ACC 207 Final Project Milestone Two Guidelines and Rubric Overview: Classifying a company's costs allows for an in-depth analysis of the impact that...

ACC 207 Final Project Milestone Two Guidelines and Rubric Overview: Classifying a company’s costs allows for an in-depth analysis of the impact that changes in output have on revenues, costs, and net income or net loss. A cost-volume-profit analysis will be completed in order to determine the breakeven point. Relevant costs will be used to prepare a flexible budget. Additionally, an appropriate costing system should be selected and the choice should be substantiated with reasonable rationale. Finally, a memo should be prepared for management that summarizes the results of the quantitative analysis and makes recommendations for an optimal costing system to be ethically used by key decision makers. For Milestone Two, you will analyze the budget and actual costs using the MDE Manufacturing Budget (Tables I, II, III, IV). Determine where variances occurred and why. Submit the Student Workbook with Tabs 3 and 4 completed with your budgets/variances and a 1–2 page Word document that discusses the implications of your findings on MDE’s financial considerations. Explain which aspects of MDE’s budgeting process are in need of improvement and justify your response using your calculations. Address all critical elements listed below in Section II. Use Tabs 5 and 6 of the Student Workbook for your budget and variance calculations. Specifically, the following critical elements must be addressed: II. Prepare and Perform a) What are your fixed costs? Segregate them in the budget model. b) Determine how variable costs change as activity measures change. How can this information be applied? c) Create the budget model, ensuring fixed costs are hard coded into the model (variable costs are stated as a percentage of the relevant activity measures or as a cost per unit of activity measure). d) Add actual activity measures to the model. Make sure all information is added accurately. e) Add the flexible budget calculations to the budget model. Make sure all information is accurate. f) Compare the flexible budget to the actual expenses. What does this inform? Be sure to discuss the following variances: i. Static budget variance, including sales volume and flexible budget variances ii. Price and efficiency variances for direct materials and direct labor iii. Spending and efficiency variances for variable manufacturing overhead g) Determine the aspects of the budgeting process that are in need of improvement. Justify your response. h) Interpret what budget variances represent. Should all variances be investigated? Guidelines for Submission: Your paper must be submitted using the Student Workbook to present your budgets and variances and a 1–2 page Microsoft Word document with double spacing, 12-point Times New Roman font, and one-inch margins to explain your findings. Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information, review these instructions. Rubric Critical Elements Proficient (100%) Prepare and Identifies fixed costs and segregates Perform: Fixed Costs them in the budget model Prepare and Perform: Variable Costs Prepare and Perform: Budget Model Prepare and Perform: Actual Activity Prepare and Perform: Flexible Budget Calculations Prepare and Perform: Compare Flexible Budget Determines how variable costs change as activity measures change and describes how this information can be applied Creates a budget model and fixed costs are hard coded into the model Needs Improvement (75%) Not Evident (0%) Identifies fixed costs but does not segregate Does not identify fixed costs them in the budget model Determines how variable costs change as activity measures change but does not describe how this information can be applied Creates a budget model but fixed costs are not hard coded into the model Value 12 Does not determine how variable costs change as activity measures