Trident ACC501 full course 2016 (all case and SLP)

ACCOUNTING COST SYSTEMS AND COST BEHAVIOR

Case Assignment

Preparation of an Income Statement for The Serious Reader Company

The first case of this course provides an opportunity to prepare a segmented variable costing (contribution margin, behavioral) income statement and analyze the information. This is a very small company and the information may seem simplistic at first glance. Don’t forget that numbers and hands-on practice best illustrate many basic accounting concepts.

The Serious Reader Company is a small online retailer operating out of a garage apartment. The owner buys books at garage sales, thrift shops, library sales, and whenever an opportunity arises. The company classifies all books into five categories based on cost of acquisition and estimated sales price. See below for details about books purchased and sold during the last year (201X).

		Price Categories
	A	B	C	D	E
Units Sold	2,000	1,000	500	400	400
Units Purchased	3,000	1,200	1,000	1,000	1,000
Resale Price	$4.00	$15.00	$25.00	$45.00	$40.00
Cost	$0.50	$5.00	$10.00	$20.00	$20.00

In addition to purchasing inventory (used books), the company incurs some operating expenses.

Variable operating expenses
	Shipping per book	$ 1.50
Fixed expenses
	Internet-related costs	$5,000
	Travel, etc.	2,000
	Advertising	1,000
	Other overhead	3,000

Required:

Computations (use Excel)

· Prepare a segmented variable costing (behavioral) income statement for the company in good format.

· Prepare a second variable costing statement assuming 90% of all the books in each category purchased were actually sold.

· Prepare a third variable costing statement assuming that the price is increased by 50% for all five categories (use original sales information).

· The owner enjoys the used-book business. Any suggestions as how to turn this into a full-time business venture so the owner can quit his other job? Prepare another income statement to support your idea.

Memo (use Word)

Interpret the results from the computations and explain how the information is useful. Write a four or five paragraph memo to the owner of the business. Start with an introduction and end with a recommendation. Each of the four or five paragraphs should have a heading.

Short essay to comment on the questions below (use Word).Start with an introduction and end with a summary or conclusion. Use headings. Maximum length of two pages.

· Why do many organizations make the effort to prepare a different type of income statement for internal purposes?

· Variable costing is not just about preparing income statements. Provide at least three scenarios in which understanding how costs behave is useful.

Assignment Expectations

Each submission should include two files: (1) An Excel file; and (2) A Word document. The Word document shows the memo first and short essay last. Assume a knowledgeable business audience and use required format and length. Individuals in business are busy and want information presented in an organized and concise manner.

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ACCOUNTING COST SYSTEMS AND COST BEHAVIOR

You are applying for a managerial position at an innovative and rapidly growing company. This is a dynamic company that wants an individual who adds value to the organization. Managers at this company wear many hats, so the position requires managing products, people, and financial aspects of running the company.

As part of the interview process, you are required to make a presentation covering four different topics, one per module for this course.

You choose the company and the new product that you want to showcase in your presentation. It can be real or fictitious (based on an industry). This is for background purposes only. The presentation is to showcase your abilities and what you can contribute to the organization.

IBIS World and BizStatshave estimates of cost of good sold and some other categories of operating expenses. Information about contribution margins are not available, but adding new products typically mean incurring both fixed and variable costs. Consequently, cost of good sold is a reasonable estimate. Net operating income as a percentage of sales or some variation thereof may also be relevant if the new product is expected to contribute significantly to the bottom line. As a candidate for a position you would not have internal information available, but being resourceful and being a skilled researcher are desired traits for the position. IBIS World also have a wealth of other market statistics that may be helpful. Use listed background material and other resources as needed.

Required:

Include the following items in your presentation.

· Present an idea for a new product.

· Describe the product.

· Show some cost estimates and pricing suggestion for this product based on research.

· What approach would you use to determine selling price (for example cost plus or target costing)? It is important when choosing a design.

· Explain your rationale for the pricing approach.

