Management Accounting

Term End Project Report

Submitted by Group 10
Asmita Kamble (2310305)
Chandrika Mitra (2310293)
Mohit Bohra (2310292)
Mritunjay Kumar (2310317)
Shivi Goel (2310348)
Sara Malhotra (2310337)

Under the guidance of

Prof. Md. Shameem Jawed
(Assistant Professor, IIM Visakhapatnam)
Table of Contents
1. ABOUT THE COMPANY ........................................................................................... 3
2. MANAGERIAL DILEMMA .......................................................................................... 3
3. PROBLEM STATEMENT............................................................................................ 4
4. PRODUCT/ SERVICE MIX:........................................................................................ 4
4.1 Products: ........................................................................................................... 4
4.2 Services: ............................................................................................................ 4
5. PRODUCT MARKET COMPOSITION: ........................................................................ 5
6. MANAGERIAL CHALLENGES ................................................................................... 6
7. DATA COLLECTION ................................................................................................ 7
8. ANALYSIS ............................................................................................................... 8
9. RECOMMENDATION ............................................................................................. 10
 1. ABOUT THE COMPANY

Little Laudable Learners works to support kids from 3.5 to 13 years old in strengthening their
reading abilities and fostering a love of education. They use books and other instructional
resources to provide students with interesting activities and specialized reading programs, both
online and offline. A group of qualified educators oversees these initiatives. The company's
objective is to concentrate on children from impoverished families and smaller cities, including
those whose parents were unable to complete a formal education and kids whose parents work
two jobs. Additionally, Little Laudable Learners works with schools in these cities where many
pupils struggle with reading.
Little Laudable Learners was founded by experienced educator Sridevi Srinivasan, who has
over ten years of experience. Her expertise lies in developing integrated reading curriculum
that are tailored to meet the needs of CBSE schools. In addition, Sridevi is the author of
"Mindful Ways to Raise Confident Readers," which reflects her dedication to developing young
minds' love of study and communication skills. She has experience teaching, and she is also a
passionate public speaker and professional storyteller with international certification.
Sornapriya S., co-founder, and director of the Raising Readers Program, supports Sridevi's
leadership. Sornapriya is an accomplished educator with more than ten years of experience
who thrives on motivating and relating to kids. Her outstanding record of success in both
teaching and management demonstrates her commitment to fostering the development of
young students.
By providing underprivileged kids with the necessary reading skills and a lifelong love of
learning, Little Laudable Learners aims to empower them through its creative programs,
seasoned leadership, and steadfast dedication to education.

2. MANAGERIAL DILEMMA

Little Laudable Learners finds itself struggling with a essential decision on resource allocation.
The organization is having an opportunity to expand its reach and impact. However, limited
resources need a strategic choice. One option is to prioritize program expansion by creating a
presence in new locations, potentially enabling them to serve a larger number of students and
secure additional support. Yet, this approach might stretch their existing teaching staff, who
would need to take on increased duties without immediate assistance. While this strategy aligns
with ensuring long-term sustainability, it might hinder their capability to capitalize on
immediate growth chances. The management team must navigate this dilemma cautiously,
weighing the trade-offs between rapid expansion and quality assurance to strike the right
balance in effectively fulfilling their mission.
 3. PROBLEM STATEMENT

The problem statement is to conduct a cost analysis with the objective of identifying areas of
improvement by evaluating the financial implications of each strategic option, potential
revenue streams, long-term costs and benefits, and opportunities for cost optimization and
resource allocation efficiencies.

4. PRODUCT/ SERVICE MIX:

4.1 Products:

a. Workbooks- Raising Confident Readers (RCR): Crafted meticulously to engage

students in meaningful learning experiences. Workbooks are designed with specific
needs in mind to serve as invaluable companions throughout a student's educational
journey. The workbooks provide hands-on learning experiences that keep children
actively involved, thought-provoking activities, and engaging exercises.

