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ACC 207 Final Project Guidelines and Rubric

Overview

The final project for this course is the creation of a quantitative analysis with a memo to management.

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Classifying a company?s costs allows for an in-depth analysis of the impact that changes in output have on revenues, costs, and net income or net loss. A cost- volume-profit (CVP) analysis will be completed in order to determine the breakeven point. Relevant costs will be used to prepare a flexible budget. Additionally, an appropriate costing system should be selected and the choice should be substantiated with reasonable rationale. Finally, a memo should be prepared for management that summarizes the results of the quantitative analysis and makes recommendations for an optimal costing system to be ethically used by key decision makers.

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The project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. These milestones will be submitted in Modules Two, Four, and Five. The quantitative analysis with a memo to management will be submitted in Module Seven.

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In this assignment, you will demonstrate your mastery of the following course outcomes:

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??????? Utilizecostbehaviorandcost analysistoassistdecisionmakers inplanningandaddingvalue tothebusiness

??????? Prepareaflexiblebudgetforsupportinginformedmanagerialdecisionmaking

??????? Interpret variances for determining the optimal costing system to fit an organization?s internal accountingneeds

??????? Interprettheroleofethicsincostaccountingfordeterminingitsimpactondecisionmaking

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Prompt

In this assignment, multiple analyses will be conducted in order to obtain a company?s financial information specific to company costs.

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MDE manufactures outdoor garden items such as lawn ornaments and bird feeders. MDE uses a standard costing system to set standards for direct materials, labor, and overhead costs. MDE reviews and revises standards as necessary. Recently, budget variances for bird feeders have caused some concern. You, the company?s cost accountant, have been asked to examine the numbers for the product, explain the variances, and suggest ways to improve performance.

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Specifically, the following critical elements must be addressed:

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You will begin by using the MDE Manufacturing Budget (Table I) to analyze costs, contribution margin, and breakeven point for the bird feeder division. You will then analyze the actual costs and complete a cost-volume-profit (CVP) analysis to determine how many bird feeders must be sold at the current cost and sales price level to earn a $10,000 profit and how much the sales price would have to increase to earn a $10,000 profit at the same cost and sales volume level. Use Tabs 1 and 2 of the Student Workbook.

 



 

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I.??????? Costs

a)?? Classify all product and period costsappropriately.

b)?? Compute a cost-volume-profit analysis. What are the implications of thisanalysis?

c)?? Compute contribution margin per unit and contribution marginratio.

d)?? Determine the breakeven quantity and the breakeven revenueaccurately.

e)?? Determineifthecompanyisbreakingeven.Whatarecost-volume-profitanalysisimplicationsonshort-termplanning?

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Your next step is to use the MDE Manufacturing Budget (Tables I, II, III, IV) to compare the budget and actual costs. Determine where variances occurred and explain why. Use Tabs 3 and 4 of the Student Workbook to present your budgets/variances and Tabs 5 and 6 for all budget/variance calculations.

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II.????? Prepare andPerform

a)?? What are your fixed costs? Segregate them in the budgetmodel.

b)?? Determine how variable costs change as activity measures change. How can this information beapplied?

c)?? Create the budget model, ensuring fixed costs are hard coded into the model (variable costs are stated as a percentage of the relevant activity measures or as a cost per unit of activitymeasure).

d)?? Add actual activity measures to the model. Make sure all information is addedaccurately.

e)?? Add the flexible budget calculations to the budget model. Make sure all information isaccurate.

f)??? Comparetheflexiblebudgettotheactualexpenses.Whatdoesthisinform?Besuretodiscussthefollowingvariances:

i.?????????? Static budget variance, including sales volume and flexible budgetvariances

ii.?????????? Price and efficiency variances for direct materials and directlabor

iii.?????????? Spending and efficiency variances for variable manufacturingoverhead

g)?? Determine the aspects of the budgeting process that are in need of improvement. Justify yourresponse.

h)?? Interpret what budget variances represent. Should all variances beinvestigated?

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You have also been asked to give management a recommendation on whether the company should switch from process costing to activity-based costing (ABC). This is an exploratory discussion, but management would like to know more about the difference between the two costing systems and if a different costing system might work better for the company.

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III.??? Main Costing Systems ? Activity-Based Costing vs. ProcessCosting

a)?? Identify the cost allocation system that would benefit this company most. Justify yourresponse.

b)?? Does this cost allocation system meet management planning and control goals?Explain.

c)?? What are the ethical implications that should be considered with this cost allocationsystem?

d)?? Describetheethicalimplicationsofdirectcostsversusindirectcosts.Whatconsiderationsshouldbemadewhenselectingoneofthesetwo?

