Fa Fairfield School of Business ! Qualification HND in Business (RQF) Unit Title MANAGEMENT ACCOUNTING Unit Number Unit 5 Unit Code / Level / Credits H/508/0489 – Level 4 / 15 Credits Vocational Scenario Case Study - Dell Assignment Title Applying expertise in Management Accounting Name of Institution Fairfield School of Business, Croydon Name of Assignment Author Mr Syed Ahmed Name of IV Mr Nadeem Mirza Assignment Issue date 30th January 2017 Hand in deadline 5th May 2017 ! Vocational Scenario or Context ASSIGNMENT BRIEF CASE STUDY – DELL Management accounting expertise enhances services sales initiatives at Dell by up to 10% Traditional pricing of information technology hardware and tracking profitability is a relatively straightforward task, considering that cost is a known quantity; but consulting and IT outsourcing deals in particular can be trickier to assess. At Dell, IT infrastructure & cloud computing services represent a significant revenue stream. Some 500 specialist consultants in Dell’s Europe, Middle East and Africa (EMEA) region sign up around 900 deals each quarter and the IT outsourcing team is involved with pursuing hundreds of millions of dollars in opportunities. Jon Rhymes, EMEA Service Business Development Finance Director, has responsibility for large, complex bids within the region. He and his team of business development ‘pricers’ work closely with bid teams and sales colleagues to help construct deals. Rhymes joined Dell from UBS six years ago. At the time, clarity on deals, win rates and profitability was lacking or inconsistent. “We did not have a clear view of our pipeline of opportunities. We did not have a view of what deals we had sold, from a budgetary perspective, and we did not have a view of deal P&Ls, i.e. which deals were making money and how they were being tracked.” Rhymes’ team now works with Dell’s consulting and managed services organisation on the financial aspects of high-value deals. Sales colleagues welcome the team’s input. “If you look at any sales-led organisation, you will find that a lot of the sales guys are not very comfortable dealing with Finance. But at Dell, the sales guys want the pricing team to be with them on the deal. It helps them sell and assists with internal approvals; importantly, it also supports what they are trying to do with the customer and validates the solution that the sales team has designed. This adds value all round.” Team members often attend customer meetings, says Rhymes, and management accountants are particularly well suited to customer liaison work. “If I look to hire into this team, CGMA skills are hugely valuable. !2 BTEC Assignment Brief MA BTEC Internal Assessment January 2017 Task 1 Scenario : Assume you are a Management Accountant at Dell. The business has a number of different initiatives. At present it has several issues that need to be addressed and you have been tasked to examine some of these matters . Following a recruitment campaign a number of new trainees have been appointed and are to take part in a short induction course. Your line manager has asked you to design a Training Manual to introduce the new trainees to the business and to its various procedures. The induction course will concentrate on a number of key issues within the organization. Some of the tasks within this assessment will require you to focus on preparing suitable materials to assist trainees on the induction course. This will form the contents of the Training Manual as mentioned above that you are called upon to prepare. Checklist of evidence required Training Manual – [ Word Limit Not Exceeding 750 +/- 10 % ] Criteria covered by this task: P1 , P2, M1 & D1 Unit/Criteria reference To achieve the criteria you must show that you are able to: P1 Explain Management Accounting and give the essential requirement of different types of management accounting systems. P2 Explain the different methods used for management accounting reporting M1 Evaluate the beneﬁts of various management accounting systems and their application within Dell D1 Critically evaluate how management accounting systems and management accounting reporting is integrated within organisational processes in the context of Dell !3 BTEC Assignment Brief MA BTEC Internal Assessment January 2017 Task 2 Scenario : It is mentioned in the vocational scenario that Dell is able to maintain the lowest level of inventory in the industry compared to its competitors. Keeping in view the fact that inventory levels have a direct impact on proﬁtability under various types of costing systems, your line manager has provided you with an Income Statement for Dell computed on the basis of Absorption Costing and wants you to prepare a Financial Report that is capable of interpreting data for a range of business activities carried out by Dell. Checklist of evidence required Financial Report [ Word Limit 750 +/- 10 % ] Criteria covered by this task: P3 , M2 , D2 Unit/Criteria reference To achieve the criteria you must show that you are able to: P3 Calculate costs per unit under both absorption costing and marginal costing and explain why do they differ . Explain how they are used to prepare an Income Statement under Marginal Costing and Absorption Costing M2 Accurately apply the results obtained in P3 above to produce an Income Statement using the management accounting technique of Marginal Costing. ! Sales (40,000 units @ 67.50) 2,700,000 Less cost of goods sold: Opening inventory 0 Add cost of goods manufactured (50,000 × 42) 2,100,000 ——— Available for use 2,100,000 Less closing inventory 420,000 1,680,000 ——— ——— Gross margin 1,020,000 Less selling and administrative expenses 840,000 ——— Net operating income 180,000 ——— Fixed selling and administrative expenses are GBP 600,000. Variable selling and administrative expenses are GBP 6 per unit sold. Direct materials 20 Direct labour 8 Variable manufacturing overhead 4 Fixed manufacturing overhead (500,000/50,000) 10 !4 BTEC Assignment Brief MA BTEC Internal Assessment January 2017 D2 Produce a Financial Report that accurately applies and interprets data for a range of business activities carried out at Dell Note : Please refer to separate guidelines for more details on how to prepare the Financial Report Task 3 Scenario : One of the internal