IMA Educational Case Journal
Volume 2, Issue 2
Laura Hopkins, Shane Moriarity
Luxor Cosmetics can be used as a simple budgeting case, but our primary goal in writing it was to unobtrusively raise an ethics problem. Students are directed to prepare a set of budgets to be used to help secure a bank loan. After alternative budgets have been prepared students are asked to identify issues needing managerial attention. This gives students the opportunity to act as management accountants by suggesting some alternative strategies for action.
Keywords: budgeting, breakeven analysis, ethics, and strategic alternatives.
Agile Machinery Group, Inc. - Rental Operations Analysis
DeWayne L. Searcy, Tina M. Loraas
AMG, Inc., is a heavy equipment distributor. Due to recent changes within the industry, AMG is finding itself in uncharted waters, namely, the heavy equipment rental business. While AMG is shifting its business model to keep up with competitors, its information system is not as flexible. The information system was designed primarily for sales and service, and thus some of the output for rental purposes is problematic. This case centers on transforming the output of the current information system into information that AMG's management can use to make better decisions regarding the company's rental fleet.
Keywords: profitability analysis, decision aid, resource allocation, and critical thinking.
Buns Bakery: Creating and Using a Master Budget
Jason C. Porter, Teresa Stephenson
This case is intended to help students in upper division or graduate cost or managerial accounting courses gain an in-depth knowledge of budgeting by developing and using a multi-product, multi-period master budget. The case consists of two segments that can be used in conjunction or separately. The first segment allows students to create a master budget. The second segment allows students to use their budgets to make recommendations for improving company performance. The use of multiple products and introduction of incentives to improve company performance add a degree of complexity above that found in most budgeting problems. Working on this type of case provides students with a greater understanding of both the flexibility of a master budget and of the information such a budget can provide to decision-makers. In addition, the case illustrates the incentives for budget padding, providing an opportunity to conduct a discussion of ethical budgeting and potential consequences in a rich context.
Keywords: master budget, subsidiary budgets, budget analysis, ethics, and spreadsheet preparation.