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%) Needs Improvement (75%) Not Evident (0%) Value Prepare and Perform: Fixed Costs Identifies fixed costs and segregates them in the budget model Identifies fixed costs but does not segregate them in the budget model Does not identify fixed costs 12 Prepare and Perform: Variable Costs Determines how variable costs change as activity measures change and describes how this information can be applied Determines how variable costs change as activity measures change but does not describe how this information can be applied Does not determine how variable costs change as activity measures change 12 Prepare and Perform: Budget Model Creates a budget model and fixed costs are hard coded into the model Creates a budget model but fixed costs are not hard coded into the model Does not create a budget model 12 Prepare and Perform: Actual Activity Accurately adds actual activity measures to the model Adds actual activity measures to the model but contains errors related to accuracy Does not add actual activity 12 Prepare and Perform: Flexible Budget Calculations Accurately adds the flexible budget calculations to the budget model Adds flexible budget calculations to the budget model but contains errors related to accuracy Does not add flexible budget calculations to the budget model 12 Prepare and Perform: Compare Flexible Budget Compares the flexible budget to the actual expenses, including key variances specified, and interprets what this informs Compares the flexible budget to the actual expenses but omits key variances or does not interpret what this informs Does not compare the flexible budget to the actual expenses 12 Prepare and Perform: Budgeting Process Determines the aspects of the budgeting process that are in need of improvement and justifies response Determines the aspects of the budgeting process that are in need of improvement but does not justify response Does not determine the aspects of the budgeting process that are in need of improvement 12 Prepare and Perform: Budget Variances Interprets what budget variances represent and determines if all variances should be investigated Interprets what budget variances represent but does not determine if all variances should be investigated Does not interpret what budget variances represent 12 Articulation of Response Submission has no major errors related to citations, grammar, spelling, syntax, or organization Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas 4 Total 100%

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