Reference no: EM133511271

Accounting Information Systems

Assessment Portfolio Activities - Case Data

Jack's Mowing

Background

In 2019, Jack Manly and Diane Moore, started a lawn mowing business in the Inner West region of Sydney.

After canvassing potential customers, Jack and Diane determined that their business would focus on providing both essential and superior gardening services.

On online presence quickly provided a steady pipeline of job enquiries from potential customers. Diane managed a simple website and all enquiries, while Jack resigned from his employment as a building manager and focused on performing all booked mowing and gardening jobs for the business.

Following increased demand and the establishment of some repeat business, in 2020 Jack and Diane began employing additional gardeners to help meet business needs.

Jack and Diane are now seeking your assistance in evaluating the data that they have captured across their first 3 years of trading.

2 data sets have been provided:
• Phase 1 which covers the period October 2019 to April 2020
• Phase 2 which covers May 2020 to January 2022.

These data sets may be found in the document CISM4000 A2 Case Study T2 2023

Assessment Portfolio Activities - Case Data

Fees Charged

Jack's Mowing provides 2 services charged at different rates. The rates reflect the level of skill and care provided with the superior service including precision edging, hedge trimming, weeding and complementary soil boosters. Base fees charged by Jack's Mowing:
• Essentials service - $70 per hour
• Superior service - $120 per hour

All work carried out (both Essentials and Superior services) is subject to a surcharge when performed in areas outside of Sydney's Inner West. These surcharges have been set to compensate for the additional travel time and distance necessary. Surcharges are currently applied to the total base fee charged for a job.
• North Shore and Eastern Suburbs- an additional 10%
• Northern Beaches and Hills District - an additional 20%

For example, a 2-hour Superior service undertaken in the Eastern Suburbs would be billed at: 2 hours x $120 x 110% = $264

PHASE 1 - OCTOBER 2019 to APRIL 2020

Throughout Phase 1, all jobs were completed by Jack with management of business operations provided by Diane. Diane managed all inbound calls and collated all job details completed by Jack and maintained the following records:

Exhibit A - Phase 1 Enquiries Register
Diane recorded the Name and Location of each customer who made an enquiry regarding the services provided by Jack's Mowing. Diane then assigned a unique, sequential customer ID to each customer recorded. There were 523 unique customer enquiries, not all of which proceeded with job bookings.

Exhibit B - Phase 1 Job Completion Register

From details provided by Jack, Diane recorded details for each job completed including:
- Customer ID
- Date of completion
- Service type provided (Essentials or Superior)
- Number of hours
- Payment method (Cash or EFTPOS)
- Amount paid by customer

Business concerns
• Diane is concerned with understanding how well the business is performing in converting enquiries into chargeable jobs, and how well the business retains customers.
• Jack is concerned with understanding the seasonality (if any) of the business, as well as the mix of services provided, which regions the business is generating its revenue from and identifying the drivers of business growth.

PHASE 2 - MAY 2020 to JANUARY 2022

Due to an increased workload and a substantial advertising campaign, Jack and Diane commenced employing additional lawnmowing staff - initially Jack's son Stan, followed by additional subsequent hires. With the increased volume of work, Jack (and the new employees) found that job estimates provided to customers sometimes varied from the time necessary for completion. As result, Diane collated additional details in maintaining the following:

Exhibit C - Phase 2 Enquiries Register
In addition to the information recorded in the Phase 1 Enquiries Register (Exhibit A), Diane also noted whether the customer was requesting work for a private residence (Private) or for business premises (Commercial). This additional detail was applied to both new and existing customers.

Exhibit D - Job Completion Register
Diane continued to maintain a job completion register with the same data as in Phase 1 Job Completion Register (Exhibit B) with additional or amended fields for:
- Hours Billed
- Hours Worked
- Staff Name (who completed the job)
- Payment method (expanded to include Direct Deposits as well as Cash or EFTPOS))

Exhibit E - Payroll Register
Due to the rapid growth of the business, a payroll register was maintained summarising monthly time and wage records. Each employee was responsible for submitting claims for hours worked. Wages paid to employees were calculated from claims submitted and the applicable hourly rate.

All staff were to be paid at the same hourly rate ($45 in 2020, increased to $50 in 2021 with no further changes). The register included the following fields:
- Date (last day of the month)
- Staff Name
- Hours Claimed
- Hourly Rate
- Wages Paid

General business concerns
• Diane has concerns about the current payroll process, but Jack insists that their staff are all trustworthy. Diane's specific concerns relate to discrepancies in hourly rates as well as the hours claimed relative to the hours worked.
• As the business has grown so quickly, Jack is interested in the services, locations, and types of clients responsible for revenue and revenue growth.
• Both Jack and Diane are interested in identifying growth opportunities to be pursued over the next 2 to 5 years.

Specific concerns
• Jack and Diane needed to employ additional staff and have set a minimum performance standard whereby every employee is expected to have at least 82% of their professional time able to be billed to clients.
Providing evidence, determine which employees have met the minimum standard of efficiency.

• Jack and Diane wish to implement a Loyalty Points scheme whereby clients receive redeemable points for every hour of billed service as follows:
- Every Essentials service of 1.5 hours or less earns 5 points;
- Every Essentials service of more than 1.5 hours earns 10 points
- Every Superior service earns 25 points, regardless of duration

Assuming that every point has a redeemable value/cost of $1.50, calculate how much this scheme would have cost if introduced from 1 July 2021.

Attachment:- Case Study.rar