Trimester T2 2020 Unit Code HI5017 Unit Title Managerial Accounting

Introduction

Managerial Accounting

Abstract

The main purpose of the assignment is to discuss the understandings process of the account management system and the costing system of any industry or the organization. Every organization needs to decide about the costing system of the working process, otherwise, they are not able to estimate proper strategies of gaining profit. Moreover, the accounts department is considered less than one of the main sections of the organization. Here the selected costing system is the job costing process. The features of the job costing along with the practical examples are considered here. Two Australian organizations are considered here to illustrate the practical implementation and the suitability of the costing system over that organization. The potential process o the cost information along with the decision making approaches of those two organization managers are also considered here. In the second part there exist a peer review article journal which states about the costing system and the practical representation of the organization in the context of the pricing system Therefore in this part, the literature findings along with the internal cost user process are discussed ere. The satisfaction of the organization considered here as per the proper and original theory of the job costing system.

Table of Contents

Part: A.. 4

Introduction. 4

Features of Job Costing System.. 4

Suitability of Job Costing For the Australian Companies. 5

Potential Uses and Significance of the Cost Information for Decision-making. 6

Part B: 8

Implementation of Job Costing System in Real-Life Organisation. 8

Role of Chosen Costing Article Satisfying the Features discussed in Part A (Q1) 8

Usefulness of the Cost Information to the Internal Users in the Organisation. 9

Key Lessons about the Practical use of Job Costing System.. 10

Conclusion. 10

Reference list 11

Part: A

Introduction

The main objective of this research paper is to develop a clear understanding in the minds of readers, and students about the specific purpose, uses and importance of management accounting systems. Moreover, in the context of this paper, job costing system is chosen because it has a lot of areas where the researcher can explore the thinking process. This study would explain the applications, principles, significance and usefulness of job costing system in helping managers in making more informed and precious decisions. In the same way, in this research paper, practical use of cost accounting systems in the contemporary companies would be analyzed. In the same way, this paper evaluate how job costing system helps in decision making and attainment of overall business goals. On the other hand, it should also be noted down that, in the present time, job costing is considered as a method which tracks the revenue and the costing system of the standardization process of reporting and the revenue of the job in any organization process. This process is considered here for a clear representation of the costing system. Moreover, this research paper is categorized in two sections such as part A and B respectively. The first part would explain the key features of job costing accounting system, suitability of job costing for the organizations, and its uses in decision making. In the second part, one peer reviews journal article will consider demonstrating the processing and the approaches of the Job costing system.

Question 1

Features of Job Costing System

Job costing is considered as the process which can able to identify the incurred cost of the job as per the proper instruction of customer and the specification. Job costing is called as the job costing of the accounting, costing for the job order, costing for the production order, and lots of other jobs related costing. Therefore it can be stated that a job means proper work or activities which are done by workers of the organization (Argade 2020). It is also stated that jobs are performed by the workers as per the specification of the customers. The features of job costing are described below:

1. Job costing process is applied for the organization which is maintained by the requirement of the customers. Therefore the organization like shoes repair and manufacturing company, different types of garages and the printing machine manufacturing tool organization are considered under it.
2. The products which are produced as per the order of the customer, not as per the stock for maintained the sale represent the job costing in their work process (Ayres and Stanfield 2019). Moreover, in this costing system, the cost is aligned as per individual job processing separately. This method is also considered under the process which falls in the specific costing of the products.
3. There is no scope of the continuous production process. Each of the jobs in any industry is different from each other therefore the specification of the customers is also different from each other. On the other hand, it also allows the business managers to judge the profitability of each job effectively and determine the future course of action. Simply, it can be said that, it is one of the best method that help a manager to make more informed and specific decisions for the attainment of common organizational goals and objectives.
4. It also assists the management as well as manager of a company to effectively and successfully control the operational efficiency by providing valuation of work-in-progress. For example, by using the job costing method, a manger can also prepare the estimate about future experiences and make more effective decision to save the cost in an effective and proper manner.
5. Another major feature or advantage of this cost system is that, it provides a detailed cost analysis of materials, labor and overheads for each job as and when required. Overall, it can be said that, job costing system has a number of feature that provide a significant benefits to the company effectively and successfully.

Question 2

Suitability of Job Costing For the Australian Companies

Wanted Shoes is the organization which developed the classic flat ballet. Therefore this organization offers a diver range of the footwear as per the customer expectation. In this context, it is stated that the organization can bale to apply the job costing in their workplace. The price tag of the organization is very much affordable for the customers. Therefore it can be stated that the organization allows the customers to set the pricing strategy of their products, which is present in the job costing process. Through this costing process, the organization can able to give special attention to the requirement of the customers and skills for the completion.

The organization named Intercast & Forge is an organization which is considered as the largest iron casting foundries of the country. The organization has given solution about the metallurgy process and the technical process as per the presence of the combined force of the thesis of the solution of the operation areas (Drobyazko et al. 2019). In this organization, the job costing system can able to give the flexibility in the expert processing, manufacturing, size and other customize parameters of the organization process. They do not have to consider a large scale production process over goods.

The unit measurement process is considered in the activities of the organization through special and the unique processing of the organization. Therefore it is stated that the standardization of the process cannot be maintained in the processing of the organization. The separate cost sheet is considered for each of the activities of the organization system.

Question No 3:

Potential Uses and Significance of the Cost Information for Decision-making

As per the research over the organization, Wanted Shoes it is stated that the organization managers and leaders can use different features in their decision-making process, by adopting the job costing system. The mangers can able to states about the process of execution along with the type and the costing strategies as per the demand of the customers. Therefore they do not need to think about the process in which they satisfied the customers. In the other hand, the organization managers get the scope of decision making during the ascertainment of the loss or profit for each costing system. Along with this, they are also able to make more precious, effective and informed decisions so the organizational goals and objectives can be attained effectively and successfully.

At the same time, it should also be noted down that, the organization Intercast & Forge mangers are very much concern about the involvement of the customers. On the The organization can decide the involvement of the operation number through the processing of the completion. The direct and indirect cost process changing decision is also taken by the accounting department of the organization system. This company can abler to convey the proper customers (Maliki and Rukmana 2020). The process of the expectation gives proper time to accuracy of the market approaches. The absorption rate of the organization accurate the value of the market process and the estimation factor is considered in that context. Moreover, the man purpose of the organization is to determine the profit and loss therefore the decision-making process can be easier. The cost estimation of the organization must be rearranging cost sheet of the organization. In addition to this, it is also analyzed that, the managers of the company are also able to make more accurate estimate about the overheads, expenses etc.

