Course Project
Each student should choose an organization with which she/he is familiar, such as the place of employment, business patronized, or other situation and describe how that organization either does or does not apply the course concepts on a day-to-day basis. The following course concepts should be discussed:
- Critical success factors.
- Identify and discuss the fixed and variable cost.
- Calculate the Contribution Margin Income Statement
- Determine and discuss the most effective costing method for your organization.
- Using the IRR or NPV method, calculate and determine if the following capital budget project is viable: Project Cost $2 million, Project Life 10 years, and Cost of Capital 15%.
- Provide a recommendation for the organization
Information needed to complete the capital budgeting portion of the final project:
- Your company expects to save $450,000 per year for the next 10 years by purchasing the item.
- The cost of capital is 15%.
- The company believes it’s initial investment will be $2 million.
Grading for the paper is based on the following:
- Introduction and background describing organization 10%
- Discussion of course concepts in context of chosen organization 65%
- Conclusion, including degree to which organization incorporates concepts 10%
- Quality of writing, including citing sources; and organization of project 15%
The written paper is to be: typed double–spaced, 1-inch margins, Times New Roman and 12-point font, a 10-page minimum, with correct spelling and grammar, proper citation, references, with a cover page and organized with headings.
Some tips for this assignment:
The recommendation you should be addressing is whether the company you are researching should invest in this capital budgeting investment, why or why not.
Be mindful of the company you select. Remember this is a managerial accounting course, it is more beneficial to study a company that manufactures some type of product. I.e. Sony, IBM, Apple, Coke, Pepsi, John Deere etc.
This project is somewhat open-ended to allow for your own creativity and individual approach. I am not as interested in whether your numbers and results are accurate – rather, it is your unique approach to the issue that matters. You can use numbers based on the assignment specifications, your company’s financial information, and/or your own assumptions/projections.
- When determining costs, I would suggest you look at the income statement/profit loss for the company and determine what expenses fit the criteria of fixed versus variable.
- Remember: Fixed costs would remain the same no matter how much volume in units are being produced or sold. Variable costs change in proportion to volume. Rent is usually a fixed cost where utilities are variable as they change based on usage.
As far as NPV or IRR , utilize Excel and if you are not great in excel try either of the calculators below:
- https://www.calculatestuff.com/financial/npv-calculator
(Links to an external site.)Links to an external site. - https://www.calculatestuff.com/financial/irr-calculator
(Links to an external site.)Links to an external site. - https://www.excel-easy.com/examples/npv.html (Links to an external site.)Links to an external site.
- https://www.excel-easy.com/examples/irr.html
(Links to an external site.)Links to an external site.
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