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After all of your calculations and research, you are now ready to prepare your report.

 



 

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IV.??? Prepare a Memo toManagement

a)?? Summarizeyourquantitativeanalysisbasedonyourfindings(includeanswerstoallquestionsinSectionsI,II,andIII).

b)?? Reportthepartsofthebudgetingprocessthatarein needofimprovement.Providesuggestionstoimprovethoseparts.

c)?? Reportoverallimprovementrecommendations tomanagement.Considertheethicalimplicationswhencommunicatingsensitiveinformation.

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Milestone One: Draft of Costs (Section I)



Milestones

 



 

In Module Two, you will submit a draft of the costs section of the final project. Use the MDE Manufacturing Budget (Table I) to analyze costs, contribution margin, and breakeven point for the bird feeder division of the company. In Tab 1 of your Student Workbook, classify costs as either product or period costs. Briefly explain the difference between the types of costs. Then, analyze the actual costs and, using Tab 2 of your Student Workbook, complete a cost-volume- profitanalysis todeterminehowmanybirdfeeders mustbesoldatthecurrentcostandsalespriceleveltoearna10%profitandhowmuchthesalespricewould have to increase to earn a 10% profit at the same cost and sales volume level. Submit the Student Workbook with Tabs 1 and 2 completed with your cost calculations and a 1-2 page Word document that explains the implications of your findings and addresses all of the critical elements in Section I. This milestone will be graded with the Milestone OneRubric.

 

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Milestone Two: Draft of Prepare and Perform (Section II)

 

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In Module Four, you will submit a draft of the prepare and perform section of the final project. Analyze the budget and actual costs using the MDEManufacturing Budget (Tables I, II, III, IV). Determine where variances occurred and why. Submit the Student Workbook with Tabs 3 and 4 completed with your budgets/variances calculations and a 1-2page Word document that discusses the implications of your findings on the company?s financial considerations. Explain which aspects of MDE?s budgeting process are in need of improvement and justify your response using your calculations. Address all critical elements in Section

 

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II. Use Tabs 5 and 6 of the Student Workbook for your budget and variance calculations. This milestone will be graded with the Milestone Two Rubric.

 

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Milestone Three: Draft of Main Costing Systems (Section III)

 

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In Module Five, you will submit a draft of your main costing system recommendations. You have been asked to give management a recommendation on whether the bird feeder division should switch from process costing to activity-based costing. This is just an exploratory discussion, but management would like to know more about the differences between the two costing systems and if a different costing system might work better for the division. Submit a Word document that addresses the critical elements of Section III. This milestone will be graded with the Milestone Three Rubric.

 

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Final Submission: Quantitative Analysis With a Memo to Management

 

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In Module Seven, submit your quantitative analysis with a memo to management. It should incorporate all milestones and include Section IV of the critical elements listed in the Final Project Document. This submission will be graded with the Final Project Rubric (below).

 

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xxxxx Submission: Quantitative Analysis xxxx x xxxx xx xxxxxxxxxx

 

Date:

 

xxx xxxxxxxx xx Bird xxxxxx xxxxxxxx

 

xxxxx

 

Re: Quantitative xxxxxxxx along with Recommendation

 

xxxxxxx xxxxx xxxxxxxxx

 

A request xx xxxx to xxxxxxxx the budget xx Bird Feeder Division xxx xx less amount xx xxxxxx xxxxxxxxxx Various xxxxxxxx is xxxxxxxxxx for this xxxxxxx .Initial xxxxxxxx xxxxxxxxx that budgeted xxxxxx of units xxxxxx to xx xxxx xxx xxxxxx but in xxxxxx xxxx xxxxxx units was xxxx .As xxx xxxxxxx price per unit was $21.00.While n another side xxx variable cost xxx unit xxxxxxxx was x xxxxxx but actual variable cost per xxxx was $ 17.00.Due to xxxxx the xxxxx xx contribution margin reduced .Contribution margin is equal to Selling xxxxx ?xxxxxxxx cost xxx xxxxx So xxx level xx xxxxxxxxxxxx margin decreased from budgeted value xx $5 to $4.

 

xx another side xxx Breakeven point in xxxxx xxx xxxxxxxxxxx goal xxx achieved by management as xxxxxx xxxxx xxxx sold but xxxxx the desired level of xxxxxx xxx

 

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