Part B:

Question 1:

Implementation of Job Costing System in Real-Life Organisation

As per the requirement, it is stated that the chosen article demonstrated an organization process and their adaptation technology of the job costing system. In the research process over the job costing strategies, it can be stated that normally the costing system is implemented for the direct labour costs and direct materials processing. However, this article case study considers a real-life picture of the difficulties of the job costing faced by a different small business organization. The name of the organization which considers by the author is the “Truffle in paradise” (Mu et al. 2017). The repetition of the case description considers a practical situation when the entrepreneur, Thor Rasmussen has started the business over the premium Truffle. As per the thinking process of Thor, he did not have any idea about the profit or loss of the organization. The pricing strategies considered for the Truffle Company was also not appropriate because he did not have any ideas over it (Zahller 2017). Therefore this article states about the cost determination process of the truffle company, the application of the costing model through the price analysis activities, sensitive performance process of the labour and the costing f the materials.

The implementation process of the organization states about the intensive labour costing process through a proper requirement of the deal as per the process of stages. As per the requirement of the customers, the organization try to consider the process through which the divided the team into four batches as per the varieties of the work process. The actual labour time during the activities is for twelve hours (Zahller 2017). Therefore it can be stated that the organization try to understand the process of the practical situation of the organization and then try to take any decision over the complexities of the organization in the context of the material costing and the accurate direct costing process.

Question No 2:

Role of Chosen Costing Article Satisfying the Features discussed in Part A (Q1)

The costing system considered in Part A is the Job costing process, and after the review over the process of the article, it satisfies the features which are discussed in the previous part. The job costing is considered as a system which states about the requirement of the customers. Therefore in that article, the application of the costing methodology considers the approx. range of the products which requires different inputs as per the different demand from the customers (Zahller 2017). The modelling skills in the excel sheet is also developed in the process of the organization which is one of the main parts of the job costing system and it is also mentioned in the previous part. The processing of the linked tables and the workbooks are also considered in that context (Pangemanan and Ramintang 2016). The developing model of the income statement along with the Pro-forma of the costing is represented here. The profitability of the organization is also considered here. The sensitivity of the analysis process as per the basic conduct is available here. The main purpose of the job costing system is to find out the loss or profit of the job. The case study stated that Thor does not understand about the loss or profit, therefore he thinks that this is the appropriate one to understand the profitability of the business process. The selling, distribution, and the administration process are estimated here for the progress of the process.

Question No 3:

Usefulness of the Cost Information to the Internal Users in the Organisation

The process of the cost information is very much important to the internal users of the organization. Therefore as per the critical analysis of the taken article, it is stated that the analysis of the spreadsheet over the organization is represented here along with the attached processing of the internal system. Moreover, the costing methods can able to understand the internal process and internal process is responsible for the selection of the process (Ramintang and Pangemanan 2016). The pricing strategies of the organization and the switching process of the organization process are considered here. Therefore the organization represent that each of the specifications of the job process the organization and the costing system can able to identify the distinguished process of the job (Zahller 2017). The Job cost card is considered by the organization to collect the data set and the costing related to the job information system. It is very much careful about the logic and the effectivity of the process in the context of the cost data preparation. The materials requisition process in the store’s area also sent by the appropriate cost of the materials (Zahller 2017).

Moreover, it is also stated that the presence of the job tickets must have the ability to consider the overtime rates, bonus rates and the piece work processing. The issues materials which are considered here must use the store’s record processing to consider the employing methods of the LIFO and FIO.

Question 4:

Key Lessons about the Practical use of Job Costing System

As per the findings of the literature, the two lessons which are informed the contemporary organization for the practical usage of the job costing system is discussed below:

1. The job costing system is very much applicable to the better control process of the costing system. There exist different methods of costing process which is used in a different situation. In that context, it can be stated that job costing is a particular method which is very much useful one to control the costing system of the price (Shah 2020). Moreover, the application of the costing system can able to measure safety processing as soon as possible. Therefore the estimation of the pricing system must consider a standard cost of the job application and 50 % of the process is ending in this process. It can be also stated that the finishing process of the job is considered the other alternative option to control the costing system.
2. The presence of coordination in the system of accounting is considered here as the practical strength of the process. The method which is considered here has the ability to accounting the system process through the representation of the specific response process (Shreenivasan and Neeraj 2018). It is possible through the representation of the daily basis job. The easy calculation of the specific job over process is also representing here. The specific order of the organization considers a lot of data related to the different indirect expense process through which the particular job of the association must be considered here.

Conclusion

As per the above discussion, it can be concluded that the Implementation of the job costing system gives any organization an overall idea about the control process of pricing strategy in the organization. Moreover, it is also stated that the profitability and the possibilities of loss are also considered here by this costing process. Here the taken article can give a proper response as per the possibilities and the description of the status of the organization. This research article started about the implementation through a practical context of the job costing system.

Reference list

Argade, S.L., 2020. Contract Costing: Meaning, Definitions, Features, Accounting Entries.

Ayres, D. and Stanfield, J., 2019. Pulling it all together: ACME trailers, a costing case. Journal of Accounting Education, 46, pp.72-88.

Drobyazko, S., Pavlova, H., Suhak, T., Kulyk, V. and Khodjimukhamedova, S., 2019. Formation of hybrid costing system accounting model at the enterprise.

Maliki, A. and Rukmana, H.S., 2020. Calculation of Cost of Production Using the Job Order Costing Method Against Determination of Selling Prices at PT OTO Media Kreasi. Neraca: Jurnal Akuntansi Terapan, 1(2), pp.103-125.

Mu, H., Jiang, P. and Leng, J., 2017. Costing-based coordination between mt-iPSS customer and providers for job shop production using game theory. International Journal of Production Research, 55(2), pp.430-446.

Pangemanan, S. and Ramintang, J., 2016. The Application of Activity-based Costing (ABC) and Job Order Costing (JOC) at Wisata Bahari Restaurant Manado. Jurnal Riset Ekonomi, Manajemen, Bisnis dan Akuntansi, 4(1), p.2865.

Ramintang, J. and Pangemanan, S., 2016. THE APPLICATION OF ACTIVITY-BASED COSTING (ABC) AND JOB ORDER COSTING (JOC) AT WISATA BAHARI RESTAURANT MANADO. Jurnal EMBA: Jurnal Riset Ekonomi, Manajemen, Bisnis dan Akuntansi, 4(1).

Shah, R.V., 2020. Process Costing using FIFO or Weighted Average-Which is Better for Performance Evaluation?. The Management Accountant Journal, 55(2), pp.63-65.

Shreenivasan, R.N.M.K. and Neeraj, M.P., 2018. Evaluation of Water Supply Project in Plant Construction Using Activity Based Costing. International Journal of Pure and Applied Mathematics, 119(7), pp.2543-2552.

