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Microsoft Word - SAP Assignment Final_Sem1_2020 Page 1 of 7 Instructions for Parts A & B Scope: There are two parts in this assignment. Part A is a group assessment and Part B is an individual assessment. Part A requires students, as a group, to carry out an analysis of the case study (Jasper Spotless Pty Ltd – described in this document) and submit an executive report in PowerPoint format. Part B requires each student to map the Jasper Spotless Pty Ltd. case study data in the SAP accounting system and complete several transactions and reports and submit a document. This assignment requires students to demonstrate their: i) Ability to identify and apply relevant management accounting concepts and techniques to practical business contexts and make recommendations with a focus on the usage of qualitative and quantitative information. ii) Skills (specialist SAP software skills) by mapping the business scenario in SAP, determination of relevant master data and transactions, their creation and/or execution and producing relevant reports from the SAP accounting system. Weighting: Part A – Case analysis – Group (15%) Part B – SAP component – Individual (15%) Due date: 30th April 2020, Thursday, 4:00 PM Submission: A soft copy is required to be submitted for each part (A & B) separately. Soft copies in PDF document format are to be submitted in Canvas (in the two folders in the ‘Assessment’ section on Canvas: i) ‘Part A – Case analysis – Group’ and ii) ‘Parts B – SAP Component – Individual’. ACCT2019 Management Accounting ‐ Semester 1, 2020 Discipline of Accounting The University of Sydney business School Group SAP Assignment Page 2 of 7 CASE STUDY Jasper Spotless Pty Ltd (JSPL) produces two laundry detergent products (Magic and Frothy) and sells them directly to major clothes manufacturing companies. It has six departments – Magic (M###), Frothy (F###), Accounting (A###), Human resources (H###), Sales & distribution (S###) and Technical services (T###) within their Jasper cost centre group (JG###). At the beginning of current year, there are 2000 units of Magic on hand costing $45 each and 2,750 units of Frothy, at a cost of $20 each. Their budgeted estimates for current year are as follows: FINISHED GOODS PRODUCT Sales Volume Selling price Required ending inventory (units) Inventory at the beginning (units) Magic 120,000 $85.00 1000 2000x $45=$90,000 Frothy 385,000 $50.00 12,750 2750x $20=$55,000 DIRECT MATERIALS Direct Material per unit of Finished product (litres) Required ending inventory (Litres) Balance beginning of the year (litres) Material Cost per litre Magic Frothy A $1.50 6 3 30,000 20,000 B 1.00 4 1 5,000 4,250 C 3.00 2 2 3,000 5,500 D 2.50 6 0 5,000 8,000 DIRECT LABOUR Direct labour hours per batch of finished product Cost per direct labour hour Process Magic Frothy Blending 3.0 1.2 Packaging 0.3 0.2 Total Hours 3.3 1.4 Batch size (units) 33 35 Direct labour hours per unit 0.1 0.04 $25 MANUFACTURING OVERHEAD BUDGET & ACTUAL Variable overheads: Budgeted Cost ($) Actual Cost ($) Cost centres the costs to be charged (actual & budgeted) Indirect labour 371,502 800,000 M### Supplies & Electricity 599,069 620,000 M### Repairs, rates & insurance 1,047,422 1,080,643 M### Total variable overhead costs 2,017,993 2,500,643 Fixed Overheads: Factory rentals 1,200,000 1,200,000 A### Depreciation & miscellaneous 2,150,600 2,140,000 A### Total fixed overheads 3,350,600 3,340,000 Page 3 of 7 The management of JSPL currently uses traditional method of allocating overhead costs using a predetermined rate based on the number of units produced. They have recently hired you and you team as their Management Accountants and want you to prepare various components of operating budget, cost of goods sold budget and a budgeted income statement. By the end of the year you find that JSPL has actually sold 125,000 units of Magic at a selling price of $87 per unit and 370,000 units of Frothy at a selling price of $55 per unit. Actual ending inventories were 5000 units and 15,000 units of Magic and Frothy respectively. You also find that Material A was purchased for 1.55 per litre and material D was purchased at $2.48 per litre. They have used1 495,000 litres of Material B for producing Magic while they used 382,000 litres of Material B for Frothy. The production department also informed that they used 230,000 litres of Material C for Magic and 790,000 litres of Material C for Frothy. Actual direct labour hours per unit of Magic produced was 0.12 hours while for Frothy it was 0.038 hours. Total labour cost for Magic was $330,000 and for Frothy it was $337,440. Actual total variable manufacturing overhead spent was $ 2,500,643 and total fixed overhead spent was 3,340,000. Rent expenses were fixed for the year. Based on an invoice submitted by a Real Estate agent (called ###Realty), monthly payments are made by JSPL towards the actual rent. For controlling purposes, the management allocates rent costs to various cost centres/departments based on the area occupied by each department using an appropriate method of allocation in their SAP system and wants the identity of the costs to be shown in the receiving