Case Studies in Accounting for MBAs: Computer-Assisted Instruction

Article excerpt

The case method of instruction offers a unique opportunity to develop sound business judgment, but certain cases are conceptually difficult, particularly time-consuming and tedious for students to prepare. As a result, effective and efficient classroom discussion is impeded. I teach an MBA managerial accounting course using the case method. Some cases are adaptable to the use of spreadsheet models. The learning objectives of the use of these models are to: (1) enhance the effectiveness and reduce the amount of student preparation time; (2) enhance the effectiveness of classroom learning time by clarifying conceptually difficult points during preparation; (3) reduce tedious and repetitive calculation time; (4) provide supplemental information; and (5) increase interest levels by using the spreadsheet as a learning tool during classroom discussion. I will describe the computer assisted approaches I use with two example cases. The complete Lotus or Excel computer models can be downloaded by the reader from the web at http://www.mercer.edu/ssbe/faculty/barber/models.exe.

Lipman Bottle Company

The Lipman Bottle Company case (Harvard Business School 181-076) illustrates the use of full cost information to set printing prices. The company is a distributor which also prints labels on bottles.

The case provides a 10-month income statement, showing variable cost per machine hour and per 1,000 passes (or separations), and fixed cost. A schedule showing shipping and scrap costs is given. Difficult to understand information is provided about printing operating time and how setup time and cost might be figured.

Students are instructed to calculate variable cost per 1,000 bottles, and a suggested price list, with a 30% margin on sales, for printing of 24 alternatives of bottle sizes, order sizes, and one- and twoseparation combinations for Albany and for New York-New Jersey. Students are told to calculate the costs and suggested prices for a specified alternative by hand. Next, they are to bring up the Lotus or Excel model which contains the solution. A highly condensed version of the model is shown below.

To calculate the other 23 alternatives (both before and in class) students must make careful decisions about the values and proper variables (bottle size, order size, shipping, etc.) to change, but the spreadsheet model clarifies and provides feedback on their analytical process, and is a significant time saver for discussion and analysis. …