Question

Case Study 1

The management in Unilever plant in Ontario is preparing for a change. The company plans to improve energy efficiency to help manage the rising and unpredictable energy prices. The plant produces margarine and other vegetable oil products. The cost of energy represents 15% of all production costs. The company expects that the cost will increase further in the coming years, as the energy price are expected to increase further. To meet an aggressive goal of reducing energy consumption by at least 6% per year, the plant’s energy team has implemented, and carefully documented, 120 projects since 1999, saving more than $4.2m in costs (based on 2006 prices), and avoiding about 23,000 tons of greenhouse gases.

One of the solutions was to invest in new technology – a reverse osmosis (RO) system that would enable significant, measurable improvements in the efficiency of the steam plant operations. In the first year of operation, Unilever calculated that the project would lead to net savings of $378,166 (based on 2006 prices), even after accounting for the full cost of operating and maintaining the RO system. It is expected that the technology will pay for itself in less than 16 months.

In order to verify whether the savings by implementing a new technology is significant, the company decided to conduct a research. The objectives of the research were to examine whether reverse osmosis (RO) system is beneficial for companies in the region. It is decided to select a few companies. The list of all companies was available. The management accountant has classified the list into; a) manufacturing, b) extraction and c) other companies. Samples are selected randomly from of these groups.

Based on the above case, answer the following questions.

Question No. 1

1. Briefly explain the role of management accountant in the above case. (The answer should explain the functions of management accountant.                                                      [3 Marks]
2. Do financial accountant and cost accountant have a role to support management in the above case? Explain.                                                                                                             [2 Marks]

Question No. 2

1. What type of information is required for the junior level, middle level and top-level management in the above case, for decision making?                                          [3 Marks]
2. Briefly explain the sampling method used in this case study.                              [2 Marks]

Answer 1

Q. Nol tants the q] solution: - Management nt Accounting in Ас соч. As per the Institute of chartered of England and wales, Management Accounting is that form of Accounting which Enables a business to be conducted more Etficiently followings are role of management Accountant in the given case :- . The primary function of manager Accounting is to guide / assist the management its function in performing Property. Mangement Accountants helps in following ways: - O Providing data : for making forecasts for the future, data is very necessary which is provided by Manage ment Accounting, vital source of data about past progress of the enterprise. who serves as a the

Data : 6 Modification of for making management Modities the which ties. the data useful for Management accountant 2 available data properly compiled and classi- Eog.:- may be sales figures for ditterent months classitied as product wise, supplier wise and territory - wise total sales . know cost Facilitates control making of budgetary control and Standard is an integral part of management Accountant, which helps in translating given objectives into specified goal which should be done in specified time achievement and of goal effectively. b7 solution Role of financial Accountant: main role of financial Accountant rocords of financial Вчрол оlge tan payment Accounts to The is keep statements a and maintains Role of cost Accountant: - ot Lost Accountant es company's financial waste Reduction Role Ро and