Zahller, K.A., 2017. Truffle in paradise: Job costing for a small business. Journal of Accounting Education, 40, pp.32-42.

Contents lists available at ScienceDirect Journal of Accounting Education journal homepage: www.elsevier.com/locate/jaccedu

Journal of Accounting Education 39 (2017) 32–42

Truffle in paradise: Job costing for a small business

Kimberly A. Zahller

College of Business, University of Colorado Colorado Springs, 1420 Austin Bluffs Pkwy, Colorado Springs, CO 80918, United States

a r t i c l e i n f o

Article history:

Received 15 July 2016

Received in revised form 27 February 2017 Accepted 27 February 2017

Available online 9 March 2017

Keywords:

Job costing

Developing standard costs Costing model

Segmented income statement

a b s t r a c t

Textbooks and case studies that simply provide direct materials and direct labor costs for job costing problems do not give the reader a true picture of the difficulty in developing these costs, especially for small business owners. ‘‘Truffle in Paradise” presents a case based on a very real situation where the entrepreneur, Thor Rasmussen, has started a premium truffle business in his spare time; the business is growing but Thor has no idea if it is prof- itable because he has not costed his truffles and does not know if his prices are appropriate. The case walks you through the process of determining the costs of his truffles, applying a costing model to analyze his prices, performing sensitivity analyses on labor and material costs, and producing a pro-forma income statement. Student feedback reported that the case opened their eyes to the complexity of costing and planning in small businesses.

© 2017 Elsevier Ltd. All rights reserved.

1. Introduction

Thor Rasmussen was an accidental entrepreneur. Although his primary job was as a hair stylist, he also had a small side business in making and selling premium, hand-dipped chocolate truffles. His aunt had developed the original recipe for a family member with a severe soy allergy (most commercial chocolate has soy). Thor made several batches as Christmas gifts for friends in 2006. After a friend of a friend tried some of the special truffles, she approached him and asked if she could buy some. Startled, Thor replied ‘‘I don’t know; let me get back to you!” Over the next several years, he continued to give truffles as presents and sell a few batches by word of mouth.

The truffle business really started to grow when he became a hair stylist at ‘‘Paradise” and his clients began asking for his truffles. By the Christmas season of 2013, the demand for Thor’s special truffles had grown so much that he really started thinking about running his sideline as a business. While he did not want to give up his career as a stylist, he did enjoy the creativity behind his truffles and the amazed reactions from people who tried them: ‘‘That’s a lot of happiness in a little box!” Thor asked a client who was a cost accountant to help him analyze his business. His main concern was that he didn’t know if he was charging enough for his truffles. He also confessed that he was not good at marketing, or numbers, or record keeping and had really no idea if his truffles were even profitable. As he put it, ‘‘I assume they’re profitable because I have

fewer credit card payments at the end of the month than I had to start with.”

Thor’s truffles were a premium product with several distinguishing features. He used premium chocolate combined with bulk chocolate in both the filling and the coating layers. The inner truffle (‘‘fondant”) was hand-rolled and cooled extremely slowly, which gave an ultra-creamy texture, and the outer shell was hand-dipped, resulting in a thinner layer which then absorbed more of the flavoring from the inner truffle. The truffles were soy-free, used premium ingredients, and were completely alcohol free.¹ Thor worried that most people didn’t see the huge difference in quality between his truffles and main- stream truffles until they actually tried them.

E-mail address: kzahller@uccs.edu

¹ Most flavorings use an alcohol base, so this was a unique difference in Thor’s truffles.

http://dx.doi.org/10.1016/j.jaccedu.2017.02.003 0748-5751/© 2017 Elsevier Ltd. All rights reserved.

Table 1

Prior year’s sales by variety.

Variety	Sales (in dozens)
Sea salt caramel	66
Milk & milk	48
Milk & vanilla	32
Dark & dark	64
Dark & amoretto	32
Dark & cherry	32
Dark & raspberry	32
Dark & mint	32
Dark & orange	32
Dark & vanilla	32
Dark & strawberry balsamic	48
Total	450

Developing new flavors was Thor’s favorite part of the business. There were eleven regular flavors, and each year Thor would create new varieties in October and test them by distributing samples at his salon, Paradise, listening very carefully to the comments and watching expressions closely. Usually, he would test both a dark and a milk chocolate version and then poll customers and co-workers for the winning combination. Last year’s season was unusual because there were three new varieties tested and all three were retained. Thor’s development record was good: of the 14 tested varieties, only three had failed. The learning curve for new varieties was fairly steep; the first three batches would be inconsistent after which they would be extremely consistent. Thor’s records were very minimal, but he was able to produce a rough estimate of how many dozens he sold of each variety in the prior year (Table 1).

2. Customers

Thor’s target market was women between the ages of 35 and 60, or what he called ‘‘old money.” He distinguished this group as being established in their careers, with discretionary funds, and who were tired of giving the ‘‘usual” gift of wine to friends and clients. As he sold only to individuals, the typical order was one to four dozen truffles, although there were three clients who bought in large orders for client gifts. Orders were picked up by customers at his salon, although he would personally deliver for large orders (12 dozen truffles). Every year, 80–85% of his business would be repeat customers. Thor characterized new clients as ‘‘slow to develop:” they would try the truffles the first year, make last minute purchases of assortments the second year, but by the third year they tended to start placing large orders for gifts.

Marketing was very minimal. Thor had traded truffles for the development of a website. While the website listed the vari- eties and had spectacular photos, it did not do a good job describing the varieties, explaining why Thor’s truffles were so special, or actually allowing customers to place orders. Thor also printed business cards listing regular varieties, the price per dozen, and his contact information. One business card was included with each box of a dozen truffles and individual ‘‘sample” truffles were served on a card to salon customers. Approximately 20% of his total production was handed out as samples each season to attract customers. Other than word of mouth from enthusiastic customers, there were no other mar- keting or advertising campaigns.

Sales were highly seasonal: Thor started making truffles in October and finished in January, although he was considering summer production to reach outdoor farmers’ markets and craft fairs. Each dozen was priced at $18.50. All sales were made by cash or credit card. Credit card purchases were 85% of Thor’s sales with bank fees of 3.65% for credit/debit cards. Because he came under the Colorado Cottage Food Act, Thor would be limited to $5000 in revenue per type of truffle and was also required to deliver the food to the customer personally, but was not required have a commercial kitchen or special licenses. He was also not required to collect sales tax.