4.2 Services:

a. Raising Confident Communicators (RCC): This is an innovative and

comprehensive program designed to empower learners with communication skills
including holistic approaches such as strategic reading, grammar, storytelling,
public speaking, and creative writing. This program offers a dynamic and engaging
learning experience with curated modules that enhance communication skills.

b. Raising Confident Readers (RCR): This holistic reading program empowers young
learners with lifelong literacy with reading abilities and fosters the love for reading
through a comprehensive approach having three different levels 1, 2, and 3.

c. Other Programs (Tamil, Hindi, Math, and Arts): Offering a range of

comprehensive programs designed to cater to the learners at different levels of
proficiencies in all the subjects. The program is designed in a way to fill the
foundational gaps and knowledge. All these facilitate doubt clarifying sessions,
ample practice sessions, and assessment-based evaluation.
 5. PRODUCT MARKET COMPOSITION:

Products offered:

• Art Classes Program (5 levels from novice to expert)

• Tamil Language Program
• Raising Confident Communicators Course
• Raising Confident Readers Program (3 levels)

Target Markets:

• Students/learners across different age groups and skill levels viz Beginners/novices in
art, language, reading, communication, Developing/intermediate level learners
Advanced/expert level learners.
• Parents who are looking for structured programs for their children.
• Schools/educational institutions seeking comprehensive curriculum.
Product-Market Combinations:
• 5-level Art Classes for students wanting to progressively learn art.
• Tamil Language Program for Tamil language skill development.
• Raising Confident Communicators for comprehensive communication abilities.
• Raising Confident Readers Program tailored to reading proficiency levels.
• All programs are marketed to individuals, parents, and educational institutions.
Key Features:
• Level-based, progressive skill development approach.
• Covers various domains: art, language, reading, communication.
• Multimedia learning with interactive activities, creative expression
• Focus on building strong fundamentals and confidence.
• Structured curricula with defined modules/levels
• Engaging teaching techniques like storytelling, situational practice
• Options for targeted skill training or comprehensive learning
• Experienced teachers and classroom environments
The company offers a range of skill-based educational programs spanning art, language,
reading, and communication training. Their offerings cater to different learning levels through
structured, level-based curriculum using interactive and creative teaching methods. While
targeting individual learners, a significant market is also parents and educational institutions
seeking comprehensive, progressive programs aligned with academic curriculums and
standards.
 6. MANAGERIAL CHALLENGES
Below are few challenges identified while discussing with the founder:

1) Infringement Issue: At the outset, the company encountered an infringement issue due
to its original name, League of Little Legends.

2) Tuition Center Challenges: The company faced various challenges associated with
operating as a tuition center, such as competition from other educational institutions,
managing student enrollments, maintaining high-quality teaching standards and
addressing the diverse educational needs of students.

3) Marketing Challenge: One significant hurdle the company faced was effectively
marketing its services to its target audience. This involved developing compelling
marketing strategies to attract students and parents, establishing a strong online
presence.

4) Financial Management and Budgeting: The long-term viability of the business depends
on efficient budgeting, cash flow management, and financial planning. It can be very
difficult to manage operating costs, allocate resources across different programs, and
guarantee profitability.

5) Pricing and Revenue Strategies: It can be difficult to decide on the best price structure
for a company's goods and services while maintaining both affordability and
profitability. Finding the best pricing plans and revenue models to optimize profits
while maintaining reach into the target market may prove difficult for the business.

6) Scalability and Resource Allocation: Managing resource allocation across many

locations, projects, and initiatives can get more difficult as the business grows and
launches new initiatives. It might be difficult to ensure effective resource usage while
upholding high standards of quality.

7) Third-Party Integration App Issues: Implementing third-party integration apps

presented a challenge for the company, as it required navigating technical complexities,
ensuring compatibility with existing systems, and addressing any issues that arose
during the integration process to streamline operations and enhance efficiency.

8) Affordability of Offered Courses: Ensuring the affordability of the courses offered by

the company posed a challenge, especially in the context of providing high-quality
education while keeping tuition fees reasonable.

