Managerial Accounting FA19
Tasty Cookies, Inc. : A Managerial Accounting Case
SPRING 2021
ASSIGNMENT PART 3 – 25% of your grade – What-if Analysis
Part 3 - Prepare a What-if Budget Workbook (Instructions)
Once you are pleased with your excel workbook, create a copy and title it Name. ClassTime. What-if Budget. The objective of the what-if budget is to create a realistic scenario of a changing situation in your business. You are going to make assumption changes in your business and enter those assumption changes in your What-if Budget Recipe Sheet (green cells only) and Input Sheet (blue cells only) as follows:
· Increase the quantity of dozens of cookies sold by at least 30% for the quarter and assume this is outside your relevant range and capacity. Note that your increase does not have to be the same % change within each month, but the total number of dozens sold for the quarter must be at least a 30% increase…it can be more than 30%.
· Make at least 7 additional assumption changes in the following categories of assumptions. (You can have more than 7 changes if you wish). These are managerial changes that you determine are necessary due to your new volume being out of the relevant range AND the managerial changes necessary to achieve your new volume. Be sure that your changes formulate a cohesive story that you will discuss in the requirements for this “what-if” part of the project. Every change you make must be related to a managerial action
Part 3 – Analysis of the What-if Budget Workbook
a. Ratios affected
Discuss why profitability, liquidity, and solvency improved or deteriorated in the what-if analysis as compared to the original budget. Be sure to be specific about the action that ties directly to the improvement or deterioration in the ratio category.
. Discuss how DOL was affected by this what-if analysis. What are the implications of this change in DOL?
c. Recommendation - Discuss the risks vs. benefits of what-if budget and give a final recommendation to management as to whether they should approve this budget for action.
SEE EXHIBITS AND RUBRIC ON FOLLOWING PAGES
Tasty Cookies Case – Ru
ic
Points
Part 1 – Recipe, MOH Regression, and Input Sheet
Recipe worksheet
10
XXXXXXXXXXCo
ect recipe quantities, purchase costs, weight to volume conversions
XXXXXXXXXXDocumentation for purchase cost and weight to volume conversions
XXXXXXXXXXCo
ect calculation of Direct Material Cost
XXXXXXXXXXCo
ect calculation of Indirect Direct Material Cost
MOH Regression
6
XXXXXXXXXXCo
ect identification of x and y variable and co
ect regression output
XXXXXXXXXXCo
ect identification of the cost function
XXXXXXXXXXCo
ect Scatter-graph
Input Sheet
4
XXXXXXXXXXSales price per dozen cookies
XXXXXXXXXXContribution margin per dozen cookies
XXXXXXXXXXBreakeven point for the quarter in total (both Dollars and Units)
Total points – Part 1
20 %
Part 2 -Original Master Budget and related analysis
Sales/ cash collections budget
6
Direct Material Purchases / Cash Disbursements
7
Manufacturing overhead budget
3
Operating expenses budget
3
Contribution Margin Income statement
7
Cash Budget and Note Payable
8
Balance Sheet with co
ect ratio/DOL calculations
7
Analysis Questions related to part 2:
MOH Regression worksheet
XXXXXXXXXXInterpretation/implications of R2 and scatter graph (3)
3
CM Income Statement Analysis and Profitability analysis
XXXXXXXXXXMOS % - meaning and how compared to CM I/S XXXXXXXXXX)
XXXXXXXXXXPM Ratio% - why different among the months (3)
5
Profitability, Liquidity, Solvency Analysis
XXXXXXXXXXDescribe benchmark and limitations (1)
XXXXXXXXXXCompare profitability, liquidity, solvency of your business relative to benchmark
XXXXXXXXXXand possibly why different XXXXXXXXXX)
6
Total Points – Part 2
55 %
Part 3 – What-if Budget and related Analysis Questions
What if changes – are they co
ectly represented in the What if Budget? (2)
What-if Analysis
· Assumption changes, related managerial action to accommodate the change in relevant range and capacity (8)
· How/ why CM I/S, Cash Budget, Balance Sheet affected? (6)
· How/why Profitability, Liquidity, Solvency affected (6)
· How DOL was affected and implications (1)
· Recommendation and risk vs benefit of what if (2)
25
NOTE: Writing quality will be evaluated as well.
NOTE - accuracy and use of excel formulas and proper linking of cells and worksheets will be evaluated for each portion of the budget
Total points – Part 3
25 %
Total points
100 %
Budgeting Project – approximate timeline – 25 minutes for introduction and 2 weeks of class for Chapter 8 coverage and time to work on project
Based on 75 minute classes
Week 2 –
25 minute introduction
Due after Ch 1 and before Ch 5
30 minute introduction of project
· Students read the case before class and come with questions
· Basic instructor introduction – reasoning for 4 raw material groups, overall importance of project in the course and in their profession
· Instructor guides students in class to set their random values on both MOH regression sheet and on Input sheet
Week 6 -
After Ch 2
Project Part 1 is due
· Recipe sheet, MOH regression sheet with scattergraph and regression output, Input Sheet
· Instructor co
ects part 1 and notates e
ors
· Student must make co
ections notated in order to proceed to part 2
Week 7 – Class 1
Ch 8
50 minutes
· Intro to Budgeting – Discuss opening questions in Ch 8 powerpoint – key points include managerial process, advantages, master budget, questions to be answered for each budget
· Sales and Cash Collections Budget - Discuss answers to questions
25 minutes
· Students work on Budget for remainder of class
Week 7 – Class 2
Ch 8
30 minutes
· Raw Materials, Direct labor - Discuss answers to questions
45 minutes
· Students work on budgets for remainder of class
Week 8 – Class 3
Ch 8
30 minutes
· MOH and Oper Exp Budget – Discuss answers to questions
45 minutes
· Students work on budgets for remainder of class
Week 8 – Class 4
Ch 8
30 minutes
· CM Income Statement, Cash Budget –
· Discuss difficult inte
elationships between the excel spreadsheets for these two budgets
· answers to questions
45 minutes
· Students work on budgets for remainder of class
Week 10 -
After Ch 13
Project Part 2 is due
· Full Master Budget Workbook is due and answers to Part 2 analysis questions
· Instructor co
ects part 2 and notates e
ors
· Student must make co
ections notated in order to proceed to part 3
CWeek 13 / 14 –
Toward end of course
Project Part 3 is due
· What if Budget Workbook is due and answers to Part 3 analysis questions