CHERRYL B.

VALMORES-MANAGERIAL ACCOUNTING
WAC #1 BATES BOATYARD
I. Point of View
Sarah Bates returns to her civilian life after spending several years in the navy.
After returning she intends to incorporate a small business with her savings.
She intends to buy a small boatyard in the town of Coat Maine, the proprietor
of the yard wishes to retire therefore, Bates bought the boatyard.
The main operation which Bates intends to conduct in her business is the
rendering of boats, and providing suitable buildings for the storage of boats in
winter. Along with this, she also intends to provide paintings and repair works
of the boat in the spring season as the demand of this work is high in that
season. Furthermore, she also intends to conduct boat construction work in her
business.
Bates realized that managing accounting records is essential for the success
of the company. Although she has good accounting knowledge but is not able
to initiate a suitable accounting system. Therefore, she asked for help so that
she can manage the financial information which enables her to charge properly
for her services.
Furthermore, at the time of purchasing, Bates realized that she solely couldn’t
finance the business therefore, she obtained additional funds from her friend
by mortgaging her property.

II. Problem
a. Is the boatyard operating many businesses?
b. What information system is needed to manage each business at the
boatyard?

III. Objectives
a. 1. To be able to create a form of business; is it corporation or sole proprietor
2. To identify the lines of businesses the boatyard can generate profit

b. 1. To be able to create a proper accounting system to record for cash

disbursement and cash receipt
2. To be able to identify whichever departments that contribute profit or loss
for her business.
3. To be able to identify which activity she wants to focus more
4. To be able to make it as her core business.

IV. Areas of consideration

Pest Analysis
 Political – Bates need financial records that she needs to keep will include the
annual tax return or other government fees.
Economic-Bates may consider having one or two assistants to help her in the
account and administrative matters.
Social – She consider buying a simple and user friendly accounting software to
facilitate the accounting tasks.
Technological – She will buy computers and other equipment to generate
accounting records.

V. Alternative Courses of Action

1. Implement Cost Accounting system and segmental reporting

Pros: By using cost accounting system, she can easily identify the cost per
line of business. She has potential of generating profit not only in boat
manufacturing, but also identifying other different activities within her
business. She also needs to implement segmental reporting for each line of
business she thinks is profitable and can generate greater revenue. By
doing so, she can compare each line of business as to profit or loss it
generates. Implementation a computerized accounting system in order to
generate proper accounting records.

Cons: Her accounting records-cash disbursement and cash receipts are

insufficient if she implements the cost accounting system, the best route is
to implement computerized accounting system to generate reports since the
manual system may generate greater human error. It will be costly to
implement and maintain. She should identify which activity she wants to
focus and to be able to make it as her core business.

VI. Conclusion/ recommendation

A. The cost accounting system. This system is suitable for her as she can
identify and assign the cost of each department. She should implement
segmental reporting for each of the department so that she can assess the
contribution and profitability of difference departments by comparing the
revenues and costs that they generate. She can identify whichever
departments that contribute profit or loss to her business. She needs to
keep other accounting records other than the cash disbursement and cash
receipts.
B. The computerized accounting system is highly recommended because it
can generate reports.
C. Since the business is something unfamiliar yet to Ms. Bates, she needs first
to understand the business, By doing so, she can make the right decisions
before she starts investing more money into expansion. She may opt to
focus on the ones that are more profitable and defer the ones that may be
too costly for the time being.