alternatives might be superior.

Case:

MacDonald Inc. manufactures and markets a complete line of ski boards. MacDonald has three manufacturing departments-Moulding, Assembly, and Finishing- and two service departments Physical Resources and Human Resources.

The basic fiberglass boards are fabricated in the Moulding Department. Fittings are attached to the boards in the Assembly Department. The boards are painted, surfaces are sanded and polished, and the completed boards are packed in the Finishing Department. Varying amounts of materials, time and effort are required for each of the various ski boards produced by the company. The Physical Resources and Human Resources provide services to the manufacturing departments

MacDonald has always used a plantwide overhead rate. Direct labour hours are used to assign the overhead to products. The overhead rate is computed by dividing the companys total estimated overhead cost by the total estimated direct labour hours to be worked in the three manufacturing departments.

Sarah Lane, the manager of cost accounting has recommended that the company use department overhead rates rather than a single, plantwide rate. Planned operating costs and expected levels of activity for the coming year have been developed by Sarah and are presented below:

	Service Department Costs
	Physical Resources	Human Resources
Variable Costs	$ 60,000	$ 8,000
Fixed Costs	140,000	78,000
Total service department costs	$200,000	$86,000

	Manufacturing Department
	Moulding	Assembly	Finishing
Departmental activity measures:
Direct labour hours	10,000	40,000	30,000
Machine hours	0	8,000	50,000
Department costs:
Raw materials	$ 800,000	$2,000,000	$ 100,000
Direct labour	150,000	600,000	450,000
Variable overhead	100,000	200,000	50,000
Fixed overhead	1,200,300	702,300	597,400
Total department costs	$2,250,300	$3,502,300	$1,197,400

	Manufacturing Department
	Moulding	Assembly	Finishing
Use of service departments
Physical Resources
Estimated physical resources hours	4,000	3,000	1,000
Percentage of peak-period requirements	50%	35%	15%
Human Resources
Estimated human resources hours	200	600	800
Percentage of peak-period requirements	15%	40%	45%

Assume that the Double Black ski board has the following annual requirements for machine time and direct labour time in the various departments

	Machine Hours	Direct Labour Hours
Moulding Department	0	500
Assembly Department	200	1,000
Finishing Department	1,500	800
Total hours	1,700	2,300

Prepare the memo and related schedules for Ms. Spence. Normal case format should be followed.

Typical Case Format CMAII Case Studies

The typical format for a Case Study in CMAII consists of a memo 3 to 6 pages including schedules that is generally prepared by an Accounting Analysis Group within the controllers office, or by an external group of accounting consultants, either for the controller or for the top management team.

While the details and approach to every case are different, the basis format is as follows:

1. An introduction which describes the major problem or challenges facing the business which you are being asked to help solve. It also generally includes a review of the specific issues you were asked to deal with and an overview of how you plan to proceed. This last aspect is to refresh the memory of the person who assigned the project to you and can be done as a list of the contents of your memo.

2. A list of alternatives that may be considered to help solve the problem facing the business (as outlined in part 1.) and an analysis of each alternative (both qualitative and quantitative aspects). Be sure and include any assumptions and you are making and any necessary calculations so it is clear to the reader how you arrived at your numerical results.

3. A recommendation that is based on one of the alternatives or a combination of alternatives and an explanation as to why this alternative was chosen (if not already obvious).

4. A brief conclusion.

Any supporting schedules may either be included right in the body of the case memo or put in an Appendix. Be sure to make reference to any schedule in an appendix in the main body of the memo.