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Case Study of Block Plc Manufactures

Question :

Information technology plays an important role in the accounting system of a workplace. This unit is based on the case study Block Plc manufactures which deals in furnitures. It covers the following-

  • Demonstrating competence in applying the Microsoft Excel functions.
  • Understanding the investment appraisal techniques.
  • Using the Microsoft excel function for capital budgeting situations.
  • Making the management decision which is based on results obtained from analysis of spreadsheet.
Answer :
Organization Selected : Block Plc

INTRODUCTION

Management accounting plays a very important role in every organization and it consists of various IT application which helps in attaining success in its industry. The present report is briefly discussing overhead costs along with their reallocation and threats in the context of the business stream.

QUESTION 1

1. Trend analysis of monthly revenue

Interpretation:

The above graph is depicting trend analysis of monthly revenue as every alternative month it has generated high revenue. In the month of July it had attained the highest revenue of 2621589.

2. Ways for increasing revenue

In the context of increasing revenue there are various ways in which most important one is to expand market by adding different complementary services for products which are existing such as free cushions along with bedroom furniture. In the same series it must be able to enter into sales agreement of cooperative in other words it could be able to contact with organizations who sells complementary service along with products by requesting them for selling these particular products as well. In the context of raising revenue, it must hone strategy of pricing as this decision must be taken in very sensitive aspect because it might shake various things up, if there is positive reaction then there should be alterations and vice versa (Surefire ways to increase revenue in business, 2018).

In the same series, products must be bundled up in context of pricing strategy such as bedsheets for furniture of bed rooms. In the present era, consumers are very price sensitive it must try decrease or substitute charges of shipping and handling it would also increase revenue from online websites. For attracting huge consumer then it must offer special discounts on every occasion as it creates proper buying opportunity in minds of consumer. For generating huge revenue, Book Plc must be capable to re-energise the channel of sales along with proper incentivize its sales partners. In the present era, its cashless economy so it must accept credit cards as it would be benefiting its potential customers and it would directly increase revenue from sales.

The present scenario describes about each business that it has various movements such as growth or decline phase. There are various organizations which are restructuring themselves by listening there feedback from its customers and there sales strategies, product and process for these dynamic world. By considering all these things it must be able to generate revenue in each circumstances as it is totally linked on knowledge and understanding of consumers which had been served.

3. Threats exits to their revenue stream

There is presence of various business threats which could incur in prospective of revenue streams of Book Plc.

Renting:

In the present scenario, houses are becoming so expensive for buying so various people are staying on rent, so landlord would opt for furnishing in very cost effective aspect. The growing trend of purchasing furniture would tend to decline (Mirzaey, Jamshidi and Hojatpour, 2017).

Household for single person:

in this generation, various households are in small size as they opt to live in apartments or homes which are small in size. So because of less availability of space along with module, demand for furniture is decreasing. It would be considered as opportunity also for increasing revenue along with threat as well. Opportunity could be replicated by framing new designs for modular structure.

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The unique lifestyle of various generations:

Today, it had become very important aspect such as difference in age and lifestyle as well. There is change in shopping habits of each consumer, so they would select wardrobe or furniture according to preferences.

4. Discussion on marginal costing and reasons for selecting Wardrobe B over wardrobe B

Marginal costing refers to the accounting system through which variable cost had been charged for a unit of fixed cost with specific duration as it had been completely written off which is not favoured in contribution. It also replicates as an alteration in opportunity cost which had been raised if a particular quantity had been produced along with raise in the context of one unit. While observing the cost of Wardrobe A and B, both are significant but while comparing A is costing less than B. Wardrobe B had been selected over A due to its qualitative scenarios because it working more hours and costing more so it depicts the quality of particular wardrobe (Cooper, Ezzamel and Qu,2017).

QUESTION 2

(a) Importance of allocation of overhead cost with proper classification

Increment of 6.3% at each overhead cost

The main key for success of business is to manage expenses in efficient aspect as overhead cost plays very important role as it helps in realizing margin, which is directly favourable to business. Every organization consists of overhead along with particular category related to indirect expenses. There is presence of organizations, which had gained capability for managing overhead cost in appropriate aspects if market place had become very competitive in nature. The calculation of overhead is directly dependent on kind of method, which had been used.