cost centres’ report. The area occupied by Magic (M###), Frothy (F###), Accounting (A###), Human resources (H###), Sales & distribution (S###) and Technical services (T###) is 400, 360, 100, 120, 100 and 140 square metres respectively. Management has also noticed the increase in variable overheads and in particular the cost of indirect labour. For controlling purposes, it has decided to allocate 30% of the indirect labour costs to the Magic (M###) and another 30% to Frothy (F###) cost centres; and 10% each to the remaining four cost centres – Accounting (A###), Human resources (H###), Sales & distribution (S###) and Technology services (T###). Management would NOT like these costs to be shown in the receiving cost centres’ performance reports as they don’t believe the managers of the receiving cost centres have any control on these costs. Except rental costs, all the other overhead costs (both fixed and variable overhead costs) as shown in the above table, are posted directly into the general ledger every month and charged to various cost centres as shown in the tables above. In addition, direct materials costs and direct labour costs are also posted directly in the general ledger every month and charged equally between Magic (M###) and Frothy (F###) cost centres. Management would like to allocate the cost of providing maintenance services (MS###) by the Technology Services (T###) cost centre to the other departments in the company. In the current month, T### has provided 200, 300, 50, 40 and 60 hours respectively to the Magic (M###), Frothy (F###), Accounting (A###), Human resources (H###) and Sales & distribution (S###) cost centres respectively. The total planned activity is 585 hours per month and the service rate is $120 per hour. It is important for JSPL to see these costs mapped in SAP and shown in the SAP reports for reference for controlling purposes. JSPL management has been concerned in recent times with the quality of their products. Both Magic and Frothy are marketed as highly effective laundry detergent products. Magic is sold as an all‐rounder effective clothes detergent, whereas Frothy is sold as a highly‐concentrated detergent liquid that is especially effective on tough stains. Even though sales have been more or less reasonable, the subsequent rate at which customers have been returning products has increased by an average of around 5% of Magic sales and around 8% of Frothy sales in 2019. This is particularly concerning as JSPL is competing with a handful of major brand competitors, and given the relative similarities of cleaning products on the market, customers are inclined to switch brands easily. On the production front, JSPL has tried to bring more control over product quality by minimising reliance on labour significantly and increasing reliance on machinery in the past 2 years. Many small aspects of production 1 Hint: Assume that the amount purchased by the Purchase Department was fully used in production. Page 4 of 7 that were taken care of by labour had been done away with. JSPL has also been trying to understand the quality of its direct materials and has been looking into suppliers that can provide higher quality materials at negotiable prices. Given the increased product return rates for Magic and Frothy, this has been an important concern. Management wants your team to explain any differences in net profit. In doing this, management also wants you to conduct a full cost‐volume‐profit analysis as well and report any notable insights. Based on these insights, management of JSPL also wants your team to understand all the variances and provide explanations for the cause of variances irrespective of whether the variances are favourable or unfavourable. The purpose of this is to find out: i) the specific factors that are affecting profits, and ii) any problems in production that need further investigating and managing. They expect an increase in sales by 10% in the next year. Expected inventory levels for the next year will be in the same proportion as current year except for the ending inventory of Direct Material A and C which they expect to have 20,000 litres and 5000 litres respectively. Your team also notes that Direct Labour cost per hour would increase by $2 for the year 2020. Your team is also required to prepare a flexible budget for the next year by taking into consideration the expectation that sales will increase (this is not required for SAP part). You and your team are required to generate analytical insights in relation to: All the variances (for both sales and costs), the potential reasons behind these variances and what these variances suggest about JSPL’s performance. The potential issues that might arise from the cost allocation methods currently used at JSPL for allocation overheads, and the potential improvements to these methods. Also, in relation to all the quantitative and qualitative analyses undertaken, management would like you to provide detailed recommendations for improvements. Based on the information analysed and the calculations your team has provided, you need to prepare a PowerPoint presentation to report to Richie. Your report should contain the following for