A Modern Family Phone Plan: A Home-Grown Case of Cost Allocation and Contracting

• In Event: Management Accounting

Abstract

Zayna Khan, a newly-graduated doctor, has added her parents to her cell phone account. Her father has offered to pay the parents’ share of the bill and Zayna is trying to decide (1) whether and why she should accept any money, (2)-(3) how much her father should pay by analyzing a phone bill which includes items that span many cost categories (e.g. fixed vs. variable, direct vs. indirect, normal/standard vs. penalty/premium), and (4) how she could invoice/contract with her father for payment.

The case presents a real world example of how managerial accounting tools can be useful in students’ day-to-day lives. It encourages students to think about aligning their economic goals and accounting methods within the specific context of the situation. It demonstrates how relatively straightforward terms can be defined and measured many different ways, and it provides an example of how one’s business practices might conflict with one’s cultural or ethical standards.

Authors

• Zeshawn Afsari Beg, Quinnipiac University

• Nelson U Alino, Quinnipiac University