In the same series, there are three kinds of expenses with context of business of manufacturing as it includes miscellaneous expense, indirect material and indirect labour. The administrative and general expenses had been accounted for service organization with huge portion of cost of overhead. The activity based costing is considered as possibilities for identifying cost allocation. By not considering the kind of business entity or method of accounting it had been specified for getting appropriate allocation of expenses to overhead and it is significant for purpose of financial reporting.

There is presence of accounting procedure that is directly linked to allocation. The allocation of cost should be implied on various time period or it could be within single and specific time period. For example, with reference to overhead analysis sheet, there are various overheads such as rent and rates, machine insurance, heating and lighting and depreciation on machine had been charged on its useful life. This particular process is required essentially for fulfilling principles of matching. With reference to cost accounting, allocation of overhead cost of production in specific duration via application of cost drivers or predictors to service along with products. It is reflecting the uses of principles of cost, which is essential for acquisition and production to units that have been produced, units purchased or services for rendering (Reasons for Overhead costs allocation. 2018).

The allocation of overheads with reference to cost objects is for major reason such as identification of full cost of object cost, for encouraging manager in context of charge of cost object for managing it in efficient aspect, for comparing substitute courses of action with context of planning, decision making and controlling management. The determination of full cost is directly complied with U.S. Generally, Accepted Accounting principles as it had huge requirement of each cost of manufacturing such as overhead, direct labour and material, which must be assigned to such type of products for the objective of inventory costing. It had been essentially required for proper allocation to products with context of overhead cost.

In the same series, it provides information related to decision making in which setting price is considered as one of the best examples, which had been taken by the management. The prices are set by considering cost of each product. It does not only consist of direct labour along with materials. It should also consider overhead. It also promotes proper application of resources as there is presence of various activities, which are performed for preparing products like purchase of specific raw material, machinery production that had been set up, repair products which are defective and to inspect products that are final. These specific activities consume resources as it states all costs, which are linked to these identified activities. In the same series, there is charge on specific products for application of activities then it would be transforming as incentive for manager to optimise activities in efficient aspect.

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(b) Reasons for equally reallocate service department in three production

The above table is indicating that it is fair to every department as it had assumption that every department has an opportunity at equal concept for application of its services and facilities, that everyone would be using a proper share with context of overhead. In the same series, nobody has direct cost of overhead linked to every individual's practice. As in the above scenario, the aim of organization is to attain growth and success with context of market share then it would not turn fruitful but it would be directly favouring the one who have alterations for building their practices.

It helps in providing accurate cost of each production department as it gained capability to reflect cost which had been associated and with specific resource of input which is generating cost. The amount of production had been easily identified by particular area of organization. It is also important for organization fore enhancing usage of resources as it helps in controlling limited resources (Saeidi and et. al., 2018).

QUESTION 3

1. Impact of excel on business environment

Excel had been considered as more advantageous from regular activities of business. It had become very mandatory for purpose of establishments for performing activities of business for reaping better outcome. It helps in tracking sales of product, as software of spreadsheet helps in allowing users of small business for keeping proper record of sales of particular product. By performing this it would be designing plans which would enhance sales in context of market. It also helps in viewing clear idea with context of business progress as it had directly specified duration for low and high sales trend. While implicating regression analysis, it could also frame trend line by considering actual data for forecasting value of future.

It also helps in tracking appropriate return on investment on accurate aspect. It would be providing clear indication to business owner with context of investments which had been implied in business and amount of profit which had been gained (Kumarasiri and Gunasekarage, 2017). The most important aspect is to use spreadsheet for keeping record of contact information of their customers along with their clients.

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CONCLUSION

From the above report it had been concluded that applications of information technology is very important for management accounting. It had shown importance of Excel with context of business environment as it helps in tracking various reports which helps in earning revenue.

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