units of Dell deals with supply of keyboards to the other units of Dell . The purchase decision shall be pursuant upon using business tools for carrying out budgetary controls. Last month this unit manufactured 4,000 keyboards. This manufacturing unit purhased and used 11,000 feet of pvc sheets . The total cost of 11,000 feet of PVC sheet was GBP 37,400. According to direct materials price and quantity standards, one key board requires 2.5 feet of PVC sheet at a cost of GBP 3.60. In your working as a Management Accountant you have been called upon by your line manager to present a Business Report analysing different types of business tools for budgetary control Checklist of evidence required Business Report [ Word Limit : 750 +/- 10 % ] Criteria covered by this task: P4, M3 Unit/Criteria reference To achieve the criteria you must show that you are able to: P4 Explain the advantages and disadvantages of different types of planning tools used for budgetary control. A. Compute the standard cost of PVC sheets required to manufacture 4,000 keyboards. Also compute the difference between actual cost incurred and standard cost. B. Compute materials price and quantity variance. M3 Analyse the use of different planning tools and their application for preparing and forecasting budgets in the context of Dell. !5 BTEC Assignment Brief MA BTEC Internal Assessment January 2017 D3 Evaluate how planning tools respond appropriately to solving problems in the context of Dell , leading to sustainable business development Note : Please refer to separate guidelines for more details on how to prepare the Business Report Task 4 Scenario : Refer to an extract from the vocational scenario given below Jon Rhymes, EMEA Service Business Development Finance Director, has responsibility for large, complex bids within the region. He and his team of business development ‘pricers’ work closely with bid teams and sales colleagues to help construct deals. Rhymes joined Dell from UBS six years ago. At the time, clarity on deals, win rates and profitability was lacking or inconsistent. “We did not have a clear view of our pipeline of opportunities. We did not have a view of what deals we had sold, from a budgetary perspective, and we did not have a view of deal P&Ls, i.e. which deals were making money and how they were being tracked.” Rhymes’ team now works with Dell’s consulting and managed services organisation on the financial aspects of high-value deals. The Senior Management is now interested in carrying out a competitor analysis and wants you to present a Report. Criteria covered by this task: P5, M4, D3 Checklist of Evidence Required Report [ Word Limit : 750 +/- 10 % ] P5 Compare Dell with one of the two Lenovo or HP in order to establish how organisations are adapting management accounting systems to respond to ﬁnancial problems such as lack of view of what deals had been sold from a budgetary perspective as given in the case scenario M4 Analyse how, in responding to ﬁnancial problems, management accounting can lead an organisation such as Dell to sustainable success !6 BTEC Assignment Brief MA BTEC Internal Assessment January 2017   Sources of information to support you with this Assignment Books: DRURY, C. (2015) Management and Cost Accounting. 9th Ed. Cengage Learning EDMONDS, T. and OLDS, P. (2013) Fundamental Managerial Accounting Concepts. 7th Ed. Maidenhead: McGraw-Hill. HORNGREN, C., SUNDEN, G., STRATTON, W., BURGSTALHER, D. and SCHATZBERG, J. (2013) Introduction to Management Accounting. Global Ed. Harlow: Pearson. (This text is available electronically and is supported by access to an online course) SEAL, W. et al (2014) Management Accounting. 5th Ed. Maidenhead: McGraw-Hill. Additional Reading CIMA , UK Study Text, BPP Relevant Study Text, Kaplan Publishing Milton F. Usry/ Lawrence Hammer / Adolph Matz, Cost Accounting, Published by: South Western / Thomson Charles T. Horngren, Srikant M. Datar, & George Foster. Cost Accounting: A Managerial Emphasis, Prentice Hall / Pearson / Financial Times Further Reading Ronald W. Hilton, Management Accounting, Maidenhead: McGraw-Hill. Websites: www.prospects.ac.uk   Other assessment materials attached to this Assignment Brief case study FOR NQF LEVEL 2 ONLY: If you have not achieved the Level 2 criteria, your work will be assessed to determine if the following Level 1 criteria have been met. To achieve the criteria you must show that you are able to: Unit Criterion reference !7 BTEC Assignment Brief MA BTEC Internal Assessment January 2017 MANAGEMENT ACCOUNTING ASSIGNMENT GUIDELINES P1,P2 Your answer must contain : • Introduction to Management Accounting , its definition and importance and the need to integrate these within organisations ( with particular reference to Dell ) • Different types of Management Accounting Systems such as • Job costing; Batch Costing; Process Costing; contract costing; service costing ( any three to be explained ) • Distinction between Management Accounting and Financial Accounting M1, D1 • Discuss how are the costs reports prepared and analyzed for Dell • What is the various performance indicators used by Dell to identify its potential improvements. • With respect to the vocational scenario, identify and discuss the different costs reduction and value enhancement strategies available and how they can be implemented within Dell P 3 ,M2 & D2 • Prepare a Financial Report using • Absorption Costing and Marginal Costing • Reconcile the difference between the net profits • Relate it to inventory M3 In carrying out the analysis , you must explain at least two of the following in the context of Dell : • Sales volume contribution and sales price variances • Material price and usage variances • Labour rate and efficiency variances !8 BTEC Assignment Brief MA BTEC Internal Assessment January 2017 P4 A. Compute the standard cost of wood required to manufacture 4,000 chairs. Also compute the difference between actual cost incurred and standard cost. B. Compute materials price and quantity variance. D3 Attempt any three of the following in the context of Dell : • Activity Based Budgeting • Target Costing Mangement • Life Cycle product Cost Management • Balanced Score Card • Value Chain Analysis !9 BTEC Assignment Brief MA BTEC Internal Assessment January 2017