HomeAbout → Tax Case Study → QuickBooks Project → Accounting Cycle Project → Payroll Project → Managerial Accounting
Managerial Accounting • Corporate Simulation

Strategic Cost & Decision Analysis

Master Budgeting • Variance Analysis • Relevant Sourcing • Balanced Scorecards

Back to Projects
Overview

Project Overview

Client Scenario: "Legendary Bakehouse," a rapidly growing gourmet cookie startup. As the Intern Accountant, I worked alongside the Accounting Manager, Neil, and staff accountant mentor, Renee, to deliver data-driven financial analysis across 7 operating rounds.

The Goal: Leverage managerial accounting principles — cost classification, master budgeting, variance analysis, sourcing comparisons, and performance metrics — to support executive strategic decision-making.

My Role: Cost & Management Accountant — analyzed product costs, constructed the sales-driven operational master budget, isolated production variances, evaluated activity-based costing systems, and built a balanced scorecard.

Contribution Margin, Fixed Costs per Store, and Breakeven Customers per Hour analysis
Challenge

The Management Challenge

Rapid growth without cost controls threatened Legendary Bakehouse's margins. I was tasked with resolving four critical areas of operational uncertainty:

Product Cost DistortionDetermining why gross profit margins varied wildly across cookie lines, and identifying if volume-based overhead allocation was distorting true product costs.
Uncoordinated Operational PlanningBuilding a cohesive Master Budget integrating production, direct materials, direct labor, and overhead projections based on fluctuating seasonal sales targets.
Sourcing & Make-vs-Buy SparingConducting relevant cost analyses to determine whether to produce Aphrodite's Delight Shortbread in-house or outsource it to a third-party co-packer.
Opaque Performance ControlsEstablishing standard cost variances to isolate pricing and usage inefficiencies, and constructing a multi-perspective KPI system to review store manager performance.
Solution

Financial Control & Cost Strategy

Cost Audit & Underpricing Identification: I modeled costs for the signature cookies. My analysis revealed that the Dragonfire Chocolate Chip cookie was actually priced at a gross loss (-$0.16/dozen) due to high direct labor time (0.22 hours/dozen). I recommended immediate price adjustments and recipe optimization to preserve overall margins.

Master Budget & Cash Planning: Built the operational budget including sales, production schedules, materials purchasing, direct labor capacity, and overhead pools. I calculated the cash collections and disbursements schedules, predicting treasury shortages and identifying funding requirements.

Standard Cost Variance Isolation: I isolated material price and quantity variances along with direct labor rate and efficiency variances. This identified specific wastage in ingredient quantities and inefficiencies in labor scheduling, directing corrective floor action.

Relevant Cost Sourcing Decisions: Performed a make-vs-buy model for Shortbread cookies. By separating unavoidable fixed overhead from variable manufacturing costs, I proved that producing in-house was more cost-effective than outsourcing by a significant margin, preventing profit leakage.

Activity-Based Costing & KPI Dashboard: Compared traditional DLH allocation to Activity-Based Costing (ABC), showing how high-volume cookies were subsidizing low-volume custom batches. Finally, I built a balanced scorecard evaluating managers on customer retention, wastage, employee satisfaction, and profitability.

Result

Outcome

  • Product costing models auditing direct materials, labor, and overhead per unit for three core lines
  • Operational retail margin analysis that identified gross-negative items and recommended price hikes
  • Comprehensive 12-Month Master Budget incorporating sales, production, DM, DL, and MOH schedules
  • Direct material and direct labor variance reports isolating pricing deviations from floor inefficiencies
  • Relevant cost sourcing reports analyzing qualitative and quantitative make-vs-buy factors
  • Activity-Based Costing (ABC) framework allocating overhead pools to activities to prevent distortion
  • Balanced Scorecard KPI dashboard evaluating regional store managers across four key operational perspectives
  • Earned the Stukent Certified Managerial Accounting Simternship credential
    • Back to Projects