Basic requirements are included in the pdf attached. Create a presentation slides and divide tasks to three students.
Use the concepts from
Chapter 1 Management Accounting and Corporate Governance
Chapter 2 Cost Behavior, Operating Leverage, and Profitability Analysis
Chapter 3 Analysis of Cost, Volume, and Pricing to Increase ProfitabilityChapter 4 Cost Accumulation, Tracing, and AllocationChapter 5 Cost Management in an Automated Business Environment: ABC, ABM, and TQMChapter 6 Relevant Information for Special Decisions
Reminder:
1) Remember, ABC is for allocating overhead costs, NOT direct costs.
2) For part 1, to provide more in-depth suggestions, you might need to assume the prices of your products based on the average product cost per unit (refer to the Unterman case in chapter 5).
Background
XYZ is a handbag manufacturing company. It has two
departments: Women and Men.
• Men’s handbags are produced mainly by machines, have
limited handmade work, and have less styles and the
styles are updated only yearly.
• Women’s handbags are mainly handmade by labors, with
some machine processes, and have many different styles,
and they update the styles every season.
Assumptions:
a)
Products from both departments are produced at the same
factory and they share the same machines.
b)
Products from both departments have the same direct
material costs per unit and same direct labor costs per hour
c)
Both departments sold same number of units last year
Project Scope
1.
Use what you learned in Chapter 5, design a typical ABC (Activity Based Costing) system to allocate
overhead costs to each department. Make up 2 indirect cost items per each activity center, as well as
key direct costs. After allocating the overhead costs to each department, calculate the
manufacturing product cost for the products from each department. Make suggestions to improve
the profitability of the company based on the results.
2.
Use the concept you learned in Chapter 1 – Chapter 6:
a) Make up some reasonable upstream and downstream costs, calculate the end-to-end average
costs of products from the Women department
b) If the company were to add 20% margin on end-to-end average costs of women’s handbags,
what should be the retail price of these handbags?
c) Assume there is an important client asked for a special discount (30% lower than retail price
that you calculated in part b). Perform special decision analysis and explain why the company
should or should not accept the offer.
**You should make up your own manufacturing overhead costs and other costs for this project. But no
additional research is needed. Use reasonable make-up numbers**
Project instructions:
• 3 students a team.
• As part of the managerial accounting team, your team would give a presentation to the CFO of
the company regarding your analysis and recommendation (no more than 10 minutes) ***Every
member in the team has to present***
• The score will be based on (Total Points -20):
• Clarity and organization of the presentation material (Points: 3)
• Project Part 1: (Points: 7)
• Design of the ABC
• Accuracy of the calculation of the manufacturing product costs per product
• Whether the analysis and suggestions are reasonable
• Project Part 2: (Points: 7)
• Calculation of the average end to end product costs and retail price
• Analysis and suggestions of whether the special offer should be accepted
• Display of understanding of the project and the related concepts via presentation and Q&A (Points:
3)
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