Waltham Motors Division Case Analysis Required Questions
Read the PDF and complete the project.
Requirement #1 – Prepare the following:
a.) Flexible Budget using the information on Exhibit 1. You will need to get a budgeted rate per unit for the variable expenses like we did in class to make that happen.
b.) Calculate the breakeven in units using the Flexible Budget.
c.) Calculate the Level 2 variances and indicate if the variance is favorable or unfavorable. (This should be done on each individual account and for the total.)
d.) Calculate the level 3 variances (price and efficiency) for direct material, direct labor, and shipping costs, and indicate if the variance is favorable or unfavorable. (Assume that the direct material per completed unit is 1 unit of direct material for each unit completed.)
e.) Calculate the level 3 variances for overhead, both variable and fixed, and indicate if the variance is favorable or unfavorable. Assume that the company allocates their overhead based on direct labor hours. You may lump all individual line items of variable overhead together to get one POHR for all variable overhead costs. You may do the same for fixed overhead (use one POHR for all of the fixed overhead costs).
Requirement #2 – Compare the breakeven calculation to actual results. Based on your breakeven calculation do you predict the company would show a profit or not? Was your prediction correct? If not, why?
Requirement #3 – Answer question #3 given in the case. Here you should be talking about the importance of the flexible budget, the information it provides and how it ties to this individual case.
Requirement #4 – Answer question #4 given in the case. You should be explaining every level 3 variance in detail and should also briefly talk about the level 2 variances. You should be using details provided in the case reading to support your analysis. I am not assigning a page minimum or limit, but this should result in a thorough analysis and will take multiple pages to explain completely.
Rules:
1.) Undergraduate students MAY choose one partner to complete the assignment. Your partner must be in the same section as you. Undergraduate students do not have to have a partner; it is optional. Graduate students MUST complete the assignment on their own.
2.) This is an individual assignment. Other than your partner (if you choose to have a partner), you may not discuss the assignment with any other classmates (including my other section). Failure to complete this assignment on your own is an academic integrity violation and will be treated with zero tolerance as stated in the course syllabus.
3.) Answers to questions must be typed, not hand written. Answers to the questions must be in a separate Word document. Make sure you explore all aspects of your decision. If you are assuming something, you must tell me. If you do assume something, explain what would happen if you assumed something else, or if the opposite were true. In other words, fully analyze the data and answer the questions.
4.) You must use Excel to prepare your spreadsheets and print out a hardcopy of your work.
a. Pay attention to formatting, margins, etc. In other words:
i. Your work for 1 problem should not extend onto multiple pages.
ii. You should not have 1 problem extend past 1 page of work. Unless there is a logical cut off. I should still be able to read it if it is printed to just 1 page.
iii. You should adjust the size of your cells so words are not cut off.
iv. Your text and numbers should be in the same format. (font, size, dollar signs, decimal places, etc.)
v. It should look professional and be organized in a logical manner.
vi. The answer to each question should be in its own separate tab. This makes cell adjustment much easier.
b. All spreadsheets should contain linked cells. In other words except for input numbers ALL calculations should be done with formulas.
c. Failure to properly format your spreadsheet will result in a 15 point penalty.
d. Failure to link your cells will result in a 15 point penalty.
5.) Organization is key! As accounting students, your work must be well organized. Accountants are responsible for reporting information to the rest of the company. If our work is sloppy or disorganized, no one will trust our report and then we may as well just go get coffee and donuts for everybody else at the meeting and go home.
6.) Your report should consist of:
a. A title page with the names of the group members, class name, and section number.
b. The Excel spreadsheet with all calculations.
c. A printout of the formulas used. (So one copy will have the numbers and the other copy should have the formulas used in preparing the spreadsheets.)
d. A word document answering the questions above.
7.) You must hand in a hard copy of your report at the beginning of class on December 4th. DO NOT BE LATE FOR CLASS! I will call for the assignment at the beginning of class and you will have five minutes to hand it in. Late assignments will not be accepted. Emails will not be accepted under any circumstance. If you turn in one, but fail to turn in both a hard and soft copy before the deadline, a 50 point penalty will be applied.
