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Management Accounting for Business Decisions - Essay Example

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It is a way of achieving growth and expansion while addressing operational challenges. Nevertheless, despite the mergers being a strategic choice for many companies, it is…
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Management Accounting for Business Decisions
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Download file to see previous pages In the case of CoolSchool and Scrubs, differences in operations present the greatest challenges to the whole merger. The new company resulting from the merger will have new dynamics and set of accounting challenges which must be addressed in order to ensure success (Bierman 2010).
CoolSchool supplies school uniforms at the beginning of the school year and the number of uniforms is based on the previous year’s enrollment. It is important to note that despite the merger, there will still be an important need to ensure that uniforms are supplied to the schools every year and on time. In addition, it is difficult for schools to provide the exact number of uniforms they shall need. In this respect, it becomes necessary for the company to continue its present production method which uses estimates from the previous year. However, this can be further improved to enhance accuracy. Since CoolSchool has supplied uniforms to schools for a number of years, it has records on the supply for every year. By using the record, the new merged company can extrapolate and estimate the enrolment rate in the coming year. Production of uniforms will then be based on the extrapolated figure which will be fairly accurate than using the enrolment for the previous years (Brush 2008).
Regarding hospital uniforms, the new company will easily predict the number based on the staff numbers previously used by Scrubs. Considering the accurate production in this regard, it is important that the new company produces a large amount of uniforms for 8 months. Producing large numbers of uniforms on a single occasion helps the company to enjoy the economies of scale associated with large scale production. In addition, hospitals will always require new uniforms and the company should not therefore worry about any excess inventory (Gleich 2010).
Producing a large amount of hospital uniforms at one time will help the company in creating ...Download file to see next pagesRead More
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