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Management Accounting for Business Decisions

Paper, Order, or Assignment Requirements
Management School
Department of Accounting and Finance
AcF 213 Coursework Question
Management Accounting for Business Decisions
Michaelmas Term 2014
CoolSchool and Scrubs plc background
CoolSchool and Scrubs both manufacture uniforms. Both companies are struggling due to the
current economy and are planning to merge. CoolSchool’s main production area is school
uniforms. This is a seasonal product as they deliver their products to schools a week before
the start of the school year. Scrubs produces uniforms for hospital staff. Both companies have
consulted with their financial department and received a report stating the benefits of the
merger. However, there is some concern with respect to the differences in managerial
accounting procedures. The main differences are stated below.
CoolSchool delivers to a fixed number of schools each year. The schools provide CoolSchool
with the exact enrolment number two weeks before the start of school year. Since it takes
more than a week to produce all the uniforms, CoolSchool uses last year’s enrolment number
for each school to start production, when the final number comes in two weeks before start of
term the company compares the production to the final number and produces extra if
necessary. If they have made too many uniforms they keep them until the next year,
assuming the uniform logo, colours… do not change.
Scrubs delivers to a fixed number of hospitals. The hospitals require new uniforms every 4
months. Scrubs knows the staff numbers and is able to perfectly predict the number of new
uniforms that need to be delivered every 4 months.
Unplanned orders
Occasionally both companies get a small one-off order, like special uniforms for a school
event or a small number of uniforms for new staff. While CoolSchool is eager to accept these
offers to boost customer satisfaction, Scrubs refuses. Scrubs argues that these orders disrupt
the normal production process. In the future after the merger, Scrubs would prefer not taking
these orders either. Especially, since schools don’t want to pay the full price for specialoccasion
uniforms and Scrubs claims these orders are not profitable.
Cost tracing, cost allocation and pricing
CoolSchool has been producing uniforms for many years and has developed historical cost
standards that are used to determine the price, based on a 25% mark-up. These standards
consist of all cost that can be traced to the cost object. The Company makes most of the
uniforms well in advance and is able to predict if the standard will be met. Scrubs:
Scrubs uses market information to renegotiate the price per uniform with the clients on an
annual basis. They allocate overhead based on machine hours and compare the full cost after
delivery with the selling price. This information is then used in future negotiations.
Employee management
CoolSchool pays all employees a basic wage and a bonus tied to company profit. If the
company makes less than 80% of the planned profit, there is no bonus. If the profit is between
80% and 120% of the planned profit, the bonus is 0.5% of the profit. If the profit exceeds
planning by 120% CoolSchool assume something exceptional happened and the bonus is
capped at a performance equal to 120%.
Scrubs ties the salary to output. Each employee gets awarded a fixed amount for each
uniform produced in their unit. E.g. the department where the logo gets stitched to the
uniforms gets a bonus for each logo stitched on.
CoolSchool uses budgeting and the bill of materials (i.e. a list of the raw materials, subassemblies,
intermediate assemblies, sub-components, parts and the quantities of each
needed to manufacture an end product.) to plan their inventory carefully. Even though most of
the production is predictable the company prefers having buffer inventory.
Scrubs is in the process of implementing Just-in-time (JIT).
In your role as management accountant for the merger, reporting to the managing director,
write a focused report assessing the management of both companies, providing any
suggestions for improvements that you think are necessary.
Focus on the current processes in both companies at the moment and assess if they can be
implemented in the new merged company.
-No calculations are required for this report. It is your job as a management accountant to
explore the opportunities for changes and discuss the difficulties attached to them.
– Make sure you discuss all items.
– Elaborate more on the issues you think are key to the Company. Write down any
assumptions made in your thought process.
The report should be word processed in Microsoft Word and the word limit is 1500 words.
Reports must contain a bibliography and you should ensure any sources, quotes etc are
correctly referenced. Marks will be awarded for good presentation in your report. Any
supplementary material should be included in an appendix. Appendices will not be included
within the word count, but it should not be seen as a dumping ground for material exceeding
the word limit, and will be included if it is used for this purpose. Attached to this handout is a
copy of the feedback form that will be used in assessment of your coursework assignment.SUBMISSION OF COURSEWORK & COURSEWORK DEADLINE:
All coursework should be submitted both in hard copy (to the box outside C38 Management
School) and electronic form (via the Moodle web site for the course) by the deadline. Use
Microsoft Word to prepare your report. If anyone is unable to do this, they should consult
me as soon as possible.
The deadline for this coursework assignment is 11:00 am on Monday 8th December 2014
(Week 10).
Your coursework should be accompanied by a coursework declaration sheet (available from
document wallets outside C38 Management School or from Moodle). Please post your
assignment and declaration form in the box outside C38 Management School and submit in
electronic form by the same deadline on Moodle. This is a strict deadline and penalties will
be imposed for late submission as per the Departmental Guidelines.
Please note: The Department reserves the right to adjust coursework marks after coursework
has been returned to students in order to ensure that the coursework marks have an
appropriate distribution.GUIDANCE ON REPORT WRITING:
As a brief guide, your written report should include:

