Changing Business Forms and Roles of Management Accounting: A Critical Discussion

Part 1

The business world is changing rapidly. New business forms can be seen in organisations such as Airbnb and Uber. Indeed, referring to “uberisation” of business, [Rice and Martin, 2015] in a recent article highlights the role of managers in such changing organizational structure.

Clearly, if the role of managers is changing, then must be the role of management accounting too.

Required:

Critically discuss how changing business forms have changed the roles and duties of the management account. You are also required to discuss how management accounting can contribute, both in financial and non-financial aspects, toward the success of modern organizations.

Part 2

Read the case study (at the end of this document) and write a report for Cat and Joe to help them in their decision-making. Your report should answer, apart from your own advice, the following questions.

Required:

1. List and briefly describe the advantages and disadvantages inherent to the food truck business model as compared to traditional restaurants.

2a. On a typical day in Kamloops, how many “Ripped Pig” sandwiches must be sold in order to break even?

2b. Comment on Cat and Joe’s breakeven point (calculated in Part a). Should this number be relevant to the entrepreneurs?

2c. If Cat and Joe wish to make a $100,000 profit for the year (after tax), how many pulled pork sandwiches must the Pig Rig sell each day? Assume all days are in Kamloops at regular prices.

3. Prepare a contribution-format income statement for one day’s business at the Pig Rig based on optimistic, realistic, and pessimistic projections for a regular, non-event day in Kamloops.

4. Prepare a contribution-format income statement for the Bullarama event based on an optimistic projection (no onsite competitors), a conservative projection (one onsite competitor), and a pessimistic projection (two onsite competitors).

5. What are the nonfinancial advantages and disadvantages of attending Bullarama?

6. Assume Cat and Joe were told that they should expect one onsite competitor. Would you recommend they stay in Kamloops for the day or go to Bullarama? Justify your answer with both financial and nonfinancial data.