PART A: a. Executive summary (1 slide limit only) – provides an overall summary of the case including background, analysis, major findings and recommendations and limitations (so that an executive reading the report will have enough detail to attend and participate at a meeting even if he/she has not read the rest of the report in detail). An executive summary needs to be thorough and also succinct. b. Background – a description of all the important issues and their background that is relevant to the case study and the findings. c. Analysis – provides an overview of the analytical/critical insights generated in light of the results obtained. Significant calculations should not be included here (but in the appendices), with this section referencing the appropriate appendices. d. Findings – detail and justify your key findings/discoveries from the analysis (this should not be a simple repetition/rephrasing of the analysis). Take care to recognise and describe any assumptions or where additional data may be necessary to further understand the situation. e. Recommendations – detail and justify your recommendations from the analysis and findings. For example, your recommendations may include the need for further specific forms of analysis or research on identified issues. Please also make sure that the recommendations are reasonable/justifiable and directly address the case and/or the analyses undertaken above. f. Action Items (Next Steps) – map out a plan that highlights specific/concrete actions to be taken in order to implement any proposed changes based on the findings and recommendations noted. This should not be a simple repetition/rephrasing of the recommendations. g. Limitations – detail specific limitations from the analyses such as assumptions made, any missing information, limitations/assumptions held behind the data, calculations and case study context. Page 5 of 7 h. Appendices – include all other relevant supporting material such as detailed calculation work (that has been referenced in the body of the report). There should be no new material or important material in the appendices. Please note: 1. Important note: While your calculations are important, the assignment will be valued mainly for its critical analysis, depth and creativity. 2. Report: You are required to prepare your report using PowerPoint. The report must meet the purpose of providing details for a manager with insufficient time to read the material (you will not be required to present). The body of the report must not exceed 10 PowerPoint slides. The executive summary has a limit of one slide only. In other words, the executive summary and the report together will be a total of 10 slides. Please also include a title slide in PowerPoint with student names and SIDs (this cover slide will not be counted as one of your 10 slides). You are encouraged to be succinct in your writing style (do not waste space on stating the obvious or including tedious calculations or including definitions of management accounting terminologies). Also remember that management would normally require as much information as would be required to help them make informed decisions, while at the same time they would not prefer information overload. To reflect this, the slides should be sufficiently detailed and informative but not be over‐crowded with words and/or diagrams; sufficiently informative dot‐points are encouraged. Each slide must be self‐explanatory, with proper headings and sub‐headings. Please make sure to see the Marking Guide for further details. 3. Appendices: You are encouraged to provide all supporting information (including calculations) in the appendices. The appendices do not need to be in PowerPoint format – you may use Word or Excel. The appendices should be no longer than ten (10) A4 pages. Please attach the appendices at the end of the PowerPoint report. 4. Cover page: Please provide a separate cover page with student names, SIDs and email addresses. Only one soft copy submission required per group. Cover pages can be found in Canvas. 5. Peer evaluation: Each group is required to sign and submit ONE (1) peer evaluation form that needs to be attached to their softcopy PDF submission. If you are in a group of three – members #1 and #2 will jointly decide the contribution of member #3; members #2 and #3 will jointly decide the contribution of member #1; members #1 and #3 will jointly decide the contribution of member #2. You will not be required to evaluate your own contribution. Each member should be aiming for 100% contribution. Contributions of 80% and below warrants investigation by the Unit Coordinator and a potential penalty for all group members, whether deemed to have contributed or not. In other words, if you have a non‐contributing group member it is your responsibility to get that individual to contribute, and hence this being a group task – you risk being penalised as well. 6. Soft copy: Create a single electronic PDF that includes the cover page, PowerPoint report, and appendices and submit via the Canvas submission link. Part B: SAP component (Individual) Your submission should: Have your SAP User account: i.e. GBI‐### & student SID in every page