· Show expectations of growth and potential profit.

SLP Assignment Expectations

Submit a Power Point presentation or a Word Document. A Power Presentation should have no more than six slides and a Word document cannot exceed two pages. Use words, tables, and graphs to make a succinct presentation. Document all sources and provide links at the end. It is acceptable to add another slide or page to list the sources.

COST–VOLUME–PROFIT ANALYSIS

Case Assignment

The Annie Smith Dance Center

The Director of Annie Smith Dance Center is asking for assistance with the financial aspects of running a professional group of performers. She wants financial information presented in an easy to read format and a better understand of the profitability of the concerts and the organization as a whole.

The Annie Smith professional group features four dance concerts each year. Three of the dance concerts showcase a different genre. The fourth performance is a Christmas Spectacular, which is the most popular dance concert and is therefore scheduled every year. Ms. Smith has tentatively scheduled the following four dance concerts for the coming season. The schedule below shows the type and number of performances and direct cost per type of concert. Examples of direct fixed costs are costumes, rehearsals, royalties, guest artist fees, choreography, and salaries of production staff, music, and wardrobe for each of the four concerts.

Descriptions	Number of Performances	Cost per Dance Concert (direct fixed costs)
Hip Hop Concert	10	$45,000
Jazz and Tap Dance	5	88,000
Modern Dance	10	95,000
Christmas Spectacular	20	25,000
		$253,000

Additional costs:

Variable costs associated with each performance are shown below.

Musicians	$7,500
Rental of auditorium	2,500
Dancers' compensation	7,000

General administrative and operating costs for the dance center are:

Administrative staff	$185,000
Insurance	25,000
Marketing	215,000
General office expenses	90,000

	Lower Orchestra Section (A)	Upper Orchestra Section (B)
Descriptions	No. of Seats	Ticket Price	Tickets Sold per Performance	No. of Seats	Ticket Price	Tickets Sold per Performance
Hip Hop Performance	150	$85	100%	450	$50	90%
Jazz and Tap Dance	150	$85	100%	450	$50	60%
Modern Dance	150	$85	100%	450	$50	95%
Christmas Spectacular	150	$125	100%	450	$50	100%

Required:

Computations (use Excel)

· Summarize key financial information in a table as shown below.

Title
Name of Dance Concert	Revenues/Performance	Variable Costs/Performance	Contribution Margin/Performance	Total Contribution/Type of Dance Concert	Direct Fixed Costs	Segment Margin/Type of Concert
1.
2.
3.
4.
Total

· Prepare a segmented income statement in good format.

· Compute the number of performances required to break even for each concert. These are separate computations for each dance concert.

· Compute break even for the organization as a whole and express the result in revenues instead of the number of performances.

· Ms. Smith wants to performance group to show at least $150,000 in operating profit. What level of revenues does the performance group need to achieve to meet this goal?

· Give a recommendation about changes Ms. Smith can make to achieve the target profit. Support your idea with computations.

Memo (use Word)

Write a four or five paragraph memo to the owner of the dance center to assist her in interpreting the financial analysis. Start with an introduction and end with a recommendation. Each of the four or five paragraphs should have a heading.

Short Essay (use Word)

Start with an introduction and end with a summary or conclusion. Use headings.

· What are some shortcomings of multi-product even analysis?

· How does demand and resource constraints affect this type of analysis.

Assignment Expectations

Each submission should include two files: (1) An Excel file; and (2) A Word document. The Word document shows the memo first and short essay last. Assume a knowledgeable business audience and use required format and length. Individuals in business are busy and want information presented in an organized and concise manner.

COST–VOLUME–PROFIT ANALYSIS

Second part of the presentation. See background information for the module one SLP.

Required:

Include the following items in your presentation.

· What about special pricing for some markets or customers?

· Show effect on revenues and profitability based on stated assumptions.

· Potential advantages and disadvantages, both financial and non-financial.

· What are the relevant costs to consider?