3. Process

Truffles are a very labor intensive process and require a great deal of cooling time between stages of the process. As a result, for everything but the Sea Salt Caramel (SSCar), Thor would usually make four batches of different varieties at a single time, so there was always one batch to be worked on while another was cooling, although he could make up to eight batches at a time. One batch produced four dozen truffles of the regular varieties of truffle.

Four batches could be processed in about two to three days with the chilling and resting cycles. However, the actual labor time during the process would be about twelve hours. Long chilling and resting times were critical, as slower cooling times resulted in higher quality and better taste. Ideally, the external temperature should be less than 74 degrees Fahrenheit. If the weather was humid, the time could be increased considerably as it would take longer to properly incorporate the base ingre- dients. Fortunately, as Thor pointed out, humidity was rarely a problem in Colorado, which is why there were so many chocolate companies based in the state!

For most varieties, the base truffle mix of chocolate, cream, and butter was identical, with flavorings usually added at the beginning of the process. The chocolate itself was a mix of bulk chocolate and either dark or milk premium chocolate. Once the mix was ready, it would be chilled overnight, individually hand rolled the next day, frozen again overnight, dipped (or ‘‘enrobed”) in chocolate, marked with a pattern of colored decorative chocolate icing indicating the variety,² quick frozen, and stored in a commercial freezer. As Thor explained, there were visual cues if the truffles weren’t mixed enough or if they were cooling too fast; he could correct the process immediately.

Sea Salt Caramel truffles were different. The process was much more difficult and Thor was still struggling to perfect it. He could get four batches of SSCar truffles (the truffles used dark chocolate fondant) in thirteen hours, and each batch produced approximately 66 truffles. SSCar truffles were layered and sliced, not hand rolled, and there was an extra stage in the process to make the caramel. Making the caramel required an extra hour, including the time to blast chill the layer. Once the caramel layer was added to the chocolate truffle layer and chilled, the resulting mix was turned out on wax paper and sliced into standardized, square truffles. Making the caramel itself was very tricky – Thor had a five-degree window to cook the caramel mixture or it was ruined and candy thermometers were largely useless due to the altitude. If the caramel had gone bad it was ‘‘super-apparent, super-fast” when he cut into the layered, chilled mixture. Unfortunately, that also meant the entire batch, including the chocolate layer, had to be discarded. Because SSCar truffles were distinctive (square instead of round), Thor did not use colored icing to distinguish the variety.

4. Costs

Currently, Thor was producing all his truffles in his own kitchen. Because this was not a space dedicated only to truffles, he was unable to adequately come up with overhead costs for utilities, rent, and insurance. In order to approximate these costs, and to give Thor an amount to use in evaluating any future moves to a rented commercial kitchen, it was arbitrarily decided to use an estimated charge of $0.12 per direct labor hour for these overhead costs.

Thor’s equipment was basic and consisted mainly of measuring cups and spoons, glass baking pans, spatulas, bowls, a scale, candy tools, a chef’s knife, and a cutting board. He hand-mixed all his truffles for quality and the only appliances he used were the stove in his apartment and an upright commercial freezer loaned by a friend. The only identifiable consum- able overhead costs he could come up with were the ‘‘thousands of little plastic storage boxes” he bought each year (esti- mated at $50 each season) and wax paper ($12.50 for ten rolls each season, bought in bulk) used to store the truffles he produced prior to their packaging and sale or distribution as samples.

Thor had used the Internet to research suppliers. He ordered his bulk chocolate three times a year from Supplier A and his premium, European chocolate twice a year from Supplier B. He timed his orders to take advantage of bulk discounts and reg- ular specials. The tissue paper, decorative Chinese takeout boxes, and colored chocolate came from a large retail craft store; flavoring and oils from Supplier C; the Strawberry Balsamic vinegar came from a local specialty shop; and all other ingredi- ents, as well as the plastic storage boxes and wax paper, came from the local ‘‘big box” retailer. During his production season, Thor went to the retailer at least daily (‘‘infinity plus one” trips), because he had limited storage for perishable ingredients, such as cream and butter. All supplies were paid for at time of purchase, using his credit card.

The bulk of his direct materials were the three types of chocolate. Bulk chocolate was $160.00 for 50 lb, including ship- ping. The premium chocolate was sold in five kilogram bars and was $115/bar for dark and $95/bar for milk chocolate, including shipping. Other ingredients were flavorings, strawberry balsamic vinegar, cream, butter, sugar, and sea salt (see Table 2 for individual costs, Table 3 for the required amount per batch, and Table 4 for measurement conversions). Each order (one dozen truffles) was packaged in a decorator Chinese takeout box, used one sheet of tissue paper, and included one busi- ness card.

By far and away, the biggest part of the cost of the truffles was the labor expense. Thor wanted to know what his prof- itability would be, and what prices he should set, if he hired part-time employees to produce the truffles, while he continued to do marketing and product development. Local minimum wage was scheduled to increase to $10 per hour within the next year. Since he would not be providing benefits, he wanted to pay slightly more than minimum wage to encourage care and efficiency by his employees.

Thor mainly wondered whether he was making any money. He needed to know the actual cost of each variety of his truf- fles and at what price he should set for each. He was reluctant to charge different prices for different varieties, although he did not rule out that possibility. He also wanted advice on whether he could afford to replace the bulk chocolate with 100% premium chocolate.

5. Requirements

●

Requirement #1: In costing Thor’s truffles, what should the cost object be? Why? Are Thor’s costs driven by prime costs or conversion costs? Classify each of the items in Table 2 as direct material or overhead.

² For example, dark chocolate and cherry had a single red dot on top of each truffle, dark chocolate and strawberry balsamic had a cross hatching of red icing, and dark chocolate and vanilla had a squiggle of white icing.

Table 2

Costs of ingredients and materials.

Item	Purchase amount	Purchase costa
Bulk chocolate	50 lbs	$160.00
Premium dark chocolate	5 kg	$115.00
Premium milk chocolate	5 kg	$95.00
Cream	1 quart	$3.50
Butter	1 lb	$5.00
Flavoring (amoretto, cherry, raspberry, mint, orange, vanilla)	1 oz	$4.80
Strawberry balsamic vinegar	12.7 oz	$22.00
Sea salt	17.6 oz	$3.15
Corn syrup	32 oz	$2.50
Premium vanilla (only used on SSCar)	2 oz	$6.23
Sugar	10 lbs	$4.20
Decorative icingb	One tube	$2.50
Chinese take-out boxes	12 boxes	$9.99
Tissue paper	12 sheets	$2.75
Business cards	1000	$40.00
Wax paper	10 rolls	$12.50
Plastic storage boxesc		$50.00

^a Purchase cost includes shipping, where applicable.

