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Volume 10 Issue 2

IMA Educational Case Journal
ISSN 1940-204X

Articles

Monte Swain, Brigham Young University
Steve Smith, Brigham Young University
Bill Tayler, Brigham Young University

CARLY JACOBS, SENIOR PARTNER AT WILLIAMS & JACOBS, IS CONCERNED ABOUT how the management structure and management accounting system is affecting the success of her law firm’s business. The firm has six practice groups (service lines) managed using an incentive structure for the firm based on a competitive sharing system between the practice groups. The support staff is a shared service at the office, and all partners participate equally in net profits. A bonus pool as a share of operating profit is distributed to practice groups based on relative profit of each practice. In the early days of the firm, this management system seemed to work well. But partners are increasingly frustrated about costs, and younger colleagues at the firm are talking about leaving for other opportunities.

Keywords: Cost allocations, death spiral effects, cost cross-subsidization, performance measurement, incentive alignment, service organizations

Herbert W. Snyder, North Dakota State University
Nancy Emerson, North Dakota State University

MIDLAND DAIRY PRODUCTS: AN ETHICS CASE IS CONCERNED WITH an employee who faces a conflict of interest in the workplace that also complicates how and whether to proceed in investigating a suspected fraud in the company. The case requires students to use conflict of interest policies and professional codes of ethics from IMA® (Institute of Management Accountants) and the AICPA (American Institute of Certified Public Accountants) to facilitate ethical decision making. In addition to sources of guidance for ethical decision making, the case provides students with a low-risk environment in which to consider the real costs of making ethical decisions in the workplace. Since ethical decisions are often made under stressful situations, students are also exposed to techniques such as negative visualization, mental practice, and husbanding self- discipline that can improve decision making under stress. There are five case questions that can also be used individually if there are time constraints. The questions are designed for a Socratic, classroom discussion but can also be used as written assignments.

Keywords: Ethical decision making, conflicts of interest, decision making under stress

Robert Rankin, Texas A&M Commerce
Martin Stuebs, Baylor University

THIS CASE PROVIDES STUDENTS WITH AN OPPORTUNITY TO extend and apply managerial accounting knowledge in a real-world setting as part of a cross-functional team charged with determining the financial feasibility of an innovative new product introduction. It flexibly has been and can be tailored for use in a spectrum of managerial accounting courses. Students evaluate Chicken Sensations, an innovative product that has the potential to initiate a new category of convenience frozen foods and significantly alter profits at Parson Foods Vegetable Company (PFVC), a leading processor of canned and frozen vegetables. This case is intended to challenge students to: 1) use managerial and financial accounting knowledge and concepts; 2) understand the challenges and risks in a new product’s introduction; 3) apply Excel skills in developing solutions and sensitivity analyses; and 4) analyze, synthesize and evaluate quantitative and qualitative factors on economic, ethical and other dimensions in making judgments, conclusions and recommendations. Teaching notes accompany the case. A completed Excel solution and an Excel template file to assist students in completing portions of the case are available upon request from the authors.

Keywords: managerial accounting, cost volume profit analysis, CVP, breakeven, forecasts, new product implementation, contribution margin, variable costing, cost behavior classification, margin of safety