9) Raising Awareness Among Parents: Another challenge the company faced was raising
awareness among parents about the value and benefits of its educational programs.
 7. DATA COLLECTION
Little Laudable Learners currently serves a total of 129 students spanning ages 4 to 14. Offering
a diverse range of seven distinct courses, the organization employs a team of eleven dedicated
teachers to deliver quality education and support to its students.
Students per age group:

Age 4 5 6 7 8 9 10 11 12 13 14 TOTAL
No of 1 18 15 22 21 23 12 10 3 1 3 129
students

Students per course:

Courses RCR RCC Hindi Tamil Art Math RCC(Exp) TOTAL

No of 41 34 18 18 4 5 9 129
students
No of 10 9 8 12 1 2 2 44
Batches

Course charges per month:

Course Name Charges

RCR Rs. 1500
RCC Rs. 1500
Tamil Rs. 1300
Hindi Rs. 1200
Math Rs. 1200
Art Rs. 1000

Expenses:

Expenses Amount
Zoom Rs 3068
Canva Rs 1977
Twinkle Rs. 300
Internet Rs 1000
Room rent Rs 2000
Marketing expense Rs 1109
Notebooks Rs 1223
Packing covers Rs 1333
Gifts to educators, students Rs 8800
Books Rs 7800
Courier and packing of books Rs 6225
 8. ANALYSIS
We have chosen Activity-Based Costing (ABC) as the preferable costing technique in this
regard. By identifying the activities involved in making the items and allocating costs
accordingly, this method yields cost information that is more precise. By using this strategy,
the business will be able to manage costs and set prices more intelligently, which will ultimately
increase sustainability and profitability.
ACTIVITY-BASED COSTING: Every step has been identified, and costs have been
allocated according to resource utilization and projected sales.

RCC RCR Tamil Hindi Maths Art Total

Students 43 41 18 18 5 4 129
Batch 11 10 12 8 1 2 44
Classes per
month per
batch 8 8 8 8 8 8
Class (hrs per
month) 88 80 96 64 8 16 352
Charges (per
month) 1500 1500 1300 1200 1200 1000
Revenue total
per month 64500 61500 23400 21600 6000 4000 181000
Labour Cost 73020 61900 134920
Cost per class
hour 434.6428571 434.6428571 336.4130435 336.4130435 336.4130435 336.4130435
Other income
(Books) 7800 7800
Overhead Cost 44035 44035
Total Income 9845

Overhead Costs
Delivery cost 6225
Administration Salary 17000
Zoom 3068
Canva 1977
Twinkle 300
Internet 1000
Marketing expense 1109
Rent 2000
Notebooks 1223
Packing covers 1333
Gifts to students/faculty 8800
Total 44035
 Based on overhead costs, we identified cost drivers and calculated activity cost pool and pool
rate. The calculations are as follows:
𝐴𝑐𝑡𝑖𝑣𝑖𝑡𝑦 𝐶𝑜𝑠𝑡 𝑃𝑜𝑜𝑙
Pool Rate = 𝐶𝑜𝑠𝑡 𝐷𝑟𝑖𝑣𝑒𝑟 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦

Activity Cost driver Pool

Overhead cost Cost driver
Cost Pool Quantity Rate
Delivery Cost 6225 Students 129 48.26
Administration Salary 17000 Students 129 131.78
Zoom 3068 Class hours 352 8.72
Canva 1977 Class hours 352 5.62
Twinkle 300 Class hours 352 0.85
Internet 1000 Class hours 352 2.84
Marketing Expense 1109 Facility 6 184.83
Rent 2000 Facility 6 333.33
Notebooks 1223 Students 129 9.48
Packing covers 1333 Students 129 10.33
Gifts to
8800
students/faculty Students 129 68.22
Total 44035

Therefore, the current cost division analysis is as follows:

Eg. Delivery cost = Delivery cost pool rate * Students

Activity Pool RCC RCR Tamil Hindi Maths Art Total

Students 43 41 18 18 5 4
Class hours 88 80 96 64 8 16
Delivery Cost 2075.0 1978.5 868.6 868.6 241.3 193.0 6225
Administration Salary 5666.7 5403.1 2372.1 2372.1 658.9 527.1 17000
Zoom 767.0 697.3 836.7 557.8 69.7 139.5 3068
Canva 494.3 449.3 539.2 359.5 44.9 89.9 1977
Twinkle 75.0 68.2 81.8 54.5 6.8 13.6 300
Internet 250.0 227.3 272.7 181.8 22.7 45.5 1000
Marketing Expense 184.8 184.8 184.8 184.8 184.8 184.8 1109
Rent 333.3 333.3 333.3 333.3 333.3 333.3 2000
Notebooks 407.7 388.7 170.7 170.7 47.4 37.9 1223
Packing covers 444.3 423.7 186.0 186.0 51.7 41.3 1333
Gifts to students/faculty 2933.3 2796.9 1227.9 1227.9 341.1 272.9 8800
Total Overhead Cost 13631.4 12951.1 7073.9 6497.1 2002.7 1878.9 44035
Labour Cost 38248.6 34771.4 32295.7 21530.4 2691.3 5382.6 134920
Total cost (per month) 51880.0 47722.5 39369.5 28027.5 4694.0 7261.5 178955.0
Total revenue per month 64500.0 61500.0 23400.0 21600.0 6000.0 4000.0 181000.0
Profit per month 12620.0 13777.5 -15969.5 -6427.5 1306.0 -3261.5 2045.0
Profit Margin 19.6% 22.4% -68.2% -29.8% 21.8% -81.5%

Based on the calculation, we can observe that Tamil, Hindi, and Art courses are in loss as Total
cost in more than the total revenue earned for it. Comparatively other courses like RCC, RCR
and Math courses provide revenue.

9. RECOMMENDATION

• The Tamil course is underpriced and is being provided at a loss of ₹15,970. The
company can increase the number of students per batch to 4, thus reducing number of
batches to 5 and class hours to 40 hours per month. This makes the course viable at the
current cost. Or they can increase the price of the course to match the level of
personalised learnings provided.
• Hindi course is underpriced and is currently incurring a loss of ₹6,428 per month. The
company can increase the number of students per batch to 4, thus reducing the number
of batches to 5 and class hours per month to 40 hours. This makes the course viable at
the current cost. But the profit margin is still below average of 10%. Or they can
increase the price of the course to match the level of personalised learnings provided.
• This course is not viable even on reducing the number of class hours. The company
should consider increasing the minimum number of students required to provide this
course to make it a viable offering.
• The recommended changes would increase the profit earned per month from their core
activities - from ₹2,045 to ₹33,235.

Calculations after recommendation:

Activity Pool RCC RCR Tamil Hindi Maths Art Total

Students 43 41 18 18 5 4
Class hours 88 80 40 40 8 8
Delivery Cost 2075.0 1978.5 868.6 868.6 241.3 193.0 6225
Administration Salary 5666.7 5403.1 2372.1 2372.1 658.9 527.1 17000
Zoom 767.0 697.3 348.6 348.6 69.7 69.7 2301
Canva 494.3 449.3 224.7 224.7 44.9 44.9 1482.75
Twinkle 75.0 68.2 34.1 34.1 6.8 6.8 225
Internet 250.0 227.3 113.6 113.6 22.7 22.7 750
Marketing Expense 184.8 184.8 184.8 184.8 184.8 184.8 1109
Rent 333.3 333.3 333.3 333.3 333.3 333.3 2000
Notebooks 407.7 388.7 170.7 170.7 47.4 37.9 1223
Packing covers 444.3 423.7 186.0 186.0 51.7 41.3 1333
Gifts to students/faculty 2933.3 2796.9 1227.9 1227.9 341.1 272.9 8800
Total Overhead Cost 13631.4 12951.1 6064.4 6064.4 2002.7 1734.7 42448.75
Labour Cost 38248.6 34771.4 13456.5 13456.5 2691.3 2691.3 105315.6522
Total cost (per month) 51880.0 47722.5 19521.0 19521.0 4694.0 4426.0 147764.4

Total revenue per month 64500.0 61500.0 23400.0 21600.0 6000.0 4000.0 181000.0
Profit per month 12620.0 13777.5 3879.0 2079.0 1306.0 -426.0 33235.6
Profit margin 19.6% 22.4% 16.6% 9.6% 21.8% -10.6%