^b One tube of decorative icing marks 8 batches of regular truffles. There are no data on the use of decorative icing per truffle or per flavor.

^c Thor has no idea how many boxes he actually uses. The estimate is a total amount spent on the boxes over the season. Boxes are used for all varieties and are reused many times as the truffles are sold and new batches are produced.

Table 3

Batch requirements by variety.

Basic fondant
Bulk chocolate	2	Pounds
Premium chocolate (either dark or milk)	6	Ounces
Cream	1	Cup
Butter	1	Cup
Individual flavors
Flavoring	2	Teaspoons
Strawberry balsamic vinegar	3	Tablespoons
Caramel
Sea salt	1	Tablespoon
Corn syrup	2	Cups
Premium vanilla	1.5	Tablespoons
Sugar	1	Cups
Cream	1.5	Cups
Butter	1.5	Cups

Table 4

Measurement conversions.

1 pound (lb)	=	16 ounces (oz)
1 pound (lb)	=	2 cups (C)
1 ounce (oz)	=	6 teaspoons
1 ounce (oz)	=	2 Tablespoons (T.)
1 cup (C)	=	8 ounces (oz)
1 quart (qt.)	=	4 cups (C)
1 kilogram (kg)	=	35.27 ounces (oz)a
1 tube of icing	=	8 batches

^a Kilogram conversion is rounded.

●

Requirement #2: Table 1 gives Thor’s estimated sales by dozen for each variety for the prior year. Assuming these amounts would be the same in the current year, develop a table to calculate (by variety and in total) batches produced, dozens produced, dozens sold, and dozens produced for promotional samples.

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Requirement #3: Table 2 presents the costs of ingredients and materials and Table 3 presents the amounts of each ingre- dient required for basic fondant, flavorings, and Sea Salt Caramel. Using these tables, and the measurement conversions presented in Table 4, develop a cost per relevant unit for each item in Table 2 and determine the costs for each batch for the following:

• Cost for Dark Chocolate fondant (also used in Sea Salt Caramel)

●

Cost for Milk Chocolate fondant

●

●

Costs for flavorings and strawberry balsamic vinegar Costs for the Sea Salt Caramel

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Requirement #4: Create a spreadsheet model to determine the cost to produce one dozen truffles for each variety if direct labor was to be filled by part-time employees (HINT: some of the varieties may be combined to reduce your columns). Please use the estimated charge for overhead of $0.12 per direct labor hour and the labor rate of $10 per hour. The case indicates that 20% of total production is given away as samples. How would you account for these sample truffles? Is the cost per dozen sold the same as the cost per dozen in promotional samples? If not, also calculate the promotional cost per dozen for each variety.

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Requirement #5: Using the information from prior requirements, create a pro-forma segmented income statement to determine operating income by variety and Thor’s net income after deducting his personal income tax rate.

●

Requirement #6: Analyze Thor’s profitability per dozen for each variety. Provide both the gross margin per dozen and the gross margin percentage per dozen. In considering your results, what price(s) would you advise Thor to charge? Would you make any recommendation to alter his current sales mix?

●

Requirement #7: Thor has asked you if he can afford to pay $12 per hour and if he can afford to substitute premium choco- late for bulk chocolate in the fondant. Perform a sensitivity analysis to answer this question assuming all other informa- tion remains the same. In your sensitivity analysis, develop a new costing model, a new segmented income statement, and a new profitability analysis. Would you recommend that Thor makes these changes? Why or why not?

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Requirement #8: Write an executive memo to Thor outlining your main findings and recommendations based on your work in the previous questions (price, sales mix, labor rate, use of premium chocolate).

6. Teaching notes

This case is based on a real-life business and situation. The author was approached by a local entrepreneur for help deter- mining if his growing, home-based side business was profitable. He primarily wanted to know whether his prices were set correctly and if he was making money, but he also was interested in determining whether he could afford to hire additional help (and at what rate) and to change his recipe to 100% premium chocolate. With no readily available data, the costing model had to be built from the ground up. This provided an excellent means of both introducing students to the complexity of developing cost data and of building the necessary interconnected tables and spreadsheets to produce the answers needed for a small business.

The case begins with some basic costing questions to refresh the student’s memory. The student then uses information given in tables within the case to develop estimated production volumes, cost per batch, and cost per dozen by variety. Stu- dents are asked to think about how to deal with promotional samples and packaging costs, to develop a pro-forma seg- mented income statement, and to develop a basic profitability analysis. Students are also asked to think about pricing and sales mix, as well as to perform a sensitivity analysis for changes in direct materials and direct labor.

The case has been successfully used in intermediate cost accounting, and MBA accounting courses. It has also successfully been used in an introductory management accounting course when broken into modules to accompany chapters on cost classification and job costing. Although the case is lengthy and labor intensive, students have found it interesting and extre- mely helpful in understanding job costing and in constructing models. Specifically, they have commented on an increased understanding of where the cost of direct materials comes from, decisions that have to be made by small businesses, and of the interrelationship between various costs, prices, and profitability. Students have been especially interested to learn that it is a real business, using (modified) real data, and have been surprised to see the results of the cost and profitability analysis for the business.

• Literature review

Costing is the fundamental tool of the management accountant; without the ability to accurately determine the costs of a product or service, it is impossible to develop strategies, formulate budgets, or evaluate alternatives for the organization. The current CMA exam allocates 20% of Part 1 of the exam to cost management topics. The CPA exam includes cost measurement methods and techniques within ‘‘operations management”, which represents 12–16% of the Business Environment and Con- cepts section. Clearly, the ability to properly develop costs and cost models is an important professional skill.

Textbooks for both cost and managerial accounting dedicate a considerable portion of the text to costing topics (including process costing, activity-based costing, cost behavior, cost estimation, and shared and joint costs). Costing is usually the first major skill that students must master; if they fail to master costing, they struggle the rest of the course. Job costing is the entry point to costing: once students are confident and competent in determining direct materials, direct labor and allocat- ing overhead, they can move on to more advanced topics.

Case study publications, such as those found in theJournal of Accounting Education, Issues in Accounting Education, and the

IMA Educational Case Journal, tend to have cycles of cases reflecting current topics, but costing cases are a perennial entry. However, most cases (see below) assume basic job costing knowledge and present the more complex issues associated with Activity-Based Costing or in using costing to develop organizational strategy or conduct Cost-Volume-Profit analyses. Both

textbooks and published cases simply present lists or tables of costs for the student to then utilize in the more advanced analysis. This presents a false impression to the student by over-simplifying the complex process of determining the con- tributing amounts to different cost types.

