Managerial Accounting & Management Decisions Discussion



You have been hired as a financial manager for the U.S. division of a multinational manufacturing company, Ace Green, Inc. The company makes energy management equipment, such as meters and load balancers for solar energy installations. In your role, you create budgets, monitor and analyze financial results and forecasts, and make recommendations for short-term and long-term actions. The division’s chief financial officer, Clara Kennedy, has asked you to provide some financial insight to inform business decisions for the upcoming year.

Company Overview

Ace Green, Inc.’s U.S. division employs approximately 150 people and is based in an industrial complex just outside of a major city. The company provides the following products and services:

  • Energy management equipment, such as photovoltaic panels, meters, and load balancers for solar energy installations
  • Installation and maintenance services
  • Consulting services to help its clients optimize their energy use and minimize costs

Business Decisions

The company is considering expanding its operations by hiring 50 additional employees and expanding its facilities as a result of higher expected demand. The expected Return on Investment (ROI) for this project is 15%, based on the increased production and number of additional clients that the organization will be able to accommodate. Clara is looking for your advice to explain the impact of ROI and similar investment evaluation criteria on management decisions, and to inform her about what other factors might need to be considered based on financial information.

Financial Information

Reference the Ace Green, Inc. summary income statement.


Your financial report and business memo will help Clara to make an informed decision that moves the company forward. Your deliverables will include a financial report with completed financial information and a business memorandum. In addition to preparing financial information to inform business decisions, be sure to speak to considerations related to expanding operations. Use the financial report template to complete the appropriate financial information, then use the financial information to inform the business memorandum.

Business Memorandum: The business memorandum will explain business implications of the financial information using the Ace Green, Inc. summary income statement. Remember that your audience does not have a strong financial knowledge base, so your explanations should be clear and thorough.

  • Day-to-Day Business Decisions: The first element of your memorandum will discuss how financial information informs decisions about day-to-day operations.
    • Describe managerial accounting, specifically highlighting its use in informing business decisions in day-to-day operations. Begin by defining managerial accounting, then highlight key concepts that management will find useful for decision making.
    • Explain cost behavior for informing business decisions using managerial accounting terminology. Use the Ace Green, Inc. summary income statement to inform your response. Specifically, address the impacts of the following:
      • How is the categorization of costs into variable, fixed, and mixed categories affected by the time horizon?
    • Briefly define the various unit costing methods in common use, such as job order, process, and activity-based. Where is each costing method most appropriate?
    • Explain basic cost concepts for informing management decisions using the contribution approach. Specifically, Include the following in your response:
      • How do costs and volume affect profit? Use the Ace Green, Inc. summary income statement to inform your response with specific examples.
      • Explain gross margin percentages and their business implications, stating the formula. Use the Ace Green, Inc. summary income statement to inform your response with specific examples.
      • Describe breakeven analysis and its business implications.
    • Explain margins for informing management decisions, specifically highlighting any significant changes in margin. Include the following:
      • Explain gross income and margin, operating income and margin, and net income and margin for their purpose in informing decision making. Use the Ace Green, Inc. summary income statement to inform your response with specific examples.
      • Why might an organization’s gross, operating, or net income margin vary seasonally? Use the Ace Green, Inc. summary income statement to inform your response with specific examples.
      • If Ace Green, Inc. commits to the proposed major staffing and facility expansion, would you expect negative margins in the first year or two? Why?
      • What actions could a company take to improve its margins?
      • Explain the difference between gross, operating, and net income.
    • Discuss three key observations you would want to bring to management’s attention based on specific examples. Consider notable ratios or trends and provide specific examples from the summary income statement.
  • Long-term investment decisions: The second element of your business memorandum will discuss long-term investment decisions.
    • Explain the impact of ROI on management decisions. Specifically, support your response using the business decisions information in the scenario and appropriate financial information. Include the following:
      • What does the ROI information tell management, and are there other factors that should be considered from a financial perspective?

What to Submit

Every project has a deliverable or deliverables, which are the files that must be submitted before your project can be assessed. For this project, you must submit the following:

Business Memorandum
The business memorandum should be 3-5 pages in length, and it should explain how the information in the summary income statement informs management decisions. Include the Ace Green, Inc. summary income statement that you used to inform your ideas.

Supporting Material

Resource Type: Ace Green, Inc. summary income statement
Use this to inform your business memorandum.

Resource Type: How to Write a Memo
While a specific business memorandum format is not required, these guidelines will help you to get started

Managerial Accounting & Management Decisions Discussion

Tips in writing a perfect essay

Writing a perfect essay requires careful planning, research, and attention to detail. Here are some tips to help you craft a great essay:

Managerial Accounting & Management Decisions Discussion


  1. Start with a clear thesis statement that states your main argument.
  2. Use evidence and examples to support your thesis statement.
  3. Create an outline to organize your thoughts and ensure a logical flow of ideas.
  4. Use clear and concise language, avoiding unnecessary jargon or complex sentence structures.
  5. Edit and proofread your essay carefully for grammar, spelling, and punctuation errors.
  6. Take breaks and come back to your essay with fresh eyes to ensure you haven’t overlooked anything.

By following these tips, you can write a well-structured, well-researched, and compelling essay.

Managerial Accounting & Management Decisions Discussion