Focus of the Final Paper
You’ve just been hired onto ABC Company as the corporate controller. ABC Company is a manufacturing
firm that specializes in making cedar roofing and siding shingles. The company currently has annual sales
of around $1.2 million, a 25% increase from the previous year. The company has an aggressive growth
target of reaching $3 million annual sales within the next 3 years. The CEO has been trying to find
additional products that can leverage the current ABC employee skillset as well as the manufacturing
facilities.
As the controller of ABC Company, the CEO has come to you with a new opportunity that he?s been
working on. The CEO would like to use the some of the shingle scrap materials to build cedar dollhouses.
While this new product line would add additional raw materials and be more time-intensive to
manufacture than the cedar shingles, this new product line will be able to leverage ABC?s existing
manufacturing facilities as well as the current staff. Although this product line will require added
expenses, it will provide additional revenue and gross profit to help reach the growth targets. The CEO
is relying on you to help decide how this project can be afforded Provide details about the estimated
product costs, what is needed to break even on the project, and what level of return this product is
expected to provide.
In order to help out the CEO, you need to prepare a six- to eight-page report that will contain the
following information (including exhibits, but excluding your references and title page). Refer to the
accompanying Excel spreadsheet (available through your online course) for some specific cost and profit
information to complete the calculations.
Final Paper Spreadsheet
I. An overall risk profile of the company based on current economic and industry issues that it may be
facing.
II. Current company cash flow
a. You need to complete a cash flow statement for the company using the direct method.
b. Once you?ve completed the cash flow statement, answer the following questions:
i. What does this statement of cash flow tell you about the sources and uses of the company funds?
ii. Is there anything ABC Company can do to improve the cash flow?
iii. Can this project be financed with current cash flow from the company? Why or why not?
iv. If the company needs additional financing beyond what ABC Company can provide internally (either
now or sometime throughout the life of the project), how would you suggest the company obtain the
additional financing, equity or corporate debt, and why?
III. Product cost: ABC Company believes that it has an additional 5,000 machine hours available in the
current facility before it would need to expand. ABC Company uses machine hours to allocate the fixed
factory overhead, and units sold to allocate the fixed sales expenses. Bases on current research, ABC
Company expects that it will take twice as long to produce the expansion product as it currently takes
to produce its existing product.
a. What is the product cost for the expansion product under absorption and variable costing?
b. By adding this new expansion product, it helps to absorb the fixed factory and sales expenses. How
much cheaper does this expansion make the existing product?
c. Assuming ABC Company wants a 40% gross margin for the new product, what selling price should it set
for the expansion product?
d. Assuming the same sales mix of these two products, what are the contribution margins and break-
even points by product?
IV. Potential investments to accelerate profit: ABC company has the option to purchase additional
equipment that will cost about $42,000, and this new equipment will produce the following savings in
factory overhead costs over the next five years:
Year 1, $15,000
Year 2, $13,000
Year 3, $10,000
Year 4, $10,000
Year 5, $6,000
ABC Company uses the net-present-value method to analyze investments and desires a minimum rate of
return of 12% on the equipment.
a. What is the net present value of the proposed investment (ignore income taxes and depreciation)?
b. Assuming a 5-year straight-line depreciation, how will this impact the factory?s fixed costs for each of
the 5 years (and the implied product costs)? What about cash flow?
c. Considering the cash flow impact of the equipment as well as the time-value of money, would you
recommend that ABC Company purchases the equipment? Why or why not?
V. Conclusion:
a. What are the major risk factors that you see in this project?
b. As the controller and a management accountant, what is your responsibility to this project?
c. What do you recommend the CEO do?
Writing the Final Paper
1. Must be six to eight double-spaced pages in length, and formatted according to APA style as outlined
in the Ashford Writing Center.
2. Must include a title page with the following:
a. Title of paper
b. Student?s name
c. Course name and number
d. Instructor?s name
e. Date submitted
3. Must begin with an introductory paragraph that has a succinct thesis statement.
4. Must address the topic of the paper with critical thought.
5. Must end with a conclusion that reaffirms your thesis.
6. Must document at least three, but no more than five sources in APA style, as outlined in the Ashford
Writing Center.
