Reference no: EM131221662 , Length:

ASSESSMENT REQUIREMENTS

This assessment has four primary aims:

1. To provide you with an opportunity to develop your understanding of standard costing and variance analysis;

2. To provide you with the means to further refine your analysis and problem solving skills;

3. To provide you with an opportunity to develop teamwork capabilities;

4. To provide you with an opportunity to develop your report writing skills.

YOUR TASK

After considering carefully all the information above you (as assistant to Grace Miller) are going to prepare a report to be presented in a meeting to Grace, Jackson Pham, Michelle Lee and Janek Sidhu. Within the report you need to address the following.

1. Outline and explain the purpose and potential benefits of standard cost systems and variance analysis. (To gain marks your discussion must not simply be a restatement of the Horngren text).

2. Using the information in the case,
(a) Prepare a flexible budget for Cool Ride Skis Ltd for the year ended 31 December 2015.

(b) For each product (skis and snowboards) prepare a complete analysis of the variance between budgeted profit and actual profit, contained in Exhibits 1 and 2. In your analysis include the following variances:
- Sales volume variance (calculate individually for each product)
- Sales mix variance (calculate individually for each product)
- Sales quantity variance (calculate individually for each product)
- Market size and market share variances (calculate individually for each product)
- Selling price variance
(Note that the selling price variance has not been directly covered in lectures).
- Price and quantity variances for each type of direct material
- Rate and efficiency variances for direct labour
- Spending and efficiency variances for each variable overhead category
- Spending variances for each fixed overhead category.

3. Provide an evaluation of how well Cool Ride Skis Ltd (Victoria) has managed its revenue and costs in 2015. Each revenue/cost item should be discussed separately in your report. Your evaluation should do the following:

- Use the variances calculated in part 2 and information in the case as support for your arguments;
- Identify the likely causes of the variances you calculated in part 2.
- Identify any interdependencies among the variances you calculated in part 2.
- Raise any concerns you have with the calculation of the variances.

4. Based on your evaluation of Cool Ride Skis' revenue and cost performance in 2015, identify and discuss the major items which should be investigated further in subsequent meetings.

5. Identify any limitations you believe exist in the following areas at Cool Ride Skis and give your recommendations on the existing system to improve and overcome the limitations you identified in the following areas:
- The Standard Costing System.
- Variance Analysis.

6. Briefly explain how management accounting reporting practices can be considered as a social practice?

Attachment:- Cool Ride Ltd Case Study.zip