Assessment 2

Create a 9-slide presentation in which you analyze cost accounting practices to make a recommendation about whether or not to accept a purchase offer at a lower price than normal. You may write a 23 page supporting report.

Collapse AllIntroduction

This portfolio work project will help you to assess a request, complete an analysis to understand the impact on an organization, provide a recommendation, and communicate that recommendation.

Scenario

The Acme Pickle Company has distributed pickles under the “Florida’s Best” brand for eight years from its production facility in Jacksonville, Florida. It sells the pickles to stores in the southeastern United States. Acme normally produces between 8,000 and 10,000 cases of pickles a month but has the capacity to produce 12,000 cases without adding equipment or personnel.

The owner of a twenty-store supermarket chain in Wisconsin, called Super Deals, visits friends in Florida and is impressed with the quality of “Florida’s Best” pickles. He approaches you, an Acme Pickle account manager, with an offer to buy 2,000 cases of pickles to use in a special promotion at his stores. He is thinking of something such as:

“Free jar of Florida’s Best pickles with every purchase of forty dollars or morethis month only!”

He offers Acme a price of $9.50 per case, knowing that it is a very substantial discount from the normal selling price of $20 a case. Acme’s management is inclined to turn the offer down, because their cost is calculated at $10.00 a case. They believe they would lose money if they sold at $9.50 a case. You, on the other hand, believe that some errors have been made in the cost accounting.

Your Role

You are the account manager for Acme Pickles.

Requirements

Your analysis for the controller and sales manager is needed to suggest a different way of calculating the pricing of the pickles that may be lower. As part of your analysis, address the following items:

• Explain why some production costs are variable and some are fixed.
• Analyze the benefit of recalculating the cost of pickle production.
• How would you recalculate it?
• What would the result be?
• What is the benefit to the company of recalculating the cost?
• Analyze how financial accounting of production cost differs from managerial accounting of production cost.
• Explain the difference between the two accounting methods.
• Identify the benefits and drawbacks of each method.
• Recommend a plan of action to management regarding Super Deals offer.

Below is the cost report for a recent month. In this month, Acme produced 9,000 cases and sold them at $20 per case, which is Acme’s normal selling price. Nine thousand cases are well beyond Acme’s break-even point, enabling Acme to record a substantial profit at the nine-thousand-case level.

Acme Pickle Company Cost Report

ItemCostCucumbers$15,000Spices and vinegar11,000Jars and lids10,000Direct labor, paid by the case30,000Line supervisors, on salary10,000Depreciation on factory10,000Property taxes on factory3,000Insurance on factory1,000Total Costs:$90,000Cost per case (9,000 cases produced) $10.00

Deliverable Format

Your team lead wants to share this analysis across remote locations of the organization and is hoping you will set the standard for how analyses and decisions of this type should be presented and supported. Your team has requested a presentation (including slides and notes). Prepare a presentation of at least nine slides using PowerPoint or software of your choice detailing your recommendation and the information you used to make your recommendation. You must provide detailed speaker notes, including citations on slides and in Notes area of the slide. You are required to add a recorded voice-over in which you present and interpret data. The voice-over does not replace your Notes section; you must still have written speaker notes for each slide.

Recommendation requirements:

• Presentation slides:
• Create at least nine slides detailing your recommendation and the information you used to make your recommendation.
• Include additional details as slide notes.

Related company standards:

• The recommendation report is a professional document and should therefore follow the corresponding MBA Academic and Professional Document Guidelines, including single-spaced paragraphs.
• In addition to the presentation or report materials, include:
• Title (slide or page).
• References (slide or page).
• Appendix with supporting materials.
• At least two APA-formatted references.

Faculty will use the scoring guide to review your deliverable as if they were the controller or sales manager. Along with reviewing the content, they will also review the way you present this content. Review the scoring guide prior to developing and submitting your assessment.

ePortfolio

This portfolio work project demonstrates your competency in applying knowledge and skills required of an MBA learner in the workplace. Include this in your personal .

Competencies Measured

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies through corresponding scoring guide criteria:

• Competency 1: Explain how accounting concepts and practices impact financial reporting.
• Explain why some production costs are variable and some are fixed.
• Competency 2: Apply principles of accounting to assess financial performance.
• Analyze how financial accounting of production cost differs from managerial accounting of production cost.
• Competency 3: Analyze accounting information to support business decisions.
• Analyze the benefit of recalculating the cost of pickle production.
• Recommend a plan of action to management.
• Competency 4: Communicate financial information with multiple stakeholders.
• Communicate accounting information clearly.

Scoring Guide

Use the scoring guide to understand how your assessment will be evaluated.

Collapse AllCriterion 1

Explain why some production costs are variable and some are fixed.

Distinguished

Explains why some production costs are variable and some are fixed and provides examples.

Proficient

Explains why some production costs are variable and some are fixed.

Basic

Identifies fixed and variable production costs but does not explain why they are so.

Non Performance

Does not explain why some production costs are variable and some are fixed.

Criterion 2

Analyze the benefit of recalculating the cost of pickle production.

Distinguished

Analyzes the benefit of recalculating the cost of pickle production and includes examples of benefits to the company.

Proficient

Analyzes the benefit of recalculating the cost of pickle production.

Basic

Explains that the production cost can be recalculated but does not explain the benefits.

Non Performance

Does not analyze how the production cost can be recalculated.

Criterion 3

Analyze how financial accounting of production cost differs from managerial accounting of production cost.

Distinguished

Analyzes, in detail, how financial accounting of production cost differs from managerial accounting of production cost and provides examples illustrating the differences in taxes and profits.

Proficient

Analyzes how financial accounting of production cost differs from managerial accounting of production cost.

Basic

Explains the difference between managerial and financial accounting but does not analyze the difference it would make in the production cost of pickles.

Non Performance

Does not analyze how financial accounting of production cost differs from managerial accounting of production cost.

Criterion 4

Recommend a plan of action to management.

Distinguished

Recommends a plan of action to management using sound financial information to support the recommendation.

Proficient

Recommends a plan of action to management.

Basic

Suggests potential actions to management.

Non Performance

Does not recommend a plan of action to management.

Criterion 5

Communicate accounting information clearly.

Distinguished

Communicates clearly and engages the reader with the fluidity of expression. There are few if any errors of mechanics, grammar, or style.

Proficient

Communicates accounting information clearly.

Basic

Communicates accounting information, but some information is not clear.

Non Performance

Does not communicate accounting information effectively.

Use the resources linked below to help complete this assessment.

Collapse AllCost Accounting and Budgeting

The following reading provides information on cost accounting and budgeting:

• Marshall, D. H., McManus, W. W., & Viele, D. F. (2023). Accounting: What the numbers mean (13th ed.). McGraw-Hill.
• The following chapters are most appropriate for this week:
• Chapter 12, “Managerial Accounting and Cost-Volume-Profit Relationships.”
• .
• Chapter 14, “Cost Planning.”
• .

Production and Price Decisions

The following reading addresses making production and pricing decisions:

• Marshall, D. H., McManus, W. W., & Viele, D. F. (2023). Accounting: What the numbers mean (13th ed.). McGraw-Hill.
• Chapter 13, “Cost Accounting and Reporting.”
• .