Compute variances using standard and actual costs

Assignment Help Accounting Basics

Reference no: EM132325832

Accounting Tools and Measures Assignment -

Learning Objectives

1.1: Prepare a performance report that shows either favorable or unfavorable variances.

2.1: Calculate the net present value.

2.2: Calculate the accounting rate of return.

2.3: Calculate the internal rate of return.

2.4: Calculate the payback.

2.5: Make investment decisions using calculations.

3.1: Differentiate between cost centers, profit centers, and investment centers.

4.1: Calculate both full cost and variable cost transfer pricing methods.

4.2: Compare the two transfer pricing methods and determine which method minimizes tax liability.

5.1: Compute variances using standard and actual costs.

6.1: Compute the breakeven point.

Overview - In this Performance Task Assessment, you will demonstrate your ability to use managerial accounting tools and measures appropriately. You are strongly encouraged to use the Academic Writing Checklist when completing this Assessment.

Your responses to this Assessment should:

Reflect the criteria provided in the Rubric.
Adhere to the required length.
Conform to APA style guidelines. You may use the Walden Writing Center's APA Course Paper Template

Professional Skills: Written Communication, Technology, and Critical Thinking and Problem Solving are assessed in this Competency

Instructions - This Assessment includes 6 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. Parts I, II, IV, and V require you to make calculations using spreadsheet software such as Excel. Part III, requires you to analyze various types of centers for a specific company. Part VI requires you to analyze data presented in the accompanying project documents and make decisions based on that data. Access the IG009 Assessment Scenarios document provided with this Assessment and analyze the appropriate scenario for each part.

Accounting Tools and Measures: Use managerial accounting tools and measures appropriately.

This assessment has six parts.

Part I: Performance Report and Variances

Sub-Competency 1: Prepare performance reports and variances.

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

Sub-Competency 2: Use net present value, accounting rate of return, internal rate of return, and payback to make investment decisions.

Access Part II of the IG009 Assessment Scenarios document. As the new product development manager, you are considering investment proposals for two mutually exclusive investment opportunities. The two proposals must be evaluated using net present value (NPV), accounting rate of return (ARR), internal rate of return (IRR), and payback. Review the cash flow information in the "Investments" section of the Assessment Scenarios document, and then analyze the investment proposals using Excel or another spreadsheet software to calculate NPV, ARR, IRR, and payback. Write a report that presents your findings (1-2 pages).

Your report should include the following:

Your calculations of NPV, payback, IRR, and ARR
An evaluation of each of the investment opportunities
Your recommendation for which investment opportunity should yield the highest

Note: Part II requires you to submit an Excel sheet tab and a section in Word. Be sure each is clearly labeled when you submit your Assessment.

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

Sub-Competency 3: Explain the differences between cost centers, profit centers, and investment centers.

Select a company that you are familiar with, or do some research on a company you are interested in, then determine what that company's cost centers, profit centers, and investment centers are (there may be more than one of each). Provide a rationale for your conclusions (3-4 paragraphs).

Part IV: Full Cost and Variable Cost Transfer Pricing Methods

Sub-Competency 4: Describe the effect of both full cost and variable cost transfer pricing methods.

Phipps manufactures circuit boards in Division A in a country with a 30% income tax rate and transfers these circuit boards to Division B in a country with a 40% income tax. An import duty of 15% of the transfer price is paid on all imported products. The import duty is not deductible in computing taxable income. The circuit boards' full cost is $1,000 and variable cost is $700; they are sold by Division B for $1,200. The tax authorities in both countries allow firms to use either variable cost or full cost as the transfer price. Using Excel or another spreadsheet software, prepare a summary that shows a comparison of the full cost transfer pricing method and variable cost transfer pricing method. Your summary should clearly show the total taxes the company would be subject to under each method.

Part V: Computing Variances Using Standard and Actual Costs

Sub-Competency 5: Compute variances using standard and actual costs.

