MGMT E XXXXXXXXXXManagerial Accounting Case Assignment
Spring 2019 – Dr. Gandevani
Submit your answers for the following case in a PDF file by 11:59 pm, April 8, 2019 EST on Canvas
Assignment. There is a 10 pages maximum limit for the case, there is no minimum as long as required
questions are addressed fully. The case is worth 100 points.
Good Luck to you all!
Dr. Gandevani
Case info:
Harvard Square Inc., a leading manufacturing company has two main lines of products: Traditional and
Modern with unit sales prices of $400 and $550. Cu
ently manufacturing overheads are applied as
$580 per direct labor hours. Below is some internal company information.
Harvard Square
Partial budgeted statement of gross margin 2019
Products
Traditional Modern Total
Sales in units XXXXXXXXXX
Beginning inventory $ XXXXXXXXXX,000.00 $ XXXXXXXXXX,000.00 $ XXXXXXXXXX,350,000.00
Direct material $ XXXXXXXXXX,500,000.00 $ XXXXXXXXXX,375,000.00 $ XXXXXXXXXX,875,000.00
Direct labor $ XXXXXXXXXX,962.50 $ XXXXXXXXXX,482.50 $ XXXXXXXXXX,445.00
Ending inventory $ XXXXXXXXXX,000.00 $ XXXXXXXXXX,000.00 $ XXXXXXXXXX,350,000.00
Overhead
eakdown in percentage
Machining 50.00%
Assembly 25.00%
Material Handling 7.00%
Inspection 18.00%
Total 100.00%
Products
Cost pool info for 2018 Traditional Modern
Direct labor hours XXXXXXXXXX
Machine hours XXXXXXXXXX
Assembly hours XXXXXXXXXX
Material handling parts XXXXXXXXXX
Inspection hours XXXXXXXXXX
Product
Projections 2020 Traditional Modern
Ending inventory $ XXXXXXXXXX,000.00 $ XXXXXXXXXX,000.00
Sales in units XXXXXXXXXX
Direct material, direct labors and total overhead are expected to increase by 10% each in 2020.
Unit sale prices for both products are expected to increase by $25 each in 2020
Percentage of overhead
eakdown remains the same in 2020
The cost drives hours for overhead are staying the same in 2020 (Hint: Cost per hour will change)
There are two clients with special orders for traditional product. The two clients ordered the
same number of units
You tracked their COGS by its extra number of specifications per units by month in 2018
Client one in 2018 # of specifications COGS
Jan 75 $ XXXXXXXXXX,000.00
Feb 55 $ XXXXXXXXXX,000.00
Mar 100 $ XXXXXXXXXX,000.00
Apr 150 $ XXXXXXXXXX,000.00
May 55 $ XXXXXXXXXX,000.00
Jun 27 $ XXXXXXXXXX,000.00
Jul 19 $ XXXXXXXXXX,000.00
Aug 27 $ XXXXXXXXXX,000.00
Sep 58 $ XXXXXXXXXX,000.00
Oct 71 $ XXXXXXXXXX,000.00
Nov 38 $ XXXXXXXXXX,000.00
Dec 114 $ XXXXXXXXXX,000.00
Total 789 $ XXXXXXXXXX,000.00
Client two in 2018 # of specifications COGS
Jan 83 $ XXXXXXXXXX,000.00
Feb 63 $ XXXXXXXXXX,000.00
Mar 128 $ XXXXXXXXXX,000.00
Apr 158 $ XXXXXXXXXX,000.00
May 63 $ XXXXXXXXXX,000.00
Jun 42 $ XXXXXXXXXX,000.00
Jul 35 $ XXXXXXXXXX,000.00
Aug 41 $ XXXXXXXXXX,000.00
Sep 69 $ XXXXXXXXXX,000.00
Oct 85 $ XXXXXXXXXX,000.00
Nov 50 $ XXXXXXXXXX,000.00
Dec 124 $ XXXXXXXXXX,000.00
Total 941 $ XXXXXXXXXX,000.00
Required (Do not round down in calculations until the final answer at two decimal point.)
1. Prepare a gross margin table based on traditional costing method with sales and COGS in total dollars
for 2018 for both product lines.
2. Prepare a gross margin table based on activities method with sales and COGS in total dollars for 2018
for both product lines.
3. What does the information in both 2018 tables tell you?
4. Prepare a gross margin table based on activities method with sales and COGS in total dollars for 2019
for both product lines.
5. Calculate the fixed cost and variable cost components of COGS for the two clients using the least
squares regression method. Show your work and write out the regression model equation for each
client.
6. Discuss the two clients COGS in terms of fixed cost and variable cost according to special
specifications.
Case ru
ic
Topics Excellent Good Needs improvement scores
Question 1 All calculations are co
ect with GM table
clearly
eakdown of all costs for COGS.
13-15
Tables are clearly presented with Sales,
OH, COGS and GM. Some minor e
ors
on calculations
6-12
Sales, Overhead, COGS and
Gross Margin calculations are
inco
ect. No tables are
presented
0-5
15
Question 2 All calculations are co
ect with all
elated tables clearly and logically
presented
17-20
Three tables are presented for OH
eak down, cost driver per unit and
gross margin calculations. Calculations
are mostly co
ect with minor e
ors.
6-16
Calculations are inco
ect for
OH
eakdown, Cost driver
per unit and GM. No table
presented for the
calculations.
0-5
20
Question 3 Co
ect analysis of the traditional costing
vs. activities costing for the two products
and total GM. Clear and logical
discussion of COGS and GM for both
products. Actual numbers are discussed.
8-10
Some co
ect analysis of the traditional
costing vs. activities costing for the two
products and total GM. Some key issues
are missed in the analysis.
4-7
Inco
ectly analysis of the
traditional costing vs.
activities costing for the two
products and total GM.
0-3
10
Question 4 All calculations are co
ect with all
elated tables clearly and logically
presented. Calculations has taken the
2xx1 projections in to consideration
17-20
Three tables are presented for OH
eak down, cost driver per unit and
gross margin calculations. Calculations
has taken the 2xx1 projections in to
consideration. Calculations are mostly
co
ect with minor e
ors.
6-16
Calculations are inco
ect for
OH
eakdown, Cost driver
per unit and GM. No table
presented for the
calculations.
0-5
20
Question 5 All calculations are co
ect. Works are
fully shown either by formula or by
egression table output. Regression
Dependent and independent variables
are co
ectly labeled. Work is partially
shown either by formula or by
Regression table output. Regression
model is clearly written out (Y = M +
Dependent and independent
variables are switched.
Calculations are coefficients
15
model is clearly written out (Y=M + BX).
There are no e
ors.
13-15
BX). There are some minor calculation
e
ors
6-12
are inco
ect. Does not show
work on calculations
0-5
Question 6 Able to explain all relationship of fixed
and variable costs to special
specifications based on the regression
models for both clients. Dependent
variable units of measurement are
mentioned and clearly labeled the exact
number for fixed cost and variable cost
for both clients.
8-10
Able to explain some of the
elationships of fixed and variable costs
against special specifications for both
clients. Dependent variable units of
measurement are omitted and /or
other key explanation missing.
4-7
Unable to explain the
elationship of fixed and
variable costs against special
specifications for both
clients.
0-3
10
APA style* and
citations
Proper APA, 6th edition in-text and no
need for end-text citations unless
outside text is used in the case by the
students.