ACCT2019 Management Accounting
Group Assignment
Semester 1, 2022
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 (Gretzky Pty Ltd – described in this document) and
submit an executive report in PowerPoint format. Part B requires each student
to map the Gretzky 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) 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: 7th May 2022, Saturday, 11:59 PM AEDT
Submission: Two files should be submitted. One for Part A & one for Part B.
Both files must be saved and submitted in PDF document format.
Please submit in Canvas in the two folders in the‘Assessment’section:
i) Part A – Case analysis – Group
ii) Part B – SAP Component – Individual
Your Part A PDF file should include the cover page, PowerPoint report, appendices and the
peer evaluation form.
Hockey Sticks Extraordinaire – Case Study
Composite carbon technology has been used in prosthetics, aerospace, car racing and now in
ice hockey sticks. Manufacturing and structural advances in composite technology have
allowed manufacturers to combine the best properties of wooden and aluminium sticks while
adding innovations that make composite sticks ideal for today’s hockey players.
In the early 1980s, many players, including Wayne Gretzky, the all-time leading scorer in
National Hockey League (NHL) history, experimented with aluminium shafts with wooden
blades. These sticks gained popularity throughout the 80’s and 90’s due to their unmatched
durability, stiffness and stability. The shaft was a rectangular aluminium tubing with a
replaceable wooden blade. Although the aluminium sticks were lighter, stronger and more
durable than wooden sticks, they did not provide players with a“feel”for the puck. This was
the primary reason for their failure.
In the late 1990s, full composite sticks were introduced to the sport. These sticks were made
from graphite fibres bound together by polymer resin, which made them extremely light.
Composite hockey sticks have soared in popularity and are currently used by more than 80%
of players in the NHL. Composite stick technology is ideal because it combines the flexibility
of wood to generate hard shots, the stiffness and stability of aluminium for control and a
lightness that is unmatched by wood or aluminium. The stick is lighter which means quicker
movement and faster release of the puck for passing and shooting.
Upon retirement, Wayne Gretzky and his father Walter Gretzky formed Gretzky Pty Ltd (GPL)
as a manufacturer and supplier of (ice) hockey sticks1. They produce two types of hockey
sticks, The Hull and The Howe. The Hull is sold as a stick that is highly effective for slap
shots, whereas The Howe is more of a finesse shooter’s stick (i.e. it has less power but greater
accuracy). Both products are top-of-the-line and too expensive for non-professional players.
Stick cost is not an issue for a professional hockey player even if they did have to buy them,
which they don’t. Their team would pay for all equipment costs including for sticks.
A quick Google search provides some insights into GPL’s competition and the hockey stick
market.
12 Best Hockey Sticks 2021 Review | Honest Hockey
Best Hockey Sticks 2022 – Top 5 Ice Sticks and Related Info (lifeinhockeywood.com)
Do NHL Players Pay for Sticks? – Getting Started with Hockey (startinghockey.com)
NHL Equipment Brand Stats – GearGeek
NHL Totals (geargeek.com)
1 Canadians never put“ice”before“hockey”. There’s only one kind of hockey in Canada.
And they never refer to“the boards”as‘the wall’.
Gretzky Pty Ltd sell The Hull and The Howe directly to professional hockey teams. Wayne’s
sales and price forecasts for 2021 are provided in the“Sales and Finished Goods”table below.
This table also provides actual inventory count values at the start of 2021. Production costs
from 2020 for The Hull inventory is $250 per stick while for The Howe, it is $300 per stick.