header. Penalties apply if the assignment does not have these identifying information in the submission. A cover page with your name, student ID and GBI number First page should Include a table of master data elements (G/L accounts, cost centres, cost elements, activity types, statistical key figures etc.), document numbers or allocation cycle number generated by the system and codes for your allocation cycles Page 6 of 7 Appropriate screen shots i) Display of actual distribution/assessment basic list after trial run, ii) direct activity allocation document display screen with details of cost centres and allocated values clearly shown) and iii) actual/plan/variance cost centre reports for your cost centre group (CG###) and for each of your cost centres for the current month. You can place two screens in each page, and make sure they are visible (cropping out unnecessary areas of the screens). One single PDF document with pages not exceeding TWELVE (excluding cover page) must be submitted. Penalties apply if the screens are ineligible or missing, or values are incorrect, and/or if the submission exceeds page limits. Note: Please note that you must first decide which master data (G/L accounts, vendors, cost elements, cost centres, cost centre group, activity types and statistical key figures), which transactions and which allocation methods are required to reflect the scenario and the reports required. You should then create relevant master data elements in the system (in client 221) using the SAP username (GBI‐###) assigned to you in workshops, perform transactions and produce reports. For the assignment, you should use the server A61 and client 221 (a different client). You need to first log in with your own GBI‐### and an initial password to be posted in the announcement soon). Hint 1: SAP is a real‐time accounting system, so you must use 01.01.2020 to 31.12.2020 for creating all your master data, today’s date for all postings, and current month for all your allocations and reports. Hint 2: Considering the limits on authorizations, complexity of the software, focus on user perspective in workshops, and real‐time nature of the accounting system, it is easier and efficient to create new master data and transactions if mistakes are made, rather than correcting the errors. Please note, if errors are made either in the creation of master data or in performing transactions, they CAN NOT simply be deleted, and the errors will therefore carry into the final cost centre reports. Marks are proportionate to the errors committed in the earlier stages (master data, transactions and allocations). Hint 3: For mapping the values and posting transactions in SAP, budgeted are given in the assignment. For actual costs, you will have to calculate direct material, direct labour based on the scenario and use the information provided in the assignment for other cost items. Hint 4: Please note that in SAP you must be entering values and produce reports for the current month. Therefore, you must convert all the values into per month and use them for postings in SAP. Table 1 gives a list of master data codes and Table 2 gives a list of generic field values to be used while creating master records and executing transactions in the SAP system. Failing to use the assigned codes will attract penalties. Note 2: Please note that in SAP you are entering the expenses for the current month and producing reports for the current month. Therefore, you must convert all the values into per month (and rounding up to next dollar) and use them for postings in SAP. Table 5: Master data codes to be used in SAP Details of master data and transaction evidence Master data codes 1 Bank Account 100 ###, 101### etc. 2 A/P Reconciliation account 250###, 251### etc. 3 Expense accounts 700###; 710###; 730###; 750###; 770###; 780###; 790###; 690### 7 Primary cost elements Corresponds to expense accounts you have created 8 Secondary cost elements 810###, 811### etc. 9 Cost centres M###, F###, A###, H###, S###, T### etc. M1###, C1###, D###, S1###, T1### etc. 10 Cost centre group SG###, SG1### etc. Page 7 of 7 11 Assessment cycle A###, A1### etc. 12 Distribution cycle D###, D1### etc. 13 Activity type MS###, MS1### etc. 14 Statistical key figure AR###, AR1### etc. Table 6: Generic field values to be used in SAP Master data and transactions Details of field Field values Account currency USD Account group for vendor (int. number assignment) KRED Assessment CEle Assessed Costs AType category – manual entry, manual allocation 1 Activity Unit – Hours HR Business area BI00 CElem category 1 (Primary costs/Cost reducing revenues) or 43 (Internal activity allocation) Company code US00 Controlling area /Hierarchy area NA00 Cost centre category H Country (vendor record) US Currency USD Current year 2019 Key fig. cat. Fixed value or Tot. values (to be determined) Payment Terms – Payable immediately due net 0001 Plan version 0 Price Indicator – plan price automatically based on activity 1 Profit center NA00 Receiver Cost centre group To be determined Receiver Rule To be determined Sender Rule Posted amounts Sorting key (posting date) 001 Stat. Key fig. UnM. (unit measure) M2 (Square metres) ‐‐oOo‐‐