Water World Instructional Case: Integrating Financial and Managerial Accounting with Strategic Planning

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CASE DESCRIPTION

The primary subject matter of this case concerns integration of strategic planning with financial and managerial accounting. Secondary issues include financial accounting journal entries, relevant costs in decision making, budgeting, production schedules, and the accounting cycle. The case has a difficulty level of two, appropriate for sophomore level and five, appropriate for first year graduate level. The case is modular in nature, and is designed to be taught in 1-5 class hours. The number of hours of outside Preparation will depend on the portions of the case selected for use in the classroom, but should not exceed 10 hours.

CASE SYNOPSIS

Much has been published about integration of accounting content and breaking down of silos created within colleges of business. Introductory accounting courses generally are still divided between managerial and financial accounting or, if there is only one course, the highlights of each are presented separately. Further, business strategy is often considered only as part of a capstone class, and the use of accounting information to support strategic decision making is often overlooked.

The purpose of this case is to provide related financial and managerial accounting projects which culminate in a strategic plan. The projects are simplified but provide a discernable thread from raw materials and direct labor to plans to expand the firm. These projects are suitable for a blended financial and managerial introductory course for undergraduates or for MBA students and have been used effectively in an online teaching environment. The modular nature of the projects means that instructors can easily customize case materials.

The Case Description and Case Synopsis should be removed before assigning this case to a student or a student group. This material could prejudice the minds of students.

Student Objectives

This case is designed to help you understand and apply financial and managerial accounting concepts, and to see how the accounting system provides information that can help in financial reporting as well as managerial decision making. To accomplish this, you will be using information from Water World, Inc., a fictitious company operating a water park facility in Texas.

There are five projects in this case. The first three projects focus on managerial accounting concepts, while the fourth is oriented toward financial accounting. You will use both financial and managerial information to complete project five. To complete project one, you will prepare a production schedule and a cash budget. In project two, you will identify and focus on relevant costs for decision making and will use these costs to formulate recommendations related to production of plush toy animals. To complete projects 3 and 4, record basic entries and, in project 4 complete the accounting cycle. In project 5, you will use the accounting information you have generated to make recommendations for increased profits.

OVERVIEW

Water World, Inc. owns and operates a 75 acre water park in Sanderling, Texas. Sanderling is located in northwest Texas, a part of the state known for its hot and dry summertime weather. Because of the heat, the park's cooling waterslides and rides are very popular among residents of the region.

The company's mission goes beyond entertainment, however. In addition to entertaining park customers with water rides and swimming pools, the company educates customers about aquatic mammals through shows and exhibits. The most popular of the educational shows focuses on sea otters. In the show, otters show off a variety of tricks while a narrator describes the otters' habitats and characteristics. The otter exhibits and shows have proven to be so popular that the company has adopted the sea otter as the company mascot, and Water World sells otter toys in the water park's gift shop and to local retailers. …