Maytag Kitchens Marker Grid- managerial accounting PDF

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MARKER GRID – MAYTAG KITCHENS CO. Candidate: Marker: OVERALL COMMENTS ON COMMUNICATION SKILLS (Marker notes: Consider ranking, time management, writing style, format, use of case facts, role)

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AO1 – F

The candidate prepares a net present value analysis to determine whether an investment in equipment should be made. Reaching competence – Attempts to calculate a NPV with supported cash flows (additional revenue and materials costs; 3 year, 5 year or 10 year analysis OK) AND initial capital investment AND uses correct present value inputs to discount Competent – Calculates a reasonable NPV with supported cash flow (additional revenue and materials costs and wages; 10 year analysis) AND initial capital investment AND either attempts PV of CCA tax shield or attempts after-tax cash flows AND uses correct present value inputs to discount Competent with distinction – Calculates an accurate NPV with supported cash flow (additional revenue and materials costs and wages; 10 year analysis) AND initial capital investment AND PV of CCA tax shield AND after-tax cash flows AND uses correct present value inputs to discount

Ranking Comments

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AO2 – SG

The candidate qualitatively evaluates the investment in equipment and concludes on whether to invest in the equipment. Reaching competence – Attempts to qualitatively evaluate the investment in equipment Competent – Qualitatively evaluates the investment in equipment AND concludes on whether to investment in the equipment Competent with distinction – Qualitatively evaluates in-depth the investment in equipment AND concludes on whether to investment in the equipment

Marker Notes

Attempts = discusses 3 advantages/disadvantages, with at least 1 of each Evaluates = discusses 4 advantages/disadvantages, with at least 1 of each In-depth = discusses 5 advantages/disadvantages, with at least 2 of each Discusses – identifies a specific case fact and explains the impact on MKC Concludes = definitive conclusion that is supported through quantitative and qualitative integrated into the conclusion

Ranking Comments

IDENTIFIES Advantages  Bargain  2 employees know how to use (reduce training)  2 employees can train others  Employee can translate  Other valid Disadvantages  English owner’s manual  Fluency in Spanish  Further breakdowns  Lack of specialized repairman  Ineffective repairs  Warranty  Difficulty finding parts  Other valid

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DISCUSSES

AO3 – F

The candidate determines how the investment in the equipment should be financed. Reaching competence – Analyzes the term loan or the line of credit by discussing 2 valid points or discusses 2 additional considerations Competent – Analyzes the term loan and the line of credit by discussing 2 valid points for each option AND discusses 2 other valid points relating to additional financing and/or additional considerations Competent with distinction – Analyzes the term loan and the line of credit by discussing 2 valid points for each option AND discusses 2 other valid points relating to additional financing and 2 other valid points relating to additional considerations

Ranking Comments

IDENTIFIES Term loan  Calculates blended annual payments (based on $750K)  Considers ability to make payments based on annual cash flow (consistent with AO #1 analysis)  Recognizes that there is a shortfall Line of credit  Calculates borrowing limit based on 75% of A/R and 50% of inventory  Calculates annual interest payments required  Recognizes that the borrowing limit is less than amount needed to equipment purchase Additional financing available  Re-mortgage land and building due to FMV being significantly higher than current mortgage balance  Calculates additional financing required with term loan  Calculates additional financing required with line of credit Additional considerations  Comparison of repayment terms  Interest rate comparison  Comparison of borrowing flexibility

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DISCUSSES (supports with case facts)

AO4 – MA

The candidate quantitatively and qualitatively evaluates and concludes on whether to enter into the New Cabinets contract. Reaching competence – Quantitatively OR qualitatively evaluates whether to enter into the New Cabinets contract Competent – Quantitatively AND qualitatively evaluates AND concludes on whether to enter into the New Cabinets contract Competent with distinction – Quantitatively AND qualitatively evaluates indepth AND concludes on whether to enter into the New Cabinets contract

Marker Notes

Quantitative:  Evaluates = compares make (with correct labour, material, variable overhead and units) to contract price (analysis can be per unit or in total)  In-depth = compares make (correct calculation) to contract price (analysis can be per unit or in total) Qualitative:  Evaluates = discusses 3 advantages/disadvantages, with at least 1 of each  In-depth = discusses 4 advantages/disadvantages, with at least 2 of each  Discusses – identifies a specific case fact and explains the impact on MKC Concludes = definitive conclusion that is supported through quantitative and qualitative integrated into the conclusion

Ranking Comments

IDENTIFIES Advantages  Manufactured to specifications  Expansion without financing  Rent out manufacturing space  Expansion for Kerr proposal  Other valid Disadvantages  Start-up (out of business)  Start-up (manufacturing errors)  Direct shipment  Throughout the year  Non-cancellable  Other valid

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DISCUSSES

AO5 – MA

The candidate discusses how a standard costing system could be used by the company, including a recommendation regarding whether to proceed with the Kerr proposal. Reaching competence – Discusses 2 issues related to standard costing and/or the Kerr proposal Competent – Discusses 4 issues in total related to standard costing and the Kerr proposal AND makes a recommendation regarding whether to proceed with the Kerr proposal (consistent with analysis) Competent with distinction – Discusses 6 issues in total related to standard costing and the Kerr proposal AND makes a recommendation regarding whether to proceed with the Kerr proposal (consistent with analysis)

Ranking Comments

IDENTIFIES Standard costing  Standard costing help determine why labour costs as a % of revenue appear high  Determine the standard cost per cabinet unit based on expected costs  Determine direct labour component (hours and cost)  Determine direct materials component (amount and cost)  Determine variable indirect costs (application basis and rate)  Analyze variance between standard cost and actual cost to determine inefficiencies Kerr proposal  Financial risk borne by MKC because “cost plus” contract based on standard costs  Ability to negotiate higher fixed premium given high volume  Considers whether there is manufacturing capacity for the contract  Considers impact on other expansion plans (consistent with AO #1 analysis)

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DISCUSSES (technically accurate)...