Study Guide: Strategic Management Accounting

Study Guide: Strategic Management Accounting

Once introduced, an TEST is expected to lead to a significant increase in the cost of power supplied from current market-dominant coal, oil, natural gas and nuclear energy sources. While compensation will be offered by the government to alleviate any increase in energy costs, other forms of government support (e. G. Alarm credits and other grants) will render the purchase and installation of renewable energy products a more affordable option for many energy users.

Thus, the Australian federal government’s introduction of a carbon ‘tax’ with effect from 1 July 2012 is likely to grow demand in the Australian domestic market for both business and residential renewable energy products. Hence, with the greater affordability of renewable energy products, coupled with increased community interest in achieving reductions in greenhouse gas emissions, the HP believes that entry into this market will provide it with a growing domestic and international market for these types of products.

Akin Flogging, the marketing manager for the HP, has recommended the introduction of a new technologically advanced solar hot-water system to be known as Slathers 1 While the market for solar hot-water systems is very competitive, the technical specifications and operational performance of the Slathers 1 will be above those of its nearest rivals and Akin believes that it will initially sell at a 10 per cent premium to its global competitors.

Furthermore, given the potential synergy from also having a solar power system in its renewable energy product range, Akin has proposed that the HP investigate the development of a product for this particular market segment. The Hap’s senior management group has given tentative support for Skin’s solar power system proposal, provided that it does not impede the division’s development of the Slathers 1 . The proposed solar power system has been given a project working title of Sallower 2.

Despite the division’s consideration of the Slathers 1 system being far more advanced than his solar power system proposal, Akin recommends that the HP run a parallel study of the Sallower 2 at the same time as the division addresses the development of the Slathers 1 . Despite having less robust quantitative data for the Sallower 2 to analyses, Akin believes that, as critical issues emerge from the development of the Slathers 1, little incremental effort will be required to broaden the scope to include a consideration of the ramifications of those issues for the Sallower 2.

Case Study Part 2: Using the conventional BBC approach to assign indirect manufacturing costs Indirect manufacturing costs are currently allocated to each HP product line on the basis of direct labor cost. Given the diversity in the electrical household product lines it manufactures, the HP has previously mentholated switching the allocation of indirect manufacturing costs to an BBC system.

However, the Haps senior management team has been reluctant to change from its current cost allocation model. In your role as the SAM for the HP, you will be actively involved in the development Of the division’s new renewable energy product lines. However, you have been concerned for some time about the division’s manufacturing overhead cost allocation model and believe that part of the problem the HP has experienced with its existing line of household electrical products is inaccurate costing.

Please follow and like us:
Haven’t found the essay you want?