ACTMANA/ACCTBA3 GROUP BUSINESS CASE (5% of class standing grade)

3rd Term, Academic Year 2014 - 2015

WORLDS APART CORPORATION
Adapted from: Hilton, Ronald W. and Platt, D.E. (2011). Managerial Accounting: Creating Value in a
Global Business Environment, Environment Global edition. McGraw-Hill.

BUDGETED INCOME STATEMENT (PREPARED BY COST ACCOUNTANT)

Worlds Apart Corporation is a wholesale merchandising supply company which
engages independent sales agent to market the companys products throughout the
Philippine archipelago. Currently, its products are produced at an average cost of
Php 468.00 per unit. Per cost accountant, gross margin is estimated at 35% of sales.
Number of units sold is regarded as the activity driver as to cost behavior.
Sales agents are paid sales commission of 15% of total sales. On the other hand,
personnel in the administrative department are paid Php 22,500 per month. Shipping and
handling costs are Php 130,000 per year plus Php 25 per unit sold. Monthly rent expenses
for selling and administrative office are Php 8,750 and Php 6,650 per month, in that
order.
For the year ending December 31, 2013, 25,750 units are expected to be sold.
SALES AGENT PROPOSAL
Sales agents are proposing that their current commission rate be adjusted to 17%.
According to them, this will motivate them to increase their sales effort thereby,
increasing the expected units of sales by 10%. They are likewise proposing to decrease
the variable shipping and handling cost by Php 2.75 per unit and the fixed shipping and
handling cost by Php 15,000. All other expenses will remain the same.
MANAGEMENT PROPOSAL
The companys management is considering the possibility of employing full-time
sales personnel instead of the sales agents. Three individuals would be required, at an
estimated annual salary of Php 67,500 each plus commission of five percent of sales. In
addition, a sales manager would be employed at a fixed annual salary of Php 180,000. All
other fixed costs, as well as the variable cost percentages, would remain the same as the
estimates in the 2013 budgeted income statements. No increase in sales is expected.

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INSTRUCTIONS:
1. This is a group business case consisting of a maximum of 4 members in a group.
2. From the information gathered in the case, the group must then submit a written report forming
analysis, conclusions and recommendations on the case. Incorporate the answers to the following
guide questions. Do not round off decimal places while solving. Only round off (to nearest to decimal
places) when providing final answers on the answer summary sheet.
WORLDS APART CORPORATION
a. Prepare a traditional format income statement for the year ending December 31, 2013 based
on the budgeted income statement.
b. Prepare a contribution format income statement for the year ending December 31, 2013
based on the budgeted income statement.
c. Prepare a contribution format income statement for the year ending December 31, 2013
applying the changes in the sales agent proposal. Based on your findings, will the proposed
changes be approved? Why or why not?
d. Prepare a contribution format income statement for the year ending December 31, 2013
applying the changes in the management proposal. Based on your findings, will the proposed
changes be approved? Why or why not?
e. Compute the estimated break-even point in sales pesos for the year ending December 31,
2013 based on the (1) contribution format income statement prepared by the cost
accountant (2) contribution format income statement applying the changes in the sales agent
proposal and (3) contribution format income statement applying the changes in the
management proposal.
f. Compute the estimated unit sales that would be required for the year ending December 31,
2013, to yield the same net operating income as projected in the budged income statement if
management continues to use the independent sales agents and agree to the their proposed
changes.
g. Compute the estimated volume in sales pesos that would generate an identical net income
for the year ending December 31, 2013, regardless whether the company chooses to
implement the changes as proposed by the sales agents or by the management.
h. What qualitative factors should the company consider in choosing between the proposals of
the sales agents and the management?
3. Outline:
I. INTRODUCTION
II. DISCUSSION: (This is the bulk of the paper. Be sure to include answers to guide questions and
support your answers with computations and logical ANALYSIS.)
III.CONCLUSION/RECOMMENDATION
IV. REFERENCES: (if any)
V. ANSWER SUMMARY (refer to last page of file)
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4. Format of Written Report:

a) Paper size: 8.5 x 11
b) Margin: 1 on all sides
c) Font and Font size: Tahoma 11
d) Paragraph alignment: Justified
e) Paragraph spacing: 1.5
f) Length of written report: 5 to 10 pages, EXCLUDING cover page and attachments
g) Attachments: Include the copy of the business case and other attachments at the end of your
report.
h) Insert the entire report in a short sliding folder.
i) The cover page should be as follows:
WORLDS APART CORPORATION
A Group Business Case
Presented to the
Accountancy Department
De La Salle University

In partial fulfillment
Of the course requirements
In ACTMANA / ACCTBA3

SUBMITTED TO:
Gonzales, Nino Jose B.

