Business Finance - Management Week 6 Assignment- Account for Managment Decision Making

Week 6 Assignment: Accounting Tools and Measures for Decision Making—Part 3

Prepared by: Replace this text with your name.

Date: Replace this text with the submission date.

Walden University

MBAX 6050: Accounting for Management Decision Making

Transfer Pricing

Replace this text with introductory information. Add or remove headings as necessary.

[Heading]

Insert your calculations of the full-cost transfer pricing method and the variable-cost transfer pricing method from Excel. Add or remove headings as necessary. For information on inserting data from Excel into Word, refer to the following: Microsoft. (n.d.). Insert a chart from an Excel spreadsheet into Word. https://support.microsoft.com/en-us/office/insert-a-chart-from-an-excel-spreadsheet-into-word-0b4d40a5-3544-4dcd-b28f-ba82a9b9f1e1

[Sub-Heading]

Replace or remove this text. Add or remove headings as necessary.

References

[Please delete this note before submitting your Assignment. For more information about formatting your reference list, please visit the following site: https://academicguides.waldenu.edu/writingcenter/apa/references .]

Include appropriately formatted references to support your Assignment. Refer to the Assignment guidelines for further information on the requirements.

Page 5 of 15

Account for Management Decision Making

Week 5 Assignment

Accounting Tools and Measures for Decision Making- Part 2

For this Assignment, you will continue in your role as consultant to the Better Chair Company. Last week, you completed and submitted a report on types of costs and their implications for decision making. This week, the focus of your report will be the use of variance analysis in making effective managerial decisions.

In addition to the requirements that follow, be sure to incorporate references to appropriate academic sources, such as those found in this week’s Learning Resources or those in the Walden Library.

To prepare for this Assignment:

· Download Week 5 Part 1 Assignment Template.

· Download Week 5 Part 2 Assignment Template.

· Your instructor will provide the data to complete the calculations for this week’s Assignment. To access that information, refer to  Doc Sharing .

Submit your completed business report and accompanying Excel file. Your report should be 3–4 pages in length (excluding title page and references) and should address the following:

Variance Analysis

The first area you have been asked to address for the management team in this report is to help them understand why the actual costs for the new chair are not aligned with the determined standard costs. The company has set up standard costs for labor and each component of the new chair. It now has the actual costs for the previous month’s production run. You are asked to determine which costs meet the standards and which are not, to analyze the probable cause of the variances, and to provide a recommendation for moving forward. To determine this, you will conduct a variance analysis. In  Doc Sharing , your Instructor will provide you with standard and actual costs to use for this part of the Assignment.

To complete this part, address the following:

· Using the Week 5 Part 2 Assignment Template and the data provided by your Instructor in the  Doc Sharing  area, calculate the price variances (price variance and wage rate variance) and quantity variances (quantity variance and labor efficiency variance) for each material and direct labor.

· Note: In addition to submitting your work in Excel, include your calculations within your report by copying and pasting the information from Excel. For information on inserting data from Excel into Word, refer to the following:

· Microsoft. (n.d.).  Insert a chart from an Excel spreadsheet into Word  Links to an external site. . https://support.microsoft.com/en-us/office/insert-a-chart-from-an-excel-spreadsheet-into-word-0b4d40a5-3544-4dcd-b28f-ba82a9b9f1e1

· Analyze what the variances to the standards are, including an examination of possible causes.

· Propose at least two recommendations for potential remedies to address the variances.

· Summarize how understanding variance analysis can impact managerial decision making.

Account For Management Decision Making

Week 6 Learning Resources

Transfer Pricing

Many companies today have multiple divisions located in various countries around the globe. For example, Division A might make shoelaces that it sells to retail outlets, but Division B might make shoes and need laces for those shoes. Division A is able to sell laces to Division B. The question is what price should Division A sell the laces to Division B? This exchange between divisions of the same company is called transfer pricing, which you will explore further in these resources.

· Franklin, M., Graybeal, P., & Cooper, D. (2019).  Why it mattersLinks to an external site. . In  Principles of accounting, volume 2: Managerial accounting . OpenStax. https://openstax.org/books/principles-managerial-accounting/pages/9-why-it-matters

· Franklin, M., Graybeal, P., & Cooper, D. (2019).  9.1 differentiate between centralized and decentralized managementLinks to an external site. . In  Principles of accounting, volume 2: Managerial accounting . OpenStax. https://openstax.org/books/principles-managerial-accounting/pages/9-1-differentiate-between-centralized-and-decentralized-management

· Franklin, M., Graybeal, P., & Cooper, D. (2019).  9.2 describe how decision making differs between centralized and decentralized environmentsLinks to an external site. . In  Principles of accounting, volume 2: Managerial accounting . OpenStax. https://openstax.org/books/principles-managerial-accounting/pages/9-2-describe-how-decision-making-differs-between-centralized-and-decentralized-environments

· Franklin, M., Graybeal, P., & Cooper, D. (2019).  9.4 describe the effects of various decisions on performance evaluation of responsibility centersLinks to an external site. . In  Principles of accounting, volume 2: Managerial accounting . OpenStax. https://openstax.org/books/principles-managerial-accounting/pages/9-4-describe-the-effects-of-various-decisions-on-performance-evaluation-of-responsibility-centers

· Plante & Moran. (2018, May 3).   The perils of basing management decisions on the transfer priceLinks to an external site. . https://www.plantemoran.com/explore-our-thinking/insight/2018/05/the-perils-of-basing-management-decisions-on-the-transfer-price

· Sprague, C.  (2021).  Tax impact on decisionsLinks to an external site. . In  Salem Press Encyclopedia.

· Walden University, LLC. (2021).  How to calculate transfer pricing    Download How to calculate transfer pricing [PDF].Walden University Canvas. https://waldenu.instructure.com

· Walden University, LLC. (2021).  Transfer-pricing methods [Video]. Walden University Canvas. https://waldenu.instructure.com

· Walden University, LLC. (2021).  Transfer pricing    Download Transfer pricing [PDF]. Walden University Blackboard. https://waldenu.instructure.com