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Bates did not have any proper accounting system. He only has record for cash disbursement and cash receipts. Bates should use cost accounting system. This system is suitable for her as she can identify and assign the costs to each department. We suggest Bates should implement segmental reporting for each of department so that she can assess the contribution and profitability of different departments by comparing the revenues and costs that they generate. Based on the segmental reporting, she can identify whichever departments that contribute profit or loss to her business. Thus, she can remove the unprofitable department. Bates should keep proper accounting records other than cash disbursements and cash receipts.

Too

many

business

activities

without

any

proper

accounting

management (core and non-core activities) Bates should identify which activity that she wants to focus more on and, thus, make it as her core business. Based on the segmental reporting used, Bates can analyze and determine which department can be turn into her core business. By solely depend on which business activity continuously gives profit to her. Base on the case study, she should set her core business into shipping due to most of her activities are related to repair, paint and construct a ship. As for the other business activities that is no related to shipping, she can set it as her non-core business such as refreshments in her store. sales of fishing tackle, sporting goods and

No proper IT system. Bates should develop suitable computerized accounting system in order to generate proper accounting records since manual records are subject to greater human error and can be easily misplaced. As for her store, additional automated system can be used to keep in track with the inventory.

No proper planning to add more activities. Bates did not conduct any cost-benefit analysis for the new activities. Furthermore, she does not have enough capital to venture into new activities. Bates has to determine whether by adding the retail shop into her business activity can add more value. For example, she may allocate more money on core business rather than adding more goods to be sold in her store.

Did not fully-utilized the season in which Bates businesses can operate more efficiently and effectively. Segregation of duties (internal control) only has one person who handle general office factotum and became bookkeeper

What kind of financial and cost information should be developed to control operations and to make proper charges to customers for services rendered? Bates should identify cost objects in order to measure and assign costs. Cost object can be defined as product or department for which costs are accumulated and measured. For this case, the cost objects are winter storage, empty land for outdoor storage, supplies store, yard, painting and repairing department and work shed for construction of boats. In order to obtain the cost object, Bates should identify the direct and indirect costs, so it is easier for her to allocate the costs to each department. Direct cost is a cost that directly relates to a particular cost object while indirect cost is a cost that must be allocated in order to be assigned to cost object. For supplies store, Bates can do an analysis on which product that is highly demanded. So she should consider setting it with a lower price since fixed cost per unit decrease as product level demanded goes up. Therefore, the total cost per product becomes lower.

For the large shed, she can raise up the rental fees of boat storage during winter season as there will be a lot of request among the owners of expensive boats. On the other hand, she can decrease the rental fees to encourage the summer people who were boating-minded to keep their boats at her shed.