An executive summary, which summarises your main findings during the project.

(This should be no more than 250 words long and is included in the word count).
This essentially describes the purpose of the report, the approach taken, major
conclusions and recommendations.

Table of contents. This should list all the major sections in your report (not included

in the word count).

Introduction. Describe what the issue is and its context. Explain why it is an issue

and how the issue is addressed (briefly).

Main body of report. Explain (i) the purpose of the report; (ii) when, where, how and

by whom the study was conducted; (iii) any findings or conclusions; and (iv) any
recommendations made

Conclusions and Recommendations. Your report should describe the findings

derived from the analysis of the issue. The insights you can extract from your
analysis form a key part of your report.

Clearly titled sections/sub-sections
Bibliography/List of References: You should ensure your references are correctly

attributed in a bibliography, and any quotes from texts must be correctly attributed to
their source (for example, Bloggs (2002, p.23) says “….”). Plagiarism is a serious
academic offence. Guidelines on referencing are available from Moodle. The list of
references/bibliography will not be included in the word count.
Useful references:


Tables, Charts and diagrams: these should be correctly titled and labelled. Also

show the source of your data.

Any supplementary material may be included within an appendix. Appendices are a

useful means of including important detail without cluttering the body of the report.
They may contain additional data, detailed explanations of methodologies or
procedures etc. (Note: the appendix is not included within the word count, but it
should not be seen as a dumping ground for material exceeding the word limit.).

Footnotes. Should you wish to use footnotes in your report, these will not be included

in the word count, providing they are not excessive. I would ask that you take a
common-sense approach on this.

Your name and your tutor’s name!

A final thought…
Consider the reader of this report…. They will only have limited time to read your report, and
so it is important that your argument is clear and focused; there should be a concise and
coherent argument throughout. A common mistake in reports is to report on everything. This
is not necessary! It is important to focus on the key issues. Additional material should be
placed in an appendix, but be selective. However, should you include material in an
appendix, it is important to refer this in the main text of your report.DEPARTMENT OF ACCOUNTING AND FINANCE
AcF 213 Michaelmas 2014 FEEDBACK
Report relevant to topic Report has little relevance
Topic covered in depth Superficial treatment of topic
Logically developed argument Report rambles and lacks continuity
Creative thought Little creative thought
Fluent piece of writing Clumsily written
Succinct writing Unnecessarily repetitive
Legible and well set out Untidy and difficult to read
Reasonable length Under/over length
Adequate acknowledgement Some unacknowledged use of sources
No bibliography
Spelling and grammar excellent Spelling and/or grammar poor
Other comments
Please note: The Department reserves the right to adjust coursework marks after coursework
has been returned to students in order to ensure that the coursework marks have an
appropriate distribution.
Please note: The individual indications on the feedback form are provided to help you. There
is not necessarily a straightforward relationship between them and your final grade.
Categories are not equally weighted and other factors will be taken into account.

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