SALES FORECASTS and FINISHED GOODS VOLUMES – 2021
PRODUCT
Sales
Volume
(units)
Selling
price/unit
Desired ending
inventory (# of
sticks)
Opening inventory
(actual # of sticks)
The Hull 50,000 $500 1,500 2,500
The Howe 85,000 $650 2,000 2,850
DIRECT MATERIALS – STANDARDS and INVENTORY VOLUMES – 2021
Direct material required for
each hockey stick (grams)
Desired
ending
inventory
(grams)
Opening
inventory
(grams) Material Cost per gram The Hull The Howe
Composite wood $0.12 240 250 45,000 22,400
Fibre glass $0.30 150 130 15,000 4,650
Carbon fibre $3.00 10 15 13,000 9,500
Kevlar $2.50 20 35 5,000 4,000
DIRECT LABOUR STANDARDS – 2021
Process The Hull The Howe
Assembly – direct labour hours per batch 2.0 2.5
Finishing – direct labour hours per batch 2.3 2.2
Total processing hours per batch 4.3 4.7
Batch size (# of sticks) 50 36
Direct labour hours per stick 0.086 0.1306
Direct labour cost per hour $45 $45
MANUFACTURING OVERHEAD – 2021
Variable overheads: Budgeted cost ($) Actual costs ($) Costs to be charged to
Indirect labour 540,000 570,000 Maintenance
Supplies 125,000 150,000 Maintenance
Electricity 400,000 420,000 Maintenance
Repairs & maintenance 750,000 760,000 Maintenance
Rates & Insurance 300,000 300,750 Maintenance
Total variable overheads 2,115,000 2,200,750
Fixed overheads:
Rent 2,500,000 2,500,000 Accounting
Depreciation 1,500,000 1,500,000 Accounting
Miscellaneous 750,000 840,000 Accounting
Total fixed overheads 4,750,000 4,840,000
Total overheads 6,865,000 7,040,750
GPL has six departments – Accounting (A###), Maintenance (M###), Sales (S###), Tech.
services (T###) and The Hull (L###) production unit and The Howe (W###) production unit
within their Gretzky cost centre group (GG###), and all of them are classified as service cost
centres in SAP.
The management of GPL (Walter & Wayne) use a traditional volume-based method of
allocating overheads with a predetermined rate based on the number of sticks produced. They
have recently hired your team as their Management Accountants to prepare various
components of their operating budget, cost of goods sold budget and a budgeted income
statement. You have been provided with the following information:
GPL’s actual sales in 2021 were 59,600 sticks for The Hull at an average price of $550 per
stick and 80,900 sticks for The Howe at an average selling price of $675 per stick.
Actual year-end ending inventories were 1,000 sticks and 1,800 sticks of The Hull and The
Howe respectively.
Walter indicates that composite wood was purchased for $0.15 per gram and Kevlar was
purchased at $2.25 per gram. The cost of fibre glass and carbon fibre were $0.22 per gram
and $3.5 per gram respectively.
GPL used 7,900 kilograms (the complete purchase amount) of fibre glass for producing The
Hull, while they bought and used 11,200 kilograms of fibre glass for producing The Howe.
Wayne indicates that they bought and used 525 kilograms of carbon fibre for The Hull and
1,125 kilograms of carbon fibre for The Howe. 14,873.6 kilograms of composite wood were
bought and used for The Hull, whereas 19,164 kilograms were bought and used for The
Howe. For The Hull, 1452.5 kilograms of Kevlar were bought and used, whereas 3,194
kilograms were bought and used for The Howe.
Actual direct labour hours for each The Hull produced was 0.108 hours, while for The Howe
it was 0.125 hours. Total labour cost for The Hull was $875,400 and for The Howe it was
$655,500.
For 2021, the total actual variable manufacturing overhead spent was $ 2,200,750 and total
fixed overhead spent was $4,840,000.
Unfortunately for GPL and other hockey stick manufacturers, stick breakage has been making
the news in hockey circles. Several players have been extremely vocal and demonstrative with
their complaints (see Appendix A).
While professional hockey players do not worry about the cost of their equipment, they are
extremely particular that it functions flawlessly. Sticks breaking at inopportune times can result
in missed goals and games lost. Several of GPL’s major competitors have been emphasising
the durability of their products. Wayne and Walter have been concerned in recent times with
the quality of their sticks.
On the production front, GPL has tried to bring more control over product quality by reducing
GPL’s reliance on labour and increasing the use of computerised manufacturing methods.
Several aspects of production that required manual labour had been automated. GPL has also
been trying to understand the quality of its direct materials. Walter has been talking to various
suppliers that can provide higher quality materials at negotiable prices. Given the current
breakage concerns for The Hull and The Howe, this has been an important concern for the two
Gretzky’s.
