Six Parts Of The IG009 Assessment Scenarios Require

SIX PARTS OF THE IG009 ASSESSMENT SCENARIOS REQUIRE

This Assessment includes six parts, each related to a different case scenario. For each scenario, you will assume an important role with a fictional company and analyze various aspects of that company using accounting tools and measures, including calculations, analysis, and decision-making.

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Introduction

The comprehensive assessment encompasses six distinct parts, each designed to evaluate different managerial accounting skills such as variance analysis, investment appraisal, cost center identification, transfer pricing analysis, and break-even analysis. These components collectively provide a holistic understanding of managerial decision-making processes and financial analysis in varied business contexts.

Part I: Performance Report and Variances

In the first part, you are tasked with analyzing the performance of Honey Bear Confections (HBC), a company specializing in bear-shaped sweets with honey as a sugar substitute. The goal is to identify inefficiencies or productivity issues indicated by a static budget report. You will review the provided static budget data, then prepare a performance report utilizing spreadsheet software, such as Excel, to compare actual results against budgeted figures, calculating variances and identifying areas for improvement.

Part II: Making Investment Decisions Using NPV, ARR, IRR, and Payback

The second part involves evaluating two mutually exclusive investment proposals for new product development. You will analyze cash flow data using Excel or similar software to calculate key investment appraisal metrics: net present value (NPV), accounting rate of return (ARR), internal rate of return (IRR), and payback period. The objective is to assess each proposal's financial viability and recommend the best investment opportunity based on these measures.

Part III: Cost Centers, Profit Centers, and Investment Centers

In the third part, you will select a real or familiar company and identify its cost centers, profit centers, and investment centers. You are required to provide a rationale for your classifications, explaining how each type of center contributes to the company’s overall financial management and strategic objectives. This analysis will demonstrate an understanding of internal organizational structures and responsibility accounting.

Part IV: Full Cost and Variable Cost Transfer Pricing Methods

The fourth part focuses on transfer pricing strategies between divisions of a manufacturing company operating in different countries with varying tax rates and import duties. Using Excel, you will compare the total tax implications of using full cost versus variable cost transfer pricing methods. This involves calculating the taxes payable under each method, considering the 30% and 40% income tax rates, the 15% import duty, and the non-deductibility of the import duty.

Part V: Computing Variances Using Standard and Actual Costs

In the fifth part, you will perform a variance analysis on the manufacturing of massage chairs for Healing Touch. Utilizing data provided, you will calculate materials and labor variances—including price, quantity, wage rate, and efficiency variances—using spreadsheet software. This analysis aims to identify cost management effectiveness and areas requiring managerial attention.

Part VI: Break-Even Point

The final part involves calculating the break-even sales volume for “Happy Feet,” a retail shoe store catering to customers with feet problems. Based on provided estimates, you will determine the monthly sales level necessary to cover all fixed and variable costs, ensuring the store remains financially viable.

Conclusion

Together, these six parts cover a broad spectrum of managerial accounting concepts essential for effective business decision-making. Proficiency in spreadsheet-based analysis, financial metrics, cost management, and strategic evaluation will be demonstrated through the completion of these tasks. The subsequent section presents detailed responses and calculations for each part, employing appropriate financial formulas and analytical techniques.

References

  • Drury, C. (2018). Management and Cost Accounting (10th ed.). Cengage Learning.
  • Hilton, R. W., & Platt, D. E. (2013). Managerial Accounting: Creating Value in a Dynamic Business Environment (10th ed.). McGraw-Hill Education.
  • Horngren, C. T., Sundem, G. L., Stratton, W. O., Burgstahler, D., & Schatzberg, J. (2013). Introduction to Management Accounting (16th ed.). Pearson.
  • Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2018). Managerial Accounting (16th ed.). McGraw-Hill Education.
  • Block, S. B., Hirt, G., & Daniel, J. (2017). Foundations of Financial Management (15th ed.). McGraw-Hill Education.
  • Brigham, E. F., & Houston, J. F. (2019). Fundamentals of Financial Management (14th ed.). Cengage Learning.
  • Ross, S. A., Westerfield, R. W., & Jaffe, J. (2019). Corporate Finance (12th ed.). McGraw-Hill Education.
  • Van Horne, J. C., & Wachowicz, J. M. (2018). Fundamentals of Financial Management (14th ed.). Pearson.
  • Kaplan, R. S., & Atkinson, A. A. (2015). Advanced Management Accounting. Pearson.
  • Chenhall, R. H. (2018). Management Control Systems (13th ed.). Routledge.

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