This case is positioned to fill this gap. The case starts at a more basic level of job costing by presenting the student with the opportunity to develop direct materials, direct labor, and overhead cost pools themselves. By using a small, home-based business and a fairly simple product line that students can easily visualize and comprehend, the task of determining costs from basic information is made challenging, but possible.

After conducting a survey of cases published in the Journal of Accounting Education, Issues in Accounting Education, and the IMA Educational Case Journal over the period from 2008 to 2016, the author found only a limited number of job costing cases. The Journal of Accounting Education published two costing cases in this period, one using ABC (Blocher, Shastri, Stout, & Swain, 2009) and one using job costing (Braun, 2013). The job costing case was listed as an instructional resource for a ‘‘flipped” class- room and concentrated on performing job costing with pre-determined costs and then using job costing for basic operational decisions. Issues in Accounting Education also published two costing cases, one comparing costing methodologies to improve costing (Krumwiede & Walden, 2013) and one expanding an ABC system to direct labor costs at a medical practice (Kaciuba & Siegel, 2009). The journal with the most cases involving the application of some costing methodology during this period was the IMA Educational Journal, with ten cases, five of them in 2008 alone. Of the ten cases, seven focused on ABC as applied to capacity analysis and theory of constraints (Mulligan, Nanni, & Ansari, 2008; Peacock & Juras, 2010; Taylor, 2008) target cost- ing and product mix (Taylor, 2008), process costing and lean management (Ansari, Mulligan, & Nanni, 2008), performance measurement, benchmarking, and balanced scorecard (Ansari & Bell, 2008; Bell, Nanni, & Ansari, 2012), SWOT analysis and strategy (Moriarity, Hopkins, & Slessor, 2011). Only three reinforced fundamentals in cost drivers and allocations (Albright, 2008; Irwin, Kerby, & Weber, 2010; McGregor, 2014), and none of the cases dealt with job costing.

Of all the cases mentioned, only Dream Chocolate Company (Krumwiede & Walden, 2013) is similar to Truffle in Paradise. Not only does Dream Chocolate Company involve job costing and costing problems, but its setting is a similar chocolate com- pany making custom-labeled, high-quality candy bars for special events and advertising. Despite their similarity, the two cases are highly complementary. Truffle in Paradise uses a home-based entrepreneurial business to ‘‘begin at the beginning” of job costing and allow the student to learn how to determine costs for materials, labor and overhead. Dream Chocolate Company moves into the environment of an SME (small or mid-sized enterprise) with automated manufacturing. The student performs some limited cost accumulation from tables, but does not have to start with a list of materials and acquisition amounts. The Dream Chocolate Company case mainly focuses on comparing different costing methods to determine the best alternative (part

1. A) and then calculating new standard costs, profitability and special orders (part B). While both Dream Chocolate Company and Truffle in Paradise require standard costing and profitability analysis, Truffle in Paradise works at a more basic, detailed level and Dream Chocolate Company then takes those concepts and applies them to a more strategic manufacturing

• Learning objectives

The specific learning objectives for the case are as follows:

• To understand the process and complexity of determining accurate direct materials costs;
• To apply job costing methodology appropriately across a range of products with differing inputs;
• To practice modeling skills in Excel in developing appropriate workbooks and linked tables;
• To use the costing model to develop pro-forma income statements, analyze profitability, and conduct basic sensitivity analysis.

• Implementation guidance

The case was pilot-tested by the author across several semesters, with major adjustments to the case requirements and instructions based on student feedback. Following these iterative adjustments, the case was field-tested by the author in a cost accounting and an MBA managerial accounting class, by another instructor in an introductory management accounting class, and by a third instructor at an external university in a cost accounting class. The case requires considerable work out- side of class to think through the process of costing a product and to develop the requisite Excel models. The author has found it helpful to advise students early on that the case is lengthy and detail-intensive, and to suggest that they plan to break it up into small sections at a time.

• Implementation in cost accounting

This case is designed primarily for cost accounting classes. Students should be familiar with basic Excel skills and cost management concepts. The case should be utilized in conjunction with the chapter on basic job order costing: it is not nec- essary to have covered topics on activity-based costing, process costing, or shared costs. The requirement to build a seg- mented income statement requires a basic knowledge of financial accounting, but if the instructor has not yet covered the chapter on segmented income statement and responsibility accounting, a brief description of the format would be suf- ficient. As not all programs choose to cover proprietorship accounting at this level, the discussion of direct labor costs is geared towards selecting an appropriate rate for future employees and analyzing the subsequent profitability.

The author’s intermediate cost accounting class received the case during their costing module (a ‘‘module” consists of three to four chapters grouped by subject and followed by an exam). The case was assigned individually and utilized the online Excel assignment system to develop the costing models. However, each student was also required to submit a written response to the individual requirements, including the executive summary and appropriate exhibits. A class discussion fol- lowed case submission.

The external cost accounting class was an extremely large, auditorium-based class at a large public university in the southeast. This class was assigned the case as their applied homework for the costing chapters and the assignment was com- pleted and submitted online using the Goldwater Excel Assignment System. No additional write-up or executive memo was assigned, and students only completed quantitative parts or simple drop-down boxes for the requirements.

• Implementation in a master of business administration course

This case has also successfully been used in an MBA class and an introductory course to managerial accounting. Both the MBA and the introductory students were provided the more detailed Excel-based costing model to assist in formulating the problem.

The MBA class required prior completion of the introductory course to basic accounting and statement analysis. The MBA students received the case during their module on costing methodologies and issues. The case was assigned to small, two- person teams and required a written case analysis, including the executive summary and appropriate exhibits. The MBA stu- dents then used the case to discuss not only costing, but the process of researching and determining costs for a start-up.

• Implementation in an introductory management accounting course

The introductory management accounting class consisted of three sections taught by another instructor at the author’s university. The instructor chose to break the case into three parts to introduce the students to the costing process. Part one consisted of requirements one through three and was presented as an in-class exercise, with the students permitted to work in groups if they desired. In this way, the instructor ensured all students had the basics of costing correct prior to assignments outside of class. Part two was a take-home assignment and consisted of the cost conversion table and the costing model. Stu- dents were required to complete the costing model through the cost per dozen by variety and were provided the Excel-based template to do so. They were also permitted to work on this assignment in groups if they wished, although the assignment was submitted individually. Once the models were turned in, the instructor provided a completed, correct template and the students were given the next portion as a take-home assignment. Part three required them to calculate the cost of the promotional samples, develop the total revenue and cost of goods sold table (by variety), and produce the pro-forma income statement. Again, the Excel-based template was provided to assist them. The instructor did not require the sensitivity anal- yses (primarily due to time constraints) or the executive memo. She reported that the case was worthwhile and that she would use it again. The students tended to be divided: the class is a required course, and includes non-business majors. In general, however, the instructor reported that the engaged students found it fun, despite the large amount of work required. Students especially seemed surprised and fascinated by the fact that it was based on a real, local business.

