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ACCT2019 Management Accounting
Instructions for Parts A & B
Scope: There are two parts in this assignment. Part A is a group assessment and Part B
is an individual assessment. Part A requires students, as a group, to carry out an
analysis of the case study (Gretzky Pty Ltd – described in this document) and
submit an executive report in PowerPoint format. Part B requires each student
to map the Gretzky Pty Ltd case study data in the SAP accounting system and
complete several transactions and reports and submit a document. This
assignment requires students to demonstrate their:
i) Ability to identify and apply relevant management accounting concepts
and techniques to practical business contexts and make recommendations
with a focus on the usage of qualitative and quantitative information.
ii) Specialist SAP software skills by mapping the business scenario in SAP,
determination of relevant master data and transactions, their creation
and/or execution and producing relevant reports from the SAP accounting
system.
Weighting: Part A – Case analysis – Group (15%)
Part B – SAP component – Individual (15%)
Due date: 7th May 2022, Saturday, 11:59 PM AEDT
Submission: • Two files should be submitted. One for Part A & one for Part B.
• Both files must be saved and submitted in PDF document format.
• Please submit in Canvas in the two folders in the ‘Assessment’ section:
i) Part A – Case analysis – Group
ii) Part B – SAP Component – Individual
Your Part A PDF file should include the cover page, PowerPoint report, appendices and the
peer evaluation form.
Hockey Sticks Extraordinaire - Case Study
Composite carbon technology has been used in prosthetics, aerospace, car racing and now in
ice hockey sticks. Manufacturing and structural advances in composite technology have
allowed manufacturers to combine the best properties of wooden and aluminium sticks while
adding innovations that make composite sticks ideal for today’s hockey players.
In the early 1980s, many players, including Wayne Gretzky, the all-time leading scorer in
National Hockey League (NHL) history, experimented with aluminium shafts with wooden
blades. These sticks gained popularity throughout the 80’s and 90’s due to their unmatched
durability, stiffness and stability. The shaft was a rectangular aluminium tubing with a
replaceable wooden blade. Although the aluminium sticks were lighter, stronger and more
durable than wooden sticks, they did not provide players with a “feel” for the puck. This was
the primary reason for their failure.
In the late 1990s, full composite sticks were introduced to the sport. These sticks were made
from graphite fibres bound together by polymer resin, which made them extremely light.
Composite hockey sticks have soared in popularity and are currently used by more than 80%
of players in the NHL. Composite stick technology is ideal because it combines the flexibility
of wood to generate hard shots, the stiffness and stability of aluminium for control and a
lightness that is unmatched by wood or aluminium. The stick is lighter which means quicker
movement and faster release of the puck for passing and shooting.
Upon retirement, Wayne Gretzky and his father Walter Gretzky formed Gretzky Pty Ltd (GPL)
as a manufacturer and supplier of (ice) hockey sticks1. They produce two types of hockey
sticks, The Hull and The Howe. The Hull is sold as a stick that is highly effective for slap
shots, whereas The Howe is more of a finesse shooter’s stick (i.e. it has less power but greater
accuracy). Both products are top-of-the-line and too expensive for non-professional players.
Stick cost is not an issue for a professional hockey player even if they did have to buy them,
which they don’t. Their team would pay for all equipment costs including for sticks.
A quick Google search provides some insights into GPL’s competition and the hockey stick
market.
12 Best Hockey Sticks 2021 Review | Honest Hockey
Best Hockey Sticks 2022 - Top 5 Ice Sticks and Related Info (lifeinhockeywood.com)
Do NHL Players Pay for Sticks? – Getting Started with Hockey (startinghockey.com)
NHL Equipment Brand Stats - GearGeek
NHL Totals (geargeek.com)
1 Canadians never put “ice” before “hockey”. There’s only one kind of hockey in Canada.
And they never refer to “the boards” as ‘the wall’.
Gretzky Pty Ltd sell The Hull and The Howe directly to professional hockey teams. Wayne’s
sales and price forecasts for 2021 are provided in the “Sales and Finished Goods” table below.
This table also provides actual inventory count values at the start of 2021. Production costs
from 2020 for The Hull inventory is $250 per stick while for The Howe, it is $300 per stick.
