• Develop cost reports within an organization
• Analyze cost data and its impacts on strategic decisions within an organization
• Communicate strategic recommendations and impacts based on cost data analysis to executive leadership

Scenario

You are a management accountant at Emerald Office Supply, Inc., an organization that manages and sells office supplies to a variety of companies throughout the country. Your manager is interested in lowering the company's carbon footprint. To better understand which resources are used, your manager has asked you to create an executive report about the budgeting process for the organization. You will use the completed client profile and then compile an analysis of all the findings, as well as prepare recommendations for future strategies for a leadership panel.

Part One: Analysis of Cost Report

Using the client profile in the Supporting Materials section, analyze the cost report based on the break-even analysis and the cost-volume-profit (CVP) analysis.

Specifically, you must address the following:

1. Compare the different types of costs used to develop a cost report in the organization.
2. Analyze the benefits of job order costing versus process costing in the organization.
3. Differentiate the preparation of a break-even analysis from that of a master budget. Include differences between the following in your response:
   1. Target profit planning
   2. Sensitivity analysis
4. Explain the relationship between the operating cycle of an organization and the cost structure of an organization.

Part Two: Analysis of Master Budget

Using the client profile, analyze the financial and operational strengths and weaknesses of the organization by using the data from the cash budget and the master budget.

Specifically, you must address the following:

1. Assess the effectiveness of the sensitivity analysis in the master budget.
2. Analyze the effectiveness of various budgeting techniques for the organization.
3. Explain how the budgeting is informing decision making in the organization.
4. Assess the importance of activity-based costing in the organization's cost structure.
5. Explain the importance of components of the master budget to the organization's financial stability.

Part Three: Executive Summary

Propose recommendations to the organization's leadership panel based on your analysis of the cost report and the master budget.

Specifically, you must address the following:

1. Evaluate the effectiveness of the budgeting process to reduce the total cost of future purchases in the organization.
2. Create strategies for financial and operational improvements for future profitability.
3. Explain how the use of a balanced scorecard informs the strategic analysis of the organization.
4. Summarize how to effectively present the balanced scorecard to the organization.
5. Determine the impact of the cost data analysis and the master budget on future profitability. Consider the following in your response:
   1. Financial stability
   2. Connection to ESG initiatives
6. Provide financial recommendations to a leadership panel based on the cost data analysis and the master budget.

Break-Even Analysis Data Emerald Office Supply, Inc., produces special report binders that it sells to its corporate customers. The binders sell for $50 per box. The variable and fixed costs for a box of binders are as follows: Variable Costs per Box Category Cost Manufacturing Direct materials Direct labor $15 $3 Manufacturing overhead Selling and administrative Total $10 $2 $30 Fixed Costs per Box Category Cost Selling and administrative Total Manufacturing overhead costs $15,000 $10,000 $25,000 Here is the break-even analysis: Break-even points in unit sales volume: Fixed costs/unit contribution margin = $25,000/($50 - 30) = 25,000/20 = 1,250 units Break-even point in dollar sales volume: Fixed costs/contribution margin ratio = 25,000/(20/50)= 25,000/.4 = $62,500 Profit planning: Unit requirements to earn $1,000 in profit o $1,000 = 50x - (30x + 25,000) o $1,000 = 50x - 30x - 25,000 o $26,000 = 20x o 1,300 units Cash Budget Data Emerald Office Supply, Inc., prepares a cash budget each quarter. The following is the cash budget for the second quarter (months April through June). April May Cash balance, beginning June $125,000 $118,500 Cash receipts $118,000 60% of current month's sales 156,000 144,000 30% of previous month's sales 67,500 162,000 78,000 72,000 April May 10% of sales two months prior June 25,000 22,500 Total receipts 248,500 244,500 26,000 Cash available 260,000 373,500 363,000 Cash disbursements 378,000 Purchases 160,000 150,000 Operating costs 153,000 95,000 95,000 Total disbursements 95,000 (255,000) (245,000) Cash balance, end 118,500 (248,000) 118,000 130,000