What implications does the firms� rapid growth and strategy have on the type of Management Control System (MCS) and Management Accounting System (MAS) that may be most suitable for HD?

Advanced Management Accounting
Paper , Order, or Assignment Requirements

Reading case and answer question C
CASE
This is a fictitious case – the focus is to apply your knowledge from the course to the scenario. You can undertake research into the industry but it is not required.

Healthy Drinks Ltd (HD) is a South Australian based company, specialising in the production of 100% real fruit smoothies which are not processed or pasteurised in any way. The business is run from the ‘Healthy House’ headquarters in the northern suburbs, where a state-of-the-art production facility is sited and where all of the employees are located.

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Company history

The business incorporated and started trading on 1 January 2013, with the entire shareholding being held equally by the two founders, Stuart Chen and Jane Griffiths, who are also the only directors. Initial finance was provided as follows:

� Stuart and Jane had both made large bonuses in their previous employment and invested $150,000 each as equity

� Bank finance was obtained through a $450,000 loan for 10 years. Interest is at 8% per annum, secured by personal guarantees on the directors’ properties and a $200,000 overdraft facility.

� In 2014, Stuart introduced a further $200,000 as a long-term loan – money that had recently been inherited. It was agreed that interest would be payable at 4% per annum.

Question C:
What implications does the firms� rapid growth and strategy have on the type of Management Control System (MCS) and Management Accounting System (MAS) that may be most suitable for HD? Provide examples of some of the detail that should be included in the firm�s MCS and MAS.

 

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