SALES FORECASTS and FINISHED GOODS VOLUMES - 2021
PRODUCT
Sales
Volume
(units)
Selling
price/unit
Desired ending
inventory (# of
sticks)
Opening inventory
(actual # of sticks)
The Hull 50,000 $500 1,500 2,500
The Howe 85,000 $650 2,000 2,850
DIRECT MATERIALS – STANDARDS and INVENTORY VOLUMES - 2021
Direct material required for
each hockey stick (grams)
Desired
ending
inventory
(grams)
Opening
inventory
(grams) Material Cost per gram The Hull The Howe
Composite wood $0.12 240 250 45,000 22,400
Fibre glass $0.30 150 130 15,000 4,650
Carbon fibre $3.00 10 15 13,000 9,500
Kevlar $2.50 20 35 5,000 4,000
DIRECT LABOUR STANDARDS - 2021
Process The Hull The Howe
Assembly - direct labour hours per batch 2.0 2.5
Finishing - direct labour hours per batch 2.3 2.2
Total processing hours per batch 4.3 4.7
Batch size (# of sticks) 50 36
Direct labour hours per stick 0.086 0.1306
Direct labour cost per hour $45 $45
MANUFACTURING OVERHEAD - 2021
Variable overheads: Budgeted cost ($) Actual costs ($) Costs to be charged to
Indirect labour 540,000 570,000 Maintenance
Supplies 125,000 150,000 Maintenance
Electricity 400,000 420,000 Maintenance
Repairs & maintenance 750,000 760,000 Maintenance
Rates & Insurance 300,000 300,750 Maintenance
Total variable overheads 2,115,000 2,200,750
Fixed overheads:
Rent 2,500,000 2,500,000 Accounting
Depreciation 1,500,000 1,500,000 Accounting
Miscellaneous 750,000 840,000 Accounting
Total fixed overheads 4,750,000 4,840,000
Total overheads 6,865,000 7,040,750
GPL has six departments – Accounting (A###), Maintenance (M###), Sales (S###), Tech.
services (T###) and The Hull (L###) production unit and The Howe (W###) production unit
within their Gretzky cost centre group (GG###), and all of them are classified as service cost
centres in SAP.
The management of GPL (Walter & Wayne) use a traditional volume-based method of
allocating overheads with a predetermined rate based on the number of sticks produced. They
have recently hired your team as their Management Accountants to prepare various
components of their operating budget, cost of goods sold budget and a budgeted income
statement. You have been provided with the following information:
• GPL’s actual sales in 2021 were 59,600 sticks for The Hull at an average price of $550 per
stick and 80,900 sticks for The Howe at an average selling price of $675 per stick.
• Actual year-end ending inventories were 1,000 sticks and 1,800 sticks of The Hull and The
Howe respectively.
• Walter indicates that composite wood was purchased for $0.15 per gram and Kevlar was
purchased at $2.25 per gram. The cost of fibre glass and carbon fibre were $0.22 per gram
and $3.5 per gram respectively.
• GPL used 7,900 kilograms (the complete purchase amount) of fibre glass for producing The
Hull, while they bought and used 11,200 kilograms of fibre glass for producing The Howe.
Wayne indicates that they bought and used 525 kilograms of carbon fibre for The Hull and
1,125 kilograms of carbon fibre for The Howe. 14,873.6 kilograms of composite wood were
bought and used for The Hull, whereas 19,164 kilograms were bought and used for The
Howe. For The Hull, 1452.5 kilograms of Kevlar were bought and used, whereas 3,194
kilograms were bought and used for The Howe.
• Actual direct labour hours for each The Hull produced was 0.108 hours, while for The Howe
it was 0.125 hours. Total labour cost for The Hull was $875,400 and for The Howe it was
$655,500.
• For 2021, the total actual variable manufacturing overhead spent was $ 2,200,750 and total
fixed overhead spent was $4,840,000.
Unfortunately for GPL and other hockey stick manufacturers, stick breakage has been making
the news in hockey circles. Several players have been extremely vocal and demonstrative with
their complaints (see Appendix A).
While professional hockey players do not worry about the cost of their equipment, they are
extremely particular that it functions flawlessly. Sticks breaking at inopportune times can result
in missed goals and games lost. Several of GPL’s major competitors have been emphasising
the durability of their products. Wayne and Walter have been concerned in recent times with
the quality of their sticks.
On the production front, GPL has tried to bring more control over product quality by reducing
GPL’s reliance on labour and increasing the use of computerised manufacturing methods.
Several aspects of production that required manual labour had been automated. GPL has also
been trying to understand the quality of its direct materials. Walter has been talking to various
suppliers that can provide higher quality materials at negotiable prices. Given the current
breakage concerns for The Hull and The Howe, this has been an important concern for the two
Gretzky’s.