Rent expenses were fixed for the year. Based on an invoice submitted by a Real Estate agent
(called ###Realty), monthly payments are made by GPL towards the actual rent. For
administrative purposes, GPL management allocates rent costs to various cost
centres/departments based on the are occupied by each centre/department using an appropriate
method of allocation in their SAP system. Management does not want the identity of this cost
to be shown in the receiving cost centres’report. The area occupied by The Hull (L###), The
Howe (W###), Maintenance (M###), Accounting (A###), Sales (S###) and Tech. services
(T###) is 450, 350, 200, 100, 300 and 180 square metres respectively.
Management has also noticed the increase in variable overheads. For controlling purposes, it
has decided to allocate 25% of the variable overhead costs to each of The Hull (L###) and The
Howe (W###) production units, 30% to Maintenance (M###), 10% to technology services
(T###) and 5% each for the remaining two cost centres – Accounting (A###) and Sales (S###).
Management would like these costs to be shown in the receiving cost centres’performance
reports, as it will give an indication of the variable overheads involved in each department and
motivate the departments to reduce the costs. Budgeted variable overheads for the Hull (L###),
the Howe (W###), Maintenance (M###), Accounting (A###), Sales (S###) and Tech. services
(T###) are $500,000, $560,000, $600,000, $100,000, $120,000 and $235,000 respectively.
Except for rent, all other actual overheads (both fixed and variable) as shown in the
‘MANUFACTURING OVERHEAD – 2021’table, are posted directly into the general ledger
and charged to various cost centres as shown in same the table. In addition, actual direct
material costs and direct labour costs are also posted directly in the general ledger every month
and charged to their respective cost centres, i.e. The Hull (L###) and The Howe (W###). Even
though The Hull (L###) and The Howe (W###) are products, for cost identification and
allocation purposes, they are treated as cost centres in the SAP Accounting system and costs
are charged to them accordingly. All the budgeted costs are also to be posted in SAP as planned
costs.
Management would like to allocate the cost of providing technological service (TS###) by the
Technical services (T###) cost centre to the other departments in the company. In the current
month, T### has provided 200, 300, 190 and 60 hours of service respectively to The Hull
(L###), The Howe (W###), Accounting (A###), Maintenance (M###) and Sales (S###) cost
centres respectively. The total planned activity is 675 hours per month and the service rate is
$150 per hour. It is important for GPL to see these costs mapped in SAP and shown in the SAP
reports for reference for controlling purposes.
You are also provided with the following information with regards to selling and administrative
expenses. Wayne takes care of all the sales and other related activities for the company. He
incurred $2,450,000 of expenses for GPL in 2021. Walter takes care of all administrative duties
(including accounting and maintenance) with $1,715,000 of costs in 2021. They both estimate
increases in these costs for 2022 by 15%. Please note that you are not required to map these
costs ($2,450,000 and $1,715,000) in SAP.
Walter & Wayne want your team to explain any significant sales, expenses and profit variances.
They also want you to conduct a full cost-volume-profit analysis with specific indications on
how the results of this analysis can be used to improve operations.
The Gretzky’s forecast a 10% increase in sales in 2022. Expected inventory levels in 2022 will
be in the same proportion as last year except for the ending inventory of composite wood and
fibre glass which they expect to have 450 and 250 kilograms respectively. Your team notes that
GPL’s direct labour cost per hour would increase by $2 per hour in 2022 and that you are
required to prepare a forecasted budget for the year 2022.
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 GPL’s performance. - The potential issues that might arise from the cost allocation methods currently used at GPL
for allocation of 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 specific and 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 Walter and Wayne. Your report should contain
the following:
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, detailed and also succinct.
b. Background – a full description of all the important issues and their background that are
relevant to the case study and your findings.
c. Analysis – provides an overview of all detailed analytical/critical insights generated in light
of the results obtained. Significant calculations should not be included here (do so in the
appendices), with this section referencing the appropriate appendices.
d. Findings – detail and justify all 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. Ensure that your 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 underlying the data, calculations and case study context.
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.
