ACC 601 Managerial Accounting Group Case 3 - 160 Points Inst ✓ Solved

Acc 601 Managerial Accounting Group Case 3 160 Pointsinstructions1

Complete the following activities as a group, using Excel or Word, and include all supporting calculations. Add only the names of group members who participated. Submit one copy via Moodle before the end of Module 7. The assignment includes multiple parts: capital budgeting, master budgeting, variance analysis, ROI and residual income evaluation, cash flow statement preparation, and a case analysis on data security breaches.

Part A: Capital Budgeting Decisions

Chee Company proposes an investment requiring $240,000 for equipment, with annual cash inflows of $50,000, no salvage value, an 8-year lifespan, and a 10% required rate of return. Assets will be depreciated straight-line. Calculate the net present value (NPV) and internal rate of return (IRR) to assess if this is a good investment.

Part B: Master Budget

You are tasked with preparing a master budget for Earrings Unlimited for the second quarter. Using provided sales data, inventory requirements, purchase and payment schedules, operating expenses, equipment purchases, dividends, and balances, prepare detailed schedules for:

• Sales budget by month and total
• Cash collections by month and total
• Merchandise purchases budget in units and dollars by month and total
• Cash disbursements for merchandise purchases by month and total
• Cash budget, determining borrowing needs to maintain at least $50,000 cash balance
• Budgeted income statement for the quarter using the contribution margin approach
• Budgeted balance sheet as of June 30

Part C: Variance Analysis for Decision Making

Bronfenbrenner Co. uses a standard cost system for its single product. Given standard costs, actual units produced, raw materials purchased and used, direct labor hours and costs, and variable overhead incurred, calculate the following variances:

• Materials price and quantity variances
• Labor rate and efficiency variances
• Variable overhead spending and efficiency variances

Discuss the importance of variance analysis in managerial decision-making.

Part D: Evaluation of Decentralized Organizations

Clipper Corporation had $380,000 net income, $2,000,000 average assets, and a 18% required ROI. Calculate ROI and residual income. Evaluate whether a $70,000 project with $12,950 income adds value, considering ROI and residual income perspectives, and manager incentives.

Part E: Preparing Statement of Cash Flows

Using Clipper’s balance sheets and net income, prepare an indirect-method statement of cash flows, including operating, investing, and financing activities, and explain the cash flow changes during the year.

Part F: Data Security Breach Case Analysis

Analyze the implications of a data breach at EducationS Review, involving exposure of personal student data over seven weeks. Discuss the importance of data security, potential risks, and best practices for protecting sensitive information in online environments.

References

• Graham, A. (2014). IT security and control considerations. Journal of Cybersecurity.
• Higgins, R. (2012). Financial Management: Principles and Applications. McGraw-Hill Education.
• Lee, T., & Carter, S. (2014). Principles of Managerial Finance. Pearson.
• Slack, N., et al. (2016). Operations Management. Pearson.
• Ross, S. A., Westerfield, R. W., & Jaffe, J. (2013). Corporate Finance. McGraw-Hill Education.
• Horngren, C. T., et al. (2014). Introduction to Management Accounting. Pearson.
• Block, S. B., et al. (2014). Foundations of Financial Management. McGraw-Hill Education.
• Kaplan, R. S., & Cooper, R. (1998). Cost & Effect: Using Integrated Cost Systems to Drive Profitability and Strategic Management. Harvard Business School Press.
• Jones, K., & Bartlett, L. (2014). Managing Data Security in Organizations. Journal of Information Systems.
• Shim, J. G., & Siegel, J. G. (2012). Financial Markets and Institutions. McGraw-Hill Education.