7. Must include a separate reference page, formatted according to APA style as outlined in the Ashford
Writing Center.
Description:
Total Possible Score: 27.00
Develops an Overall Risk Profile
Total: 4.00
Distinguished – Develops a thorough overall risk profile of the company based on current economic and
industry issues the firm may be facing.
Proficient – Develops an overall risk profile of the company based on current economic and industry
issues the firm may be facing. Minor details are missing.
Basic – Somewhat develops an overall risk profile of the company based on current economic and
industry issues the firm may be facing. Relevant details are missing.
Below Expectations – Minimally develops an overall risk profile of the company based on current
economic and industry issues the firm may be facing. Significant details are missing.
Non-Performance – The overall risk profile is either nonexistent or lacks the components described in the
assignment instructions.
Current Company Cash Flow
Total: 5.00
Distinguished – Creates a complete and accurate cash flow statement using the direct method. Correctly
interprets and communicates the information calculated including a well-supported recommendation to
obtain additional financing.
Proficient – Creates a mostly accurate cash flow statement using the direct method. Interprets and
communicates the information calculated including a recommendation to obtain additional financing.
Work contains minor inaccuracies.
Basic – Creates a partially accurate cash flow statement using the direct method. Somewhat interprets
and communicates the information calculated including a limited recommendation to obtain additional
financing. Work contains several inaccuracies.
Below Expectations – Attempts to create a cash flow statement using the direct method, interpret and
communicate the information calculated, and offer recommendations; however, there are many
inaccuracies in the cash flow statement and interpretation, and the recommendation is incomplete.
Non-Performance – The current company cash flow is either nonexistent or lacks the components
described in the assignment instructions.
Product Cost
Total: 5.00
Distinguished – Correctly calculates the product cost, selling price, contribution margin, and break-even
point for the new product. Correctly interprets the change in fixed cost and sales expenses allocated to
the original products with the introduction of the new product. Provides complete supporting
calculations for each question.
Proficient – Correctly calculates, with minor errors, the product cost, selling price, contribution margin
and break-even point for the new product. Correctly interprets, with minor exceptions, the change in
fixed cost and sales expenses allocated to the original products with the introduction of the new
product. Provides supporting calculations for each question.
Basic – Calculates, with several errors, the product cost, selling price, contribution margin, and break-
even point for the new product. Interprets, with several exceptions, the change in fixed cost and sales
expenses allocated to the original products with the introduction of the new product. Provides some
supporting calculations for most questions.
Below Expectations – Calculations for the product cost, selling price, contribution margin, and break-
even point for the new product are mostly incorrect. Interpretation of the change in fixed cost and
sales expenses allocated to the original products with the introduction of the new product is
incomplete. Supporting calculations were not provided.
Non-Performance – The product cost is either nonexistent or lacks the components described in the
assignment instructions.
Potential Investments to Accelerate Profit
Total: 4.00
Distinguished – Accurately calculates the net present value of the investment, impact of depreciation on
fixed costs, and cash flow. Provides complete supporting calculations. Recommendations are thorough,
logical, and include a well-supported rationale.
Proficient – Calculates the net present value of the investment, impact of depreciation on fixed costs,
and cash flow. Provides mostly accurate supporting calculations. Recommendations are logical and
include a rationale, but minor details are missing.
Basic – Calculates the net present value of the investment, impact of depreciation on fixed costs, and
cash flow. Provides some supporting calculations which contain several errors. Recommendations and
rationale are included, but relevant details are missing.
Below Expectations – Calculates the net present value of the investment, impact of depreciation on fixed
costs, and cash flow. Provides minimal supporting calculations which contain many errors. No
recommendations are included.
Non-Performance – The potential investments to accelerate profit are either nonexistent or lack the
components described in the assignment instructions.
Conclusion
Total: 4.00
Distinguished – Conclusion thoroughly covers the major risks associated with the project and the
controller?s responsibility to the project. Provides a well-supported recommendation to the CEO.
Proficient – Conclusion covers the major risks associated with the project and the controller?s
responsibility to the project. Provides a recommendation to the CEO. Minor details are missing.