SLP Assignment Expectations

Submit a Power Point presentation or a Word Document. A Power Presentation should have no more than six slides and a Word document cannot exceed two pages. Use words, tables, and graphs to make a succinct presentation. Document all sources and provide links at the end. It is acceptable to add another slide or page to list the sources.

Combine the submissions from prior module(s) into one file before uploading to the dropbo

TRANSFER PRICING AND RESPONSIBILITY CENTERS

Case Assignment

Coffee Maker's Incorporated (CMI)

Two divisions of a CMI are involved in a dispute. Division A purchases Part 101 and Division B purchases Part 201 from a third division, C. Both divisions need the parts for products that they assemble. The intercompany transactions have remained constant for several years.

Recently, outside suppliers have lowered their prices, but Division C is not lowering its prices. In addition, all division managers are feeling the pressure to increase profit. Managers of divisions A and B would like the flexibility to purchase the parts they need from external parties to lower cost and increase profitability.

The current pattern is that Division A purchases 3,000 units of product part 101 from Division C (the supplying division) and another 1,000 units from an external supplier. The market price for Part 101 is $900 per unit. Division B purchases 1,000 units of Part 201 from Division C and another 500 units from an external supplier. Note that both divisions A and B purchase the needed supplies from both the internal source and an external source at the same time.

The managers for divisions A and B are preparing a new proposal for consideration.

· Division C will continue to produce Parts 101 and 201. All of its production will be sold to Divisions A and B. No other customers are likely to be found for these products in the short term, given that supply is greater than demand in the market.

· Division C will manufacture 2,000 units of Part 101 for the Division A and 500 units of Part 201 for the Division B.

· Division A will buy 2,000 units of Part 101 from Division C and 2,000 units from an external supplier at $900 per unit.

· Division B will buy 500 units of Part 201 from Division C and 1,000 units from an external supplier at $1,900 per unit.

Division C Data 2014 Based on the Current Agreement

Part	101	201
Direct materials	$200	$300
Direct labor	$200	$300
Variable overhead	$300	$600
Transfer price	$1,000	$2,000
Annual volume	3,000 units	1,000 units

Required:

Computations (use Excel)

· Set up a table similar the one below to compute the difference between the current situation and the proposal for Divisions A and B. Design a different table for Division C.

Division A
	Current Situation	Proposal
	No. of Units	Purchase Price	Total Purchases	No. of Units	Purchase Price	Total Purchases
Internal purchases	3,000		$	2,000		$
External purchases	1,000			2,000
Total cost for part 101			$			$
Savings to Div. A						$

· Summarize the financial effects for the three divisions and the company as a whole in another table.

Memo (use Word)

Write a 4- or 5-paragraph memo to the division manager explaining the analysis performed. Start with an introduction and end with a recommendation. Each of the four or five paragraphs should have a heading.

Short Essay (use Word)Start with an introduction and end with a summary or conclusion. Use headings.

· Evaluate and discuss the implications of the following transfer pricing policies:

Transfer price = cost plus a mark-up for the selling division

Transfer price = fair market value

Transfer price = price negotiated by the managers

Why is transfer pricing such a significant issue both from a financial and managerial perspective?

Assignment Expectations

Each submission should include two files: (1) An Excel file; and (2) A Word document. The Word document shows the memo first and short essay last. Assume a knowledgeable business audience and use required format and length. Individuals in business are busy and want information presented in an organized and concise manner.

TRANSFER PRICING AND RESPONSIBILITY CENTERS

Third part of the presentation. See background information for the module one SLP.

Required:

Include the following items in your presentation.

· The organization is currently centralized, but is reviewing options to put a decentralized structure in place.

· You are asked to comment on responsibility centers and their functions.

· Cost centers can be a drain on an organization. Do you have any thoughts about limiting the number of cost centers and control costs? Present specific ideas.