• Implementation options and average time to complete

There are several options that have worked well in assigning how the students are to complete the analysis. In the first three options, the case works well as an individual, a small team (two member), or a group assignment.

• The case is assigned as a written assignment only, and a written analysis supported by spreadsheets (and preferably by the attached workbook) is
• The case is assigned as a written assignment, and, once students have turned in their papers, the instructor leads a class discussion on costing methodology and strategic decision making using a cost
• The case is assigned as a written assignment to be followed by formal class presentations where individuals or teams present their recommendations for pricing strategies, which labor rate to use in costing the truffles, and whether Thor should switch to the all-premium
• The case is assigned for pre-reading and then the analysis is performed in class with instructor guidance. In this instance, the case may also be broken into modules, with the students applying the day’s topic to the case

Intermediate cost accounting students indicated that they spent an average of 13 h outside of class preparing the case; MBAs spent an average of 14 h; introductory managerial accounting students varied widely, but the average was six hours outside of class as they did considerable work in class with instructor support. At a minimum, the instructor should set aside half an hour for a class discussion. Team presentations could be restricted to 10 or 15 min each (not including feedback).

• Opportunity to develop professional skills

• Modeling

Competency and fluency in modeling and in the use of Excel is requisite for success within the business world, and espe- cially within the accounting profession. Teaching modeling skills, however, is often difficult to implement within the core cur- riculum. This case specifically engages the student in using Excel to create linked models for costing in a sequence of steps.

The Excel workbook accompanying the case includes a template for use in classes. For more advanced classes, or one in which the instructor wishes to provide instruction in model design, the case may be assigned without the template. The tem- plate was used for both the introductory management accounting classes (n = 100) and for the MBA accounting class (n = 17). A separate Excel workbook is available with the models and a blank template to distribute to students, if desired. I strongly suggest that instructors provide the template, or some definite guidance as to the format in which they wish to see a costing model; otherwise, student creativity and inexperience can lead to a plethora of poorly-designed models. Addition- ally, if the instructor wishes to reduce the workload for introductory courses or larger sections, he or she may choose to limit the costed varieties of truffle.

One reason that modeling assignments are often missing from managerial and cost accounting courses is the excessive amount of grading time required to evaluate model design and format, formulas, and linkages between tables. A new system, the Excel Assignment System, developed by Dr. Paul Goldwater at the University of Central Florida is available to automat- ically grade Excel-based assignments. The system allows for retakes, threshold completion, and provides feedback to the stu- dent. It was utilized in the cost accounting classes, for both smaller classes (n = 37) and large auditorium classes (n = 180). An additional benefit to using the online system is the ability of the artificial intelligence programming to generate completely new (but logically linked) values for each student and each iteration of the case, thereby eliminating issues with solutions being posted to the Internet or shared among students. Paul Goldwater may be contacted at the Dixon School of Accounting, at the University of Central Florida (Paul.Goldwater@ucf.edu) for a free trial of the Excel Assignment System using the ‘‘Truf- fle in Paradise” case.

• Professional writing

Finally, the last requirement allows the instructor to assign students an opportunity to practice professional writing skills in writing an executive memo outlining their findings. This memo is assigned in addition to the student’s write-up of the prior requirements and may be deleted or amended as the instructor wishes. For example:

●

If the instructor has primarily used in-class work for the assignment, he or she may assign the executive memo as the only written requirement to be submitted.

●

The requirement may be altered to fit the circumstances; for example, the instructor utilizing the case in the introductory management accounting course ended the assignment at the pro-forma income statement and did not use the sensitivity analyses of labor rates and materials cost. In such a case, students could provide an executive memo simply outlining costs per variety and a suggested pricing strategy.

●

In large, auditorium classes utilizing the automated grading system to evaluate the Excel tables and costing models, the executive memo may be omitted entirely.

In practice, the author has assigned two grades to the written assignment: one for the analysis and model and one for writing skills based on the executive memo. The grades are then averaged (or may be weighted) for the overall case grade. This has been particularly helpful in evaluating students whose primary language is not English.

7. Evidence regarding case efficacy

• Direct evidence of efficacy

The case was assigned to the cost accounting class as an accompaniment to the costing module (covering chapters on Job, Process, ABC, and shared costs) and due immediately prior to the module exam. The overall mean score for cost sections that

Table TN-1

Evidence for case efficacy.

	Without case study					With case study
	Semester	n	Exam mean	Exam median		Semester	n	Exam mean	Exam median	Case mean	Case median
Panel A: Cost accounting
Spring 2014 (a)		21	77.30	83.50	Fall 2014		25	72.27	73.25	87.40	85.00
Spring 2014 (b)		12	80.98	81.88	Spring 2015 (a)		13	78.51	76.20	81.31	93.00
Spring 2016 (a)		34	77.14	83.00	Spring 2015 (b)		15	77.13	84.60	69.73	76.00
Spring 2016 (b)		17	74.29	82.00	Fall 2015		37	78.24	82.00	84.81	90.00
Overall		84	76.98	82.00	Overall		90	76.43	79.84	82.51	87.88

Test for differences between means of exam: t-stat 0.1997 (p = 0.84)

Panel B: MBA accounting for decision-making

Fall 2014	21	77.88	80.40	Spring 2015	17	89.68	88.50	83.06	81.00
Spring 2016	26	86.05	86.75	Fall 2015	13	90.35	91.50	90.04	90.00
Overall	47	82.40	83.60	Overall	30	89.97	91.00	86.08	90.00

Test for differences between means of exam: t-stat 3.0197 (p = 0.0035)

did not use the case was 76.98% (median 82.00) and the overall mean for cost sections that did use the case was 76.43% (median 79.84). Although there was a non-significant difference between these scores (p = 0.84, two-tailed), exam content did not specifically require the development of costing models (amounts were simply given in job costing problems), the case itself had an overall mean of 82.51% (median 87.88). Please see Table TN-1, panel A, for the relevant statistics.

The case assigned to the MBA students showed much clearer evidence of learning from the case. In this instance, the MBA students did not have the prior background in managerial accounting and had consistently struggled with the costing chap- ters in earlier sections. In the semesters before and after the case was used, the average score on the exam covering costing methodologies was 82.40% (median 83.60). In the semesters in which the case was assigned to the MBA class to accompany the costing chapters, the average score on the exam rose to 89.97% (median = 91.00) and the case itself had a mean score of

Table TN-2

Results of student survey for case efficacy.