Basic – Conclusion briefly covers the major risks associated with the project and the controller?s
responsibility to the project. Somewhat provides a recommendation to the CEO. Several details are
missing.
Below Expectations – Conclusion attempts to cover the major risks associated with the project, the
controller?s responsibility to the project, and provide a recommendation to the CEO; however,
significant details are missing.
Non-Performance – The conclusion is either nonexistent or lacks the components described in the
assignment instructions.
Quantitative Literacy: Calculation
Total: 1.00
Distinguished – Calculations are essentially all successful and adequately all inclusive. Calculations are
presented clearly and succinctly.
Proficient – Calculations are mostly all successful and adequately comprehensive to solve the problem.
Basic – Attempted calculation either unsuccessfully or represents only a segment of the calculations
required to comprehensively solve the problem.
Below Expectations – Attempted calculations both unsuccessfully and is not comprehensive.
Non-Performance – The assignment is either nonexistent or lacks the components described in the
instructions.
Critical Thinking: Explanation of Issues
Total: 1.30
Distinguished – Clearly and comprehensively explains in detail the issue to be considered, delivering all
relevant information necessary for a full understanding.
Proficient – Clearly explains in detail the issue to be considered, delivering enough relevant information
for an adequate understanding.
Basic – Briefly recognizes the issue to be considered, delivering minimal information for a basic
understanding.
Below Expectations – Briefly recognizes the issue to be considered, but may not deliver additional
information necessary for a basic understanding.
Non-Performance – The assignment is either nonexistent or lacks the components described in the
instructions.
Written Communication: Control of Syntax and Mechanics
Total: 0.68
Distinguished – Displays meticulous comprehension and organization of syntax and mechanics, such as
spelling and grammar. Written work contains no errors, and is very easy to understand.
Proficient – Displays comprehension and organization of syntax and mechanics, such as spelling and
grammar. Written work contains only a few minor errors, and is mostly easy to understand.
Basic – Displays basic comprehension of syntax and mechanics, such as spelling and grammar. Written
work contains a few errors, which may slightly distract the reader.
Below Expectations – Fails to display basic comprehension of syntax or mechanics, such as spelling and
grammar. Written work contains major errors, which distract the reader.
Non-Performance – The assignment is either nonexistent or lacks the components described in the
instructions.
Written Communication: APA Formatting
Total: 0.68
Distinguished – Accurately uses APA formatting consistently throughout the paper, title page, and
reference page.
Proficient – Exhibits APA formatting throughout the paper. However, layout contains a few minor errors.
Basic – Exhibits basic knowledge of APA formatting throughout the paper. However, layout does not
meet all APA requirements.
Below Expectations – Fails to exhibit basic knowledge of APA formatting. There are frequent errors,
making the layout difficult to distinguish as APA.
Non-Performance – The assignment is either nonexistent or lacks the components described in the
instructions.
Written Communication: Page Requirement
Total: 0.67
Distinguished – The paper meets the specific page requirement stipulated in the assignment description.
Proficient – The paper closely meets the page requirement stipulated in the assignment description.
Basic – The paper meets over half of the page requirement stipulated in the assignment description.
Below Expectations – A fraction of the page requirement is completed.
Non-Performance – The assignment is either nonexistent or lacks the components described in the
instructions.
Written Communication: Source Requirement
Total: 0.67
Distinguished – Uses more than the required number of scholarly sources, providing compelling evidence
to support ideas. All sources on the reference page are used and cited correctly within the body of the
assignment.
Proficient – Uses required number of scholarly sources to support ideas. All sources on the reference
page are used and cited correctly within the body of the assignment.
Basic – Uses less than the required number of sources to support ideas. Some sources may not be
scholarly. Most sources on the reference page are used within the body of the assignment. Citations
may not be formatted correctly.
Below Expectations – Uses inadequate number of sources that provide little or no support for ideas.
Sources used may not be scholarly. Most sources on the reference page are not used within the body of
the assignment. Citations are not formatted correctly.
Non-Performance – The assignment is either nonexistent or lacks the components described in the
instructions.
