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Your consulting team has been hired to review these variances and bonuses and to prepare a memo to Blue Steele Toy Company's CEO outlining the
Your consulting team has been hired to review these variances and bonuses and to prepare a memo to Blue Steele Toy Company's CEO outlining the following Explanation of selected variances: Matilda Jeffries is interested in having an outsider review formulate some likely explanations for the observed variances. As a team, review these variance reports in Tables 6 and 7 and provide explanations for the selected e for net income on table was increasing sales a good thing the variance reports and variances Matilda is concerned about o Sales volume varianc hypothetically? Was increasing sales a good thing actually? o Flexible budget variance for net income on table 6. Why are profits lower than expected? o Efficiency variance for total variable production costs on table 7. What areas would you recommend for improvement efforts based on the efficiency variances? o Price variance for total variable production costs on table 7. What areas would you recommend for improvement efforts based on the price variances? On table 7 look at all the individual materials with their price and efficiency variances. Do you see any pattens? Are there any favorable variances that should be of concern? o . Recommendations to improve profitability: Based on the variance analysis, offer two recommendations to Matilda Jeffries to improve profitability of Blue Steele Toy Company next year or further in the future. Analysis of the incentive compensation plan for department heads: Matilda Jeffries has hired your consulting team to comment on the incentive compensation plan for department heads pointing out its strengths and weaknesses. If the department heads focus only on improving their own compensation, will that create any problems for the company as a whole? Based on these strengths and weaknesses, offer two modifications. . LEARNING OBJECTIVE OF THE CASE: identify managerial accounting-related real world business issues and propose solutions to these issues. GRADING ON THE CASE. This case analysis is worth 25 points. The breakdown is as follo Explanation of variances (Focus on the variances specified above) Recommendations to improve profitability (Remember profits involve both costs & revenues Analysis of incentive compensation plans and recommendations Flow of paper and consistency within the group and to the actual case: 15 2 5 3 (Remember profits involve both costs & revenues) Complete this assignment in groups of 2-4 students. As outlined in the syllabus, if you complete this case assignment as an individual, you will receive a 20% penalty on your final score I expect the end result to be about 2 or 3 pages long
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