Assignment/Case Study
ACC 202
Course Code | ACC 202 |
Percentage towards final exam | 20% (20 marks) |
Date of submission | 10th December 2022 5:00 pm |
Sections | 145.147.148.5.7 |
Format | Section 1: Case study Juliette’s lemonade stand (10 marks, CLO 2.1, 2.2, 3.1) Section 2: Theory of Constraint Case Study, Analysis, Application Question (5 marks, CLOs 2.2, 2.3) Section 3: Variance Analysis (5 marks, CLO1.3, 2.2) |
Instructions:
- ACC 202 Assignment/Case study has three sections.
- Section 1 is a Harvard Publishing case study which can be downloaded and purchased from the link provided.
- Please review the instructions in detail, the case study will be discussed in class and detailed instructions are attached with the case study as to how to complete it.
- This is a simple management accounting case in which we look at a real-life scenario and try to develop and improve the accounting information to improve the business.
- Sections 2 and 4 are calculative most of the materials are covered in Chapters 2, 3 and 4 to solve the questions. You will need to understand the question properly in order to calculate the value correctly. Please consult the book provided for more information.
- Section 3 is theory-based. Do some revision on the Theory of constraints to answer the question. This is from Chapter 4.
- Any questions please let me know!
Kind regards and Best of luck
Dr Nazia Adeel
Section 1 (10 marks)
Please download the Harvard case study from the following link by paying the account $4.25. Please review it carefully and try to answer the questions in the end. We will discuss the case study in class and try to learn how to solve it.
From the case study please solve the following questions:
Question 1: Prepare Victor’s preseason balance sheet. (3.33 marks)
Question 2: Prepare Victor’s post-season Income statement (3.33 marks)
Question 3: Prepare Victor’s post-season balance sheet. (3.33 marks)
Section 2 (5 marks)
Theory of Constraints
For this case study please read carefully the information provided about the company in the paragraph about a business expansion project. Identify all the possible “constraints” the company is facing in this particular case and classify them according to their type. Any cost that the company needs to pay to remove the constraint will be an additional cost. They will need to plan with the budget so that they can achieve their target. For example, if a constraint involves problems with raw material/inventory it will be a physical constraint, if a constraint involves policy from the government, it will be a policy constraint and vice versa. In the given table write each constraint and put an X under the correct type of constraint.
Salad Express is a healthy eating business and is very popular in Italy. Salad Express is looking forward to expanding its business in Tunisia and opening a manufacturing plant there. There will be some issues in business expansion in a new country. They are looking forward to some challenges, for example, cultural are religious challenges, given Tunisia has both Muslim and non-Muslim customers. The company will need to make some amendments to its inventory, especially around non-halal raw materials or additives. Also, the company is looking for information on halal certification as it will be an additional cost. It appears the company might find some challenges in the market when it will start its business. Another issue is the policy of the government which enforces all international firms operating in the county to get compulsory halal certification.
During the planning meeting, the CEO was provided with some early information on the kind of equipment that is available for processing. It was learned that a new processing plant will also need to be installed due to the absence of a similar facility available there. The new plant will need more manpower and there will be an additional cost to train labour. The CEO suggested employing Mr Smith, the HD Director to train the staff ahead before the commencement of the plant. Mr Smith has enjoyed special treatment from the boss even though he is not punctual and has missed some deadlines in the last year. The company also sees problems ahead with staff training. Mr Smith does not have previous experience in teaching/training staff from different cultural backgrounds. The Project Manager has suggested hiring a local trainer who is familiar with the local language and culture of labour but the CFO has not considered this suggestion. Also, it is expected in the Tunisian market a typical market issue is the availability of affordable transport and storage facility. There have been some protests from the local labour over the petrol prices and every day the market needs to adjust to the new conditions.
Your job is to identify all the constraints from the given paragraph. Make a list of these in the first column of the table below, and add X to the kind of constraint.
For example, the first constraint, new equipment needed has been done for you. Also, in the last column add any suggestions that you might have to help with the constraint or to remove it completely.
Identify Constraints | Physical constraint | Policy Constraint | Paradigm constraint | Market constraint | Suggestion for solution | |
New equipment needed | X | Market research Industry analysis Cost-benefit analysis Capital budgeting decision to buy new equipment. | ||||
Section 3 (5 marks)
Variance Analysis
Paulson’s Piano Service, Inc. is trying to establish the standard labor cost of tuning a typical piano. The following data have been collected from time and motion studies conducted over the past three months.
Labor hours tuning:
Actual time spent on tuning a piano 1.25 hours
Setup and downtime 5% of actual labor hour
Travel and rest periods 15% of actual labor hour
Labor hour wage:
Hourly wage rate $50
Fringe benefits 20% of wage rate
Payroll taxes 12% of wage rate
Instructions
(a) Determine the standard direct labor hour per each piano that is tuned.
(b) Determine the standard direct labor hourly rate.
(c) Determine the standard direct labor cost per each piano that is tuned.
(d) If it took 1.65 hours to tune a piano at the standard hourly rate, what was the direct labor quantity variance?
(e) During the month of May, Paulson’s Piano service tuned 80 pianos. The average time spent on each piano was 1.75 hours. The average cost per hour was $62.25 per hour. Paulson’s had to hire some less experienced part-time help in order to handle the demand.
(1) Calculate the direct labor price variance.
(2) Calculate the direct labor quantity variance.
(3) Calculate the total direct labor variance.
(4) Explain what might have caused the variances.