5 5 Chapter 17 Discussion Forum Use this forum to post your answer to the Chapter 17 Discussion TIF 17-34 (text page 884). Answer all questions in your primary post. You must reply to two other students. Refer to the grading rubric for point scoring guidelines. Forum Guidance: This is a complex situation that will require some time to consider the accounting situation and the implications. You do not have to create a memo for the assignment. Simply create the body of the memo and post it as the primary post. This week I am looking for accounting analysis, application of the analysis, and solid managerial recommendations. The primary post and reply posts should contain references to, or concepts from Chapter 17. You will need to complete a cost per equivalent unit calculation on each machine. You do not have to include the actual calculations in the primary post, but your primary post must utilize the results. For this reason you will not be able to see the other student posts until you make a primary post. It is perfectly fine to make your best effort in the primary post and then through the reply post process demonstrate that you have really grasped the concept. It is not OK to simply throw a bunch of emotional or editorial opinions into the forum. You are expected to make an accounting analysis and provide insight. Key - financial accounting (BUS200) is the process of keeping the books. Managerial accounting (BUS201) is the process of using the accounting data to solve management problems or make recommendations. This is a primary example of the need to first analyze the data and then construct a recommendation from the data. TIF 17-3 Communication Jamarcus Bradshaw, plant manager of Georgia Paper Company's papermaking mill, was looking over the cost of production reports for July and August for the Papermaking Department. The reports revealed the following: Pulp and chemicals...... Conversion cost... Total cost Number of tons.... Cost per ton ........ July $295,600 146,000 $441,600 1,200 $ 368 August $304,100 149,600 $453,700 1,130 $ 401.50 Jamarcus was concerned about the increased cost per ton from the output of the department. As a result, he asked the plant controller to perform a study to help explain these results. The controller, Leann Brunswick, began the analysis by performing some interviews of key plant personnel in order to understand what the problem might be. Excerpts from an interview with Len Tyson, a paper machine operator, follow: Len: We have two papermaking machines in the department. I have no data, but I think paper machine No. 1 is applying too much pulp and, thus, is wasting both conversion and materials resources. We haven't had repairs on paper machine No. 1 in a while. Maybe this is the problem. Leann: How does too much pulp result in wasted resources? Len: Well, you see, if too much pulp is applied, then we will waste pulp material. The customer will not pay for the extra product, we just use more material to make the product. Also, when there is too much pulp, the machine must be slowed down in order to complete the drying process. This results in additional conversion costs. Leann: Do you have any other suspicions? Len: Well, as you know, we have two products-green paper and yellow paper. They are identical except for the color. The color is added to the papermaking process in the paper machine. I think that during August these two color papers have been behaving very differently. I don't have any data, but it just seems as though the amount of waste associated with the green paper has increased Leann: Why is this? Len: I understand that there has been a change in specifications for the green paper, starting near the beginning of August. This change could be causing the machines to run poorly when making green paper. If this is the case, the cost per ton would increase for green paper. Leann also asked for a database printout providing greater detail on August's operating results. September 9 Requested by: Leann Brunswick Papermaking Department-August detail B C D E F A Production Run Number Paper Machine Color Green Yellow DOWN Green Yellow Green Yellow Green Yellow Material Conversion Costs Costs 40 300 18.300 41,700 21.200 44.600 22.500 36,100 18.100 38,300 18,900 33.900 15.200 35,600 18,400 33.600 17,000 304,100 149,600 Tons 150 140 150 120 160 140 130 140 1,130 Total Prior to preparing a report, Leann resigned from Georgia Paper Company to start her own business. You have been asked to take the data that Leann collected, and write a memo to Jamarcus Bradshaw with a recommendation to management. Your memo should include analysis of the August data to determine whether the paper machine or the paper color explains the increase in the unit cost from July. Include any supporting schedules that are appropriate. Round any calculations to the nearest cent. 5 5 Chapter 17 Discussion Forum Use this forum to post your answer to the Chapter 17 Discussion TIF 17-34 (text page 884). Answer all questions in your primary post. You must reply to two other students. Refer to the grading rubric for point scoring guidelines. Forum Guidance: This is a complex situation that will require some time to consider the accounting situation and the implications. You do not have to create a memo for the assignment. Simply create the body of the memo and post it as the primary post. This week I am looking for accounting analysis, application of the analysis, and solid managerial recommendations. The primary post and reply posts should contain references to, or concepts from Chapter 17. You will need to complete a cost per equivalent unit calculation on each machine. You do not have to include the actual calculations in the primary post, but your primary post must utilize the results. For this reason you will not be able to see the other student posts until you make a primary post. It is perfectly fine to make your best effort in the primary post and then through the reply post process demonstrate that you have really grasped the concept. It is not OK to simply throw a bunch of emotional or editorial opinions into the forum. You are expected to make an accounting analysis and provide insight. Key - financial accounting (BUS200) is the process of keeping the books. Managerial accounting (BUS201) is the process of using the accounting data to solve management problems or make recommendations. This is a primary example of the need to first analyze the data and then construct a recommendation from the data. TIF 17-3 Communication Jamarcus Bradshaw, plant manager of Georgia Paper Company's papermaking mill, was looking over the cost of production reports for July and August for the Papermaking Department. The reports revealed the following: Pulp and chemicals...... Conversion cost... Total cost Number of tons.... Cost per ton ........ July $295,600 146,000 $441,600 1,200 $ 368 August $304,100 149,600 $453,700 1,130 $ 401.50 Jamarcus was concerned about the increased cost per ton from the output of the department. As a result, he asked the plant controller to perform a study to help explain these results. The controller, Leann Brunswick, began the analysis by performing some interviews of key plant personnel in order to understand what the problem might be. Excerpts from an interview with Len Tyson, a paper machine operator, follow: Len: We have two papermaking machines in the department. I have no data, but I think paper machine No. 1 is applying too much pulp and, thus, is wasting both conversion and materials resources. We haven't had repairs on paper machine No. 1 in a while. Maybe this is the problem. Leann: How does too much pulp result in wasted resources? Len: Well, you see, if too much pulp is applied, then we will waste pulp material. The customer will not pay for the extra product, we just use more material to make the product. Also, when there is too much pulp, the machine must be slowed down in order to complete the drying process. This results in additional conversion costs. Leann: Do you have any other suspicions? Len: Well, as you know, we have two products-green paper and yellow paper. They are identical except for the color. The color is added to the papermaking process in the paper machine. I think that during August these two color papers have been behaving very differently. I don't have any data, but it just seems as though the amount of waste associated with the green paper has increased Leann: Why is this? Len: I understand that there has been a change in specifications for the green paper, starting near the beginning of August. This change could be causing the machines to run poorly when making green paper. If this is the case, the cost per ton would increase for green paper. Leann also asked for a database printout providing greater detail on August's operating results. September 9 Requested by: Leann Brunswick Papermaking Department-August detail B C D E F A Production Run Number Paper Machine Color Green Yellow DOWN Green Yellow Green Yellow Green Yellow Material Conversion Costs Costs 40 300 18.300 41,700 21.200 44.600 22.500 36,100 18.100 38,300 18,900 33.900 15.200 35,600 18,400 33.600 17,000 304,100 149,600 Tons 150 140 150 120 160 140 130 140 1,130 Total Prior to preparing a report, Leann resigned from Georgia Paper Company to start her own business. You have been asked to take the data that Leann collected, and write a memo to Jamarcus Bradshaw with a recommendation to management. Your memo should include analysis of the August data to determine whether the paper machine or the paper color explains the increase in the unit cost from July. Include any supporting schedules that are appropriate. Round any calculations to the nearest cent