JET2 Task 4 Financial Analysis MBA Program Getting Started 12/29/2011

What is JET2 Task 4? Task 4 consists of three questions focusing on: Costing Methods (Activity Based Costing) Breakeven Analysis (Cost-Volume-Profit) Expected length of submission could range from 3 to 5 pages. There is no set length.

Using this information Disclaimer: The information in this Getting Started document is the opinion of the Course Mentor. It is not intended to restrict or inhibit your own thoughts and experiences in complying with the Rubric Questions. It is merely one way out of many to organize your responses.

Learning Resources My Labs Plus– Horngren: Accounting 8e My Finance Lab – Gitman: Principals of Managerial Finance 12th ed. CourseSmart (embedded text) Hilton: Managerial Accounting 9th ed.

Additional Learning Resources Skillsoft Books 24x7 Introduction to Accounting: Language of Business (video lectures) Activities at a Glance Financial Accounting Standards Board Database

Additional Resources Help Documents posted in the Financial Analysis Learning Community Study Sessions: Study Sessions for JET2 (Tasks 1-4 only) are every Tuesday night from 6pm to 8pm Mountain Time. The meeting website: http://wgu.connectpro.acrobat.com/gradacctg Conference telephone information: Number: 1-888-450-5996 Passcode: 551362

Requirements for JET2 Task 4 Three level task: 0 - Unsatisfactory to 2 - Satisfactory. Must score 2 to pass the task. All five rubric elements must be completed and submitted to TaskStream in order to pass Task 4. The response requires a paper including any outside references and a copy of the workbook you are using.

Study Guidelines It might be a good idea to attempt the first four tasks in numerical order. In order to complete the tasks, you must read and become familiar with the concepts and terms within the Course of Study and the Story Line for Competition Bikes. Read the materials with the intent on knowing the ‘why’ about the analysis as well as the ‘how’ to use the topic information. Review all of the tabs for the Competition Bikes spreadsheet to familiarize yourself with the data.

Study for Task 4 You should have gone through the Course of Study materials for Task 1 – Task 4. Refresh or acquire basic managerial accounting knowledge before you approach Task 4. Make sure you address the ‘why’ part of the topics. The key thing to remember is that you are conducting an analysis of Competition Bikes financial and management activities, not merely presenting the data on the spreadsheets.

Costing Methods Question A1 This task question requires an understanding on how Activity Based Costing works. You do not have to calculate anything, but you must know the dynamics. Provide a short explanation of Activity Based Costing (ABC) What is the basic difference between traditional costing How does it help a company who uses ABC? Describe the different results between the Traditional Method and ABC as evidenced by the income statement at the bottom of the tab. What implications are there for cost improvement? Make a recommendation of which costing method CB should adopt? Traditional or ABC Support it with data (you might have already done so answering the above questions.)

Breakeven Point Question A2 The Breakeven Point requires understanding of the basic equation for Breakeven points. It’s in your Course of Study and illustrated in the Cost-Volume-Profit tab (CVP). A2 – Explain the basics of Breakeven analysis. You can use the top half of the CVP tab for data to back up your discussion. Discuss the relationship between Sales/Unit, Units and total sales. Discuss the need to average the Unit Contribution margin for Titanium and Carbon Fiber bikes to determine the total contribution margin. Discuss the relationship between the Contribution Margin dollars and the Fixed Costs.

Breakeven Analysis Change Question A2a A2a – Two cost increases occur in the question: direct costs rise by 10% per unit and fixed costs increase by $50,000. Why does an increase in direct cost cause a decrease in Contribution Margin? What must CB do to again breakeven? Why does an increase in fixed cost cause a loss in a previous breakeven scenario. Why is it important for a company to understand what factors impact breakeven and profitability in a cost-volume-profit approach? Make sure you provide data from the lower schedule in the CVP tab to back up your answers.

Submission Tips For your discussions, make your point/decision obvious and back it up with detail found in the spreadsheets. Insufficient data and insufficient analysis will result in a rejection. Remember to always apply analysis. Don’t just put in the numbers, but explain why they are different and if you can put them in a context with other numbers do so. A lack of analysis will result in that element not passing. Make sure you organize your work according to the rubric questions, so that the grader can easily identify your specific answers. Don’t overthink your answers, but base them on the information given. If in doubt on details, refer back to the story line or the spreadsheet. If you aren’t confident about your work, don’t add words to cover yourself. Extraneous words will only make the graders have a harder time to find your answers or conclude that you aren’t quite getting your answers right. More clear answers will yield more clear feedback from the graders.

Course Mentoring Guidelines Performance Assessments are not homework assignments and you should not work with other students on the specific wording of your submissions. What the Course Mentor can do: Help interpret rubric questions Assist with content Clarify on grader comments Help frame task revisions Provide additional resources, as needed Course Mentors are not graders, so we do not know if your task will meet the graders standards or not. All we can do is make suggestions. Following our advice does not guarantee a passing score.

Contact Information Course Mentor for JET2 Ken Cassell 1-866-895-9660 Ext 5661 kcassell@wgu.edu