SLP Assignment Expectations

Submit a Power Point presentation or a Word Document. A Power Presentation should have no more than six slides and a Word document cannot exceed two pages. Use words, tables, and graphs to make a succinct presentation. Document all sources and provide links at the end. It is acceptable to add another slide or page to list the sources.

Combine the submissions from prior module(s) into one file before uploading to the dropbox.

BUDGETING, VARIANCE ANALYSIS, AND PERFORMANCE EVALUATIONS

Case Assignment

T&P Fashion Shops

T&P Fashion Shops is a new chain that operates 10 stores in major malls throughout the United States. Each store manager is responsible for preparing a flexible budget for the store. T&P headquarters accumulates and analyzes the information for each store and in the aggregate.

Below follows some cost estimates for the Houston store.

T&P Fashions
Flexible Budget Information
Expense	Fixed	Variable
Cost of sales	$210,000	40%	$740,000
Management	27,000	12%	186,000
Shop assistants	162,000	8%	268,000
Rent	13,200	5%	54,450
Utilities	34,800		34,800
	$447,000		$1,283,250

Additional information

· The sales forecast for the year is $1,400,000.

· Variable expenses are based on revenues. Do note that percentage clause for rent only kicks in above $500,000 in sales.

· Other expenses are all specific to this store. Headquarters pay for marketing and corporate overhead expenses.

· T&P wants to see a flexible budget based on the sales forecast, including estimates for sales being 10% below budget and 10% above budget.

Actual results

T&P Fashions
Actual Results from Operations
Revenues	$1,325,000
Cost of sales	790,000
Management	208,000
Shop assistants	230,000
Rent	58,200
Utilities	31,000
Operating profit	$7,800

Required:

Computations (use Excel)

· Prepare a flexible budget in good format.

· Compute the flexible variances and indicate whether favorable or unfavorable.

· Headquarters are contemplating charging each store a 5% marketing expense based on sales. How will that affect the operating profit of the store and the money available for managerial bonuses based on actual results for the past year? Summarize the information in the table.

Memo (use Word)

Write a 4- or 5-paragraph memo to the division manager explaining the flexible budget variances; how to interpret the information; and what action, if any to take. Comment on the 5% marketing proposal too. Start with an introduction and end with a recommendation. Each of the four or five paragraphs should have a heading.

Short Essay (use Word)Start with an introduction and end with a summary or conclusion. Use headings.

· Discuss how to interpret static and flexible budget variances. How is the information useful in general?

· What are the benefits of variance analysis? How can such analysis be detrimental rather than beneficial to the organization?

Assignment Expectations

Each submission should include two files: (1) An Excel file; and (2) A Word document. The Word document shows the memo first and short essay last. Assume a knowledgeable business audience and use required format and length. Individuals in business are busy and want information presented in an organized and concise manner.

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BUDGETING, VARIANCE ANALYSIS, AND PERFORMANCE EVALUATIONS

Fourth and final part of the presentation. See background information for the module one SLP.

Required:

Include the following items in your presentation.

Performance measures. It is important to measure success of the organization and its managers.

· Suggest performance measures for

o divisions, product lines, etc.

o managers

· Comment on the measures selected and explain how they foster goal congruence for the organization and employees.

SLP Assignment Expectations

Submit a Power Point presentation or a Word Document. A Power Presentation should have no more than six slides and a Word document cannot exceed two pages. Use words, tables, and graphs to make a succinct presentation. Document all sources and provide links at the end. It is acceptable to add another slide or page to list the sources.

Combine the submissions from prior module(s) into one file before uploading to the dropbox.

Rubric

At Trident University, your assignments will be evaluated usinggrading rubrics.While every assignment is assessed using one of the rubrics, grading rubrics may differ across assignments. Should you need help locating the grading rubric for this SLP, be sure to watch the following video:http://permalink.fliqz.com/aspx/permalink.aspx?at=b13c1b2c864344a68565357ea2f9f7ff&a=e635c1442edf4f4f9952a5d4ddef7bf0

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