Course^a Mean Median p-value^b Coding, anchors, and responses

			1 No impact 2 on my understanding	3 Somewhat increased my understanding	4	5 Significantly increased my understanding
Without accurate costing, it is hard Management to correctly identify the highest accounting and lowest cost products Cost	3.76 3.92	4.00 0.000 4.00 0.000	10 2 2 2	22 9	33 8	32 16
accounting
(1) Cost	3.19	3.00 0.606	3 1	6	2	4
accounting (2) MBA	4.36	4.00 0.000	0 0	1	7	6
Job order costing is not always quick, Management easy, or simple accounting	3.99	4.00 0.000	10 2	13	29	46
Cost accounting (1) Cost	4.54 3.56	5.00 0.000 3.50 0.132	1 1 2 1	3 5	4 2	28 6
accounting (2) MBA	4.43	5.00 0.000	0 1	1	3	9
Overall, to what extent did the case Management expose you to the complexities of accounting job costing? Cost	4.02 4.43	4.00 0.000 5.00 0.000	4 3 0 1	18 4	37 10	38 22
accounting (1) Cost	3.31	3.00 0.312	1 2	8	1	4
accounting
(2) MBA	4.57	5.00 0.000	0 0	0	6	8
Overall, to what extent did the case Management make you think about the role of accounting cost classification in costing? Cost	3.69 3.89	4.00 0.000 4.00 0.000	7 5 1 0	28 13	32 11	28 12
accounting (1)
Cost accounting (2) MBA	3.25 4.36	3.00 0.362 4.50 0.000	1 2 0 0	7 2	4 5	2 7
Coursea	Mean	Median p-valueb	1 No 2	3 Not sure	4	5 Yes
Overall, this case was a valuable Management learning experience accounting Cost	4.00 4.14	4.00 0.000 5.00 0.000	12 0 1 4	8 5	35 6	44 21
accounting (1) Cost	3.38	4.00 0.371	4 1	1	5	5
accounting
(2) MBA	4.57	5.00 0.000	0 0	2	2	10

^a Cost accounting (1) represents the author’s smaller cost class and cost accounting (2) represents the large, external cost class.

^b The p-values are determined using one sample t-test compared to the mid-range value of 3 (two-tailed).

86.08% (median 90).³ In this case, there is clear evidence that the case, with its hands-on approach to explaining the costing process for a small business, led to increased understanding for professional students without prior accounting backgrounds (p-value = 0.0035 for two-tailed test for difference of means). The data for these statistics is presented in panel B of Table TN-1.

• Survey evidence of student perception of case value

Anonymous student feedback was received from 37 students in the author’s cost accounting class, answered the question ‘‘Overall, this case was a valuable learning experience” with an average of 4.14 (1 = No, 5 = Yes), and a median and mode of 5. The 16 students completing the survey in the external cost accounting class rated the experience as a 4.57 (median and mode both 5). The 100 students in the introductory management accounting class rated it as a 4 (median 4, mode 5). Finally, the 14 students in the MBA class rated the learning experience as a 4.57 (median and mode both 5). Table TN-2 reports the mean and median scores for each item on the survey, as well as distribution of answers.

Overall, the mean scores for the six items are significantly different from a middle score of 3 for all but the large cost accounting class. Because the class was so large (n = 180), the instructor was not able to ensure individual completion of sur- veys (response n = 16), and the case was not presented in class but simply assigned as an Excel-based, web-delivered assign- ment. Although the web-delivered Excel assignment system does make it possible to assign an intensive case to a large class, the inability to address the qualitative aspects and to present the case in a more personal format did affect the overall learn- ing rate and satisfaction. Surprisingly, however, the introductory management accounting class, despite having a high pro- portion of non-accounting, non-business students forced into taking a course that they do not regard as relevant, did show a significant pattern of learning and interest. Of all the courses, the MBAs seemed to have the highest learning and satisfaction from developing and applying a model that allowed them to directly use textbook theory on an actual business situation.

• Qualitative evidence from student feedback

The survey also allowed for free-form comments on the aspects the students found to be the most difficult and the most interesting or surprising. The most difficult aspect, across all sections, was learning to build the cost model and realizing how linked all the tables and values were to each other. The introductory students also found it difficult to analyze a case study format and find relevant data (the majority had never been exposed to case formats prior to the introduction of this case). Most students reported finding it surprising how complex costing actually was – textbooks and homework had led them to think that direct costs were easily and quickly obtained. The intermediate and MBA students also found construction of the model interesting. All classes were surprised and interested to discover that the case was based on an actual, local business. The intermediate cost class was surprised by the discovery that although it looked like the Sea Salt Caramels would be the most expensive, they were the least costly variety to make. The introductory class was surprised to learn how slim the profit margins were on such a business.

8. Solutions

Solutions and Excel templates are available upon request from Kimberly Zahller (kzahller@uccs.edu).

Acknowledgements

I wish to thank Carla Genao for enthusiastically volunteering as a research assistant in the initial costing consultations. I also wish to thank Dan Kifer for presenting me with an interesting problem, allowing me to develop it as a case, and enthu- siastically sharing his experiences as an accidental entrepreneur (and his truffles) with my students.

References

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Ansari, S., & Bell, J. (2008). Activity-based management in Shell Gabon. IMA Educational Case Journal, 1, 1–7.

Ansari, S., Mulligan, P., & Nanni, A. J. Jr., (2008). Pelarsen windows: Humans v. robots. IMA Educational Case Journal, 1, 1–16.

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³ The higher case grades for the MBA classes were largely attributable to the MBA students’ greater experience with professional writing as cases included a score for writing quality associated with the executive memo. The MBA students’ greater experience with Excel based spreadsheets and modeling also seemed to help them form the mental framework to understand the costing problem more rapidly than the undergraduate cost students, who had not yet developed Excel modeling skills to the same degree.

Krumwiede, K. R., & Walden, W. D. (2013). Dream Chocolate Company: Choosing a costing system. Issues in Accounting Education, 28, 637–652. McGregor, S. (2014). Product costs: Application in an insurance company. IMA Educational Case Journal, 7, 1–17.

Moriarity, S., Hopkins, L., & Slessor, A. (2011). TransGlobal airlines. IMA Educational Case Journal, 4, 1–7.

Mulligan, P., Nanni, A. J., Jr., & Ansari, S. (2008). Hammond Cards Inc: The creative acquisition. IMA Educational Case Journal, 1, 1–11. Peacock, E., & Juras, P. (2010). Alternative costing methods: Precision Paint Shop’s dilemma. IMA Educational Case Journal, 3, 1–6.

Taylor, A. (2008). TRIM Inc.. IMA Educational Case Journal, 1, 1–5.