- Important note: While your calculations are important, the assignment will be assessed
mainly for its critical analysis, depth and creativity. - Report: You are required to prepare your report using PowerPoint. The report must meet
the purpose of providing details for a manager with sufficient time to sit and 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 (1) slide only, i.e., 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 detailed but also 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. Make sure to see the Marking Guide for further details. - 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. - Cover page: Please provide a separate cover page for your assignment submission (with
student names, SIDs and email addresses). Only one submission required per group. Cover
pages can be found in Canvas. - Peer evaluation: Each group is required to sign and submit one (1) peer evaluation form
that needs to be attached to their assignment. For example, if you were in a group of three –
members #1 and #2 would jointly decide the contribution of member #3; members #2 and #3
would jointly decide the contribution of member #1; members #1 and #3 would 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.
Part B: SAP component (Individual)
Your submission should have:
Your SAP User account, i.e., learn-### & student SID in every page header.
A cover page with your name, student ID and learn-### number.
A first page that includes a table of master data elements (G/L accounts, cost centres,
cost elements, activity types, statistical key figures etc.), document numbers or
allocation cycle numbers generated by the system and codes for your allocation cycles.
Appropriate screen shots of: i) display of actual distribution/assessment basic list after
final run with cycle number displayed on screen, 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 (GG###) for the
current year and for each of your cost centres for the current year. You can place two
screenshots in each page, and make sure they are visible (you must crop out
unnecessary areas of the screenshots for better visibility).
One single PDF document with pages not exceeding 20 (including cover page) must
be submitted. Penalties apply if the screenshots are illegible or missing, the values are
incorrect, if the submission exceeds the page limit, and if the assignment does not have
identifying information.
Please note that you must first decide which master data, which transactions and which
allocation methods are required to reflect the scenario and determine the reports required.
You should then create relevant master data elements in the system (in client 413) using
the SAP username (learn-###) assigned to you in workshops, perform transactions and
produce reports.
For the assignment, you should use the server M29 and client 413 (a different client)
with your SAP username learn-###. An initial password for the new client 413 will be
communicated through a separate Canvas announcement after the second SAP
workshop.
Hint 1: SAP is a real-time accounting system, so you must use 01.01.2022 to 31.12.2022
for creating all your master data, today’s date for all postings, and current year for all your
allocations and reports. In other words, even though the data (actual and budgted costs) in
this assignment relates to 2021, you must deem them as figures for 2022 (which is the
current real year) for the purpose of mapping in SAP.
Hint 2: Considering the limits on authorisations, complexity of the software, a focus on
user perspective in workshops, and the 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 CANNOT simply be deleted, and the errors will therefore
carry into the final cost centre reports. Marks are proportionate to correct mapping of the
scenario in SAP including creation of relevant master data, evidence of transactions and
reports, correctness of the methods employed for allocations, and accuracy of the values in
the reports.
Hint 3: For mapping the values and posting transactions in SAP, some of the budgeted and
actual figures are given in the assignment. You are required to calculate other costs based
on the scenario and use them while mapping in SAP.
Table 1 below provides a list of master data codes and Table 2 below provides 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.
Table 1: 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 (possible
twelve account codes to choose
from)
700###, 701##; 710###, 711###; 720###, 721###;
730###, 731###; 750###, 751###; 770###, 771###;
780###, 781###; 790###, 791###; 660###, 661###;
670###, 671###; 680###, 681###; 690###, 691###;
8 Secondary cost elements 810###, 811### etc.
9 Cost centres As indicated in the assignment scenario
10 Cost centre group As indicated in the assignment scenario
11 Assessment cycle A###, A1### etc.
12 Distribution cycle D###, D1### etc.
13 Activity type TS###, TS1### etc.
14 Statistical key figure AR###, AR1###; or EM###, EM1### etc.
Table 2: Generic field values to be used in SAP Master data and transactions
Details of field Field values
Assessment CEle Assessed Costs
AType category – manual entry, manual allocation 1
Activity Unit – Hours HR
Business area BI00
Company code US00
Controlling area /Hierarchy area NA00
Cost centre category H
Country (vendor record) US
Currency USD
Current year 2022
Key fig. cat. (category of statistical key figure) 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 centre 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) or PRS (persons) or
other relevant UnM