main building where the company operates houses the all administrative staff, the sales office, a product display area, the processing and packaging facility, and the refrigeration units. Workers are moved to and from the company’s main building, as well as between greenhouses, using two fully owned mini-vans. The company also uses its own fleet of three trucks (with cooling) to distribute products to customers and to take production to the trade market.

The company’s growth has created difficulties to Mr Tong in ensuring the timely payments to employees and suppliers. He is also finding a bit overwhelming to have a feel for how the company is doing, now that the scale of operations has grown to an unprecedented level. At the moment, there is no formal planning in the company; only rough estimates of revenues and the main cost items are prepared by Mr T ong in his paper notebook. The company’s accountant role has been that of dealing with financial accounting matters and ensuring the company meets its legal tax obligations.

Another issue that Hana currently faces is the management of sales of products in short supply. These products cannot be sold to the first customer that comes through the door, but rather they need to be meticulously managed so that the orders from regular customers can be at least partially satisfied. Mrs Tong noted that the salespersons, who have been informally assigned to specific customers, frequently lacked an appreciation for this issue in their eagerness to meet their assigned customer’s requirements. No doubt Hana wanted a proactive sales team, but the sales push needed to be directed to products in good supply, not for those that can “sell for themselves”.

Required:

1. Conduct some research to explain the value of cost classifications for Hana Ltd. and how this may assist Mr and Mrs Tong in improving their decision-making processes.

2. Conduct some research into costing techniques that Hana 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 Hana Ltd. It should be clear from these examples how Hana Ltd. 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 Hana Ltd. and have relevance to management.

Quality

• Over quantity.

• The number of words in the assignment is not an indication of its quality. Marks will be allocated for the substance and clarity of the work, not for its length. Tables and diagrams, for example, may communicate substance more clearly than a large number of words.

• You and your friends will have different answers and that is completely fine!!

• Marks distributed for quality of your answer and explanation rather than content or the ‘right’ answer.

• You can use as many or as few costing techniques as you would like; there is no set requirement.

• Textbooks have content – assignments apply this content to a real-life context. Don’t re-write the textbook!!

• Create a well thought out, well-constructed discussion, and a careful and considered application of costing techniques to a real-life context.

2. Context

• Context is absolutely essential to getting good marks.

• Remember: there is no standard costing technique and there is no single purpose for costing techniques. They depend on the organisation, what they are seeking to do, the information needs of managers and the decisions they are trying to make.

• Costing techniques have to be tailored and context specific.

• You have learnt a number of costing techniques during the semester – there is no right or wrong answer; each student will pick different techniques – that’s fine!!

• However, as indicated in Q2 – it should be clear from your chosen technique(s) how Hana would determine a product cost for their products – No numbers/figures required – don’t waste your word count coming up with your own!

3. Specifics

• For Q2, it might be useful to imagine you are a consultant working for Hana Ltd.

• Imagine Hana Ltd. asked you to suggest costing techniques that they could use.

• Managers in Hana Ltd. should be able to look at your answer to Q2, know exactly what you are suggesting and how they could implement it.

• They should be able to take your answer to Q2 and just input their own numbers/figures straight away into your recommended techniques ….and not have to spend too much time figuring out the specifics.

• It is your job to give the specifics.

• No specifics = low mark.

4. Originality and Research

• Construct a well-researched and informed argument.

• Use the textbook sparingly; it can be a good basis for constructing your own understanding of these techniques but you need to go beyond this (....and no, this doesn't mean you can use another textbook instead!!).

• Be creative and innovative - we are looking for a well-researched informed discussion, not another textbook!

• Show evidence that you have conducted research and have used it wisely to construct and inform your discussion.

• Remember this is a “Research assignment” – conduct your own research and integrate and reference this research appropriately.

• "Opportunistic referencing" will be penalised - occurs when random quotes, references or summaries of articles appear to have been ‘thrown into’ the assignment to ‘prove’ that research was done but they actually have very little relevance or use to the point that is being made at that stage of your assignment.

• Please note an assignment with many quotes, even when correctly referenced, may receive a low grade as it does not show that you have understood the material, merely using a search engine and good at copying and pasting.

• Instead provide evidence that you have considered these references in detail, and have used them to construct and inform your discussion in a meaningful way

5. Presentation

• Present in a professional manner

• Use lots of ‘visual’ information, particularly in relation to question 2 – Diagrams – Charts – Pictures – Headings – Bullet points – Colour!

• Under no circumstances should you copy and paste diagrams/charts/tables from anywhere (lecture slides and textbook included) – Make your own; make them relevant to Hana Ltd.

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