Access Part V of the IG009 Assessment Scenarios document. You are the senior controller for Healing Touch, a manufacturer of high-quality products designed to help support healthy spines. Its newest product offering is a massage chair and you plan to perform a variance analysis of the chairs manufactured this month to determine if the standards are being met. Once you have completed the analysis, you plan to show it to the production department manager and ask for an explanation of any variances that you believe should be examined. Assuming that Healing Touch manufactured 500 massage chairs this month, use the data contained in Part V of the Assessment Scenarios document to calculate all materials and labor variances in Excel (or other spreadsheet software). Be sure to include price, quantity, wage rate, and labor efficiency variances.

Part VI: Break-Even Point

Sub-Competency 6: Compute the break-even point.

Access Part VI of the IG009 Assessment Scenarios document. Dr. Lucy Zang, a noted local podiatrist, plans to open a retail shoe store specializing in hard-to-find footwear for people with feet problems, such as bunions, flat feet, mallet toes, and diabetic feet. She has asked you to help her figure out what sales need to be each month to keep the store open, and has given you some basic numbers to work with. Using the estimates provided in Part VI of the Assessment Scenarios document, calculate the amount of sales the Happy Feet store must do each month to break even.

Attachment:- Assignment Files.rar

Reference no: EM132325832

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Reviews

len2325832

6/21/2019 2:56:42 AM

I kindly request you to please check and confirm if the attached solutions are aligned with the assignment requirement. This professor is very strict and will not allow resubmission so I need to be very sure prior if its met with objective point 3 Exceeding expectations. Please check professor's comments- If you look at what you recently submitted for IG009, you will see there are still issues. I’m not listening all but, one of the issues that I will mention pertains to the transfer pricing. I do not see anything in the prompt or the template that I provided you that refers to either "low country" or "high country". You do not need to tell me where these came from, but you do need to follow the sanctions as given in the letter sent to you today.

len2325832

6/21/2019 2:56:31 AM

You have one attempt left. Please be very careful that you use citations and references for everything that is taken from any source. I also suggest you review the plagiarism module again. Submit on time. This assignment will be in 2 files (1. APA for format & 2. Excel file) This Assessment requires submission of two (2) files. Save your files as follows: Save the Excel files for this Assessment as IG009_Excel_firstiniital_last name (for example, IG009_Excel_J_Smith). On your Excel file, create a tab for each spreadsheet, and label each tab with the appropriate part of the Assessment. Save the written parts for this Assessment in a Word document as IG009_ firstiniital_lastname. Use headings to identify each part of the Assessment. When you are ready to upload your completed Assessment, use the Assessment tab on the top navigation menu.

len2325832

6/21/2019 2:56:24 AM

Assessment Rubric - Response demonstrates the same level of achievement as “2,” plus the following: Budgeted and actual production volumes are indicated. Response includes a brief explanation of why this method is or is not preferred over the other methods. Response includes a brief explanation about why this method is inferior to the discounted cash flow methods. Calculation shows the present value of each cash flow. Response includes strengths and weaknesses of each method of calculation. Response includes an explanation of the purpose of each method. Response includes an explanation of why the transfer pricing method was chosen and why it minimizes tax liability.

len2325832

6/21/2019 2:56:15 AM

The variances are identified as either favorable or unfavorable. Response includes an explanation of the break-even point. Grammar, spelling, and mechanics reflect a high level of accuracy in standard American English and enhance readability. Writing is consistently well-organized. Introductions, transitions, and conclusions are used effectively to enhance clarity, cohesion, and flow. Excel spreadsheet includes format and design elements that bring enhanced clarity to the spreadsheet. Response clearly and comprehensively assesses the reasonableness of assumptions in a given argument. Response provides a detailed and compelling analysis of implications of fallacies and logical weaknesses in a given argument. Response justifies the reasonableness and need for assumptions in an original argument.

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