SUBMITTED BY:
Surname, Given Name, M.I.*
Surname, Given Name, M.I.
Surname, Given Name, M.I.
Surname, Given Name, M.I.

Date
*NOTE: The names should be arranged alphabetically.
5. Deadline of Written Report:
MW class March 23, 2015 (Monday)
TH class March 24, 2015 (Tuesday)

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Each group must likewise present their findings in front of the class. A powerpoint presentation of
the groups respective solutions is recommended. The schedules for the group business presentation are
as follows:
MW class March 23 and March 25
TH class March 24 and March 26
Please wear business attire for the report proper.
6. Rubric/Criteria for Grading:
a) To compute for the 5% team grade, please refer to next page for the rubric.
b) To compute for the individual written group business case analysis grade, the average peer
evaluation grade (refer to Item#7) will be multiplied to the team grade. A sample computation
follows:
Application of ACTMANA-related tools 100% * weight of 50% = 50.00%
Depth of insights
90% * weight of 30% = 27.00%
Quality in writing paper
90% * weight of 20% = 18.00%
Team grade
= 95.00%
Multiplied by: Average peer evaluation grade
(Assume 2 exemplary, 1 satisfactory or 290%/3)
96.67%
INDIVIDUAL GRADE
91.83%
Multiplied by: Business case grade
5%
INDIVIDUAL BUSINESS CASE GRADE
4.59%
CRITERIA
Applicatio
n of
ACTMANA
-related
tools and
skills
[50%]

Depth of
insights
and
discussion
s
[30%]

EXEMPLARY
100%
The group
applies at least
two ACTMANArelated tools
and skills
appropriately
and includes
only realistic
assumptions in
the paper.
The group
relates properly
the case to the
learnings in
ACTMANA
course and
shows
comprehensive
knowledge on
ACTMANA
topics.

SATISFACTORY
90%
The group
applies two
ACTMANA related tools
and skills
appropriately
and includes a
few unrealistic
assumptions in
the paper.

DEVELOPING
80%
The group
applies only
one ACTMANA related tool and
skill
appropriately
and includes
some
unrealistic
assumptions in
the paper.
The group
The group
relates properly relates
the case to the somewhat
learnings in
improperly the
ACTMANA
case to the
course and
learnings in
shows some
ACTMANA
knowledge on
course and
ACTMANA
shows little
topics.
knowledge on
ACTMANA
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BEGINNING
70%
The group fails
to apply at least
one ACTMANA related tool and
skill
appropriately
and includes
many
unrealistic
assumptions in
the paper.
The group fails
to relate
properly the
case to the
learnings in
ACTMANA
course and
shows little to
no knowledge
on ACTMANA
topics.

Quality in
writing
the paper
(format,
grammar)
[20%]

The group
follows the
format and has
not one
spelling/
grammatical
error in the
paper.

topics.
The group
The group
follows the
follows the
format and uses format but uses
only the English a mixture of
language in the Filipino and
paper which is
English
at an
language in the
acceptable
paper and/or
level.
uses the English
language
somewhat
inappropriately.

The group does

not follow
format and uses
a mixture of
Filipino and
English
language in the
paper and/or
uses the English
language
inappropriately.

7. Peer Evaluation
a) On a one-half sheet of bond paper, cross-wise, write the names of all your group mates (in
alphabetical order).
b) Give the corresponding percentage (70, 80, 90, 100) for each of your group mate. Refer to table
below. Be fair when evaluating.
c) Print your name then sign as evaluator.
d) Include this as an attachment at the end of the paper.
CRITERIA
Contributio
n to teams
final
output
[100%]

EXEMPLARY
100%
The student
contributes to
the teams
final output
more than
what is
expected.

SATISFACTORY
90%
The student
contributes to
the teams final
output as
expected.

DEVELOPING
80%
The student
contributes
somewhat to
the teams final
output.

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BEGINNING
70%
The student
does not
contribute to
the teams final
output.

ANSWER SUMMARY
This sheet serves as a guide for instructors during the actual business presentation. Students fill up this
sheet with their final answers. For answers with descriptive nature, bullet points would suffice. For
requirements A to D, just provide the summary of the accounts in this answer sheet i.e., total sales,
total cost of goods sold, total selling and administrative expense, etc.)
A.

B.

C.

D.

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E.

1.

2.

3.

F.
G.
H.

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