Oil Pipeline Case Study- Parts One and 2 I need help with both parts of this case study. Please see attached videos and word documents and grading rubric. Part 1: Discuss all 6 P&L and include ov
Case Study Overview
Oil Pipeline Software (OPS) is a comprehensive case study in the managerial accounting concepts that we cover in this course. This is the first of two parts and will cover the cost allocation concepts in Chapters 19 and Appendix C but for a services company to provide the opportunity for you to see how we allocate costs in a non-manufacturing setting.
There is a pdf file containing the overview of the case and an excel file that contains the exhibits with additional quantitative and qualitative data. It is recommended that you read the case study overview and exhibits a few times to gain the background of the case. There is also a video going over the case study and exhibits to help get you going on the case study and to introduce all the various exhibits you will be using in more depth than in these guidelines.
Key Terminology
There is some key terminology that should be understood before reading the case study. This is an organization with two distinct divisions, a Software division and a Professional Services Division. Under each division, there are the following lines of business:
Software Division
Software Products
Maintenance & Support
Software Services
Professional Services
Data Management
Integrity Management
Compliance
In part 1 we will be using Exhibits 2 & 7 and also six other profit & loss (In practice, income statements are often called profit & loss statements or p&l for short) statements that were created by using the allocation methods discussed in Exhibit 7 to create them from the Company wide p&l in Exhibit 2. Also, we will not be using Exhibits 5 & 6 until part 2, but if you are reviewing everything, Exhibit 5 is and Operating Budget for 2016 and then Exhibit 6 is a Forecast as of May 2016. In practice, we establish a budget before the beginning of a year, then as time passes, we update the months that have passed, in this case January through May, with actual results and then essentially redo our budget for the remaining months based on the updated business conditions we are experiences. We call the original budget the budget and then the one that is updated with actuals and updated budgeted numbers the forecast. It is very common for companies to “reforecast” the year every month. This is done as of May for the year 2016 so we can get a sense of where the year will actually end up.
Project Requirements and Guidelines
Part 1
This part of the project will be due on Sunday, October 30th. For this part, you will be reviewing the overall company’s p&l for the last five years in Exhibit 2 along with the six separate p&l’s for each line of business in the two divisions and writing a 1-2 page summary in a separate word document of what you see is going on within the company as a result of creating these p&l’s with all of the overhead expenses allocated to each of the six lines of business. To keep this writing organized and to ensure you properly discuss all lines of business, for each of the six p&l’s for the lines of business, you should write about 5-7 sentences discussing the results of that division over the last five years. Then you should write 1-2 paragraphs to summarize the results of the company based on the discussion of each individual line of business.
Please use appropriate headings to clearly identify what line of business you are discussing and also to identify the section in which you are summarizing the results of the entire company. Your paper should be done in a word document (please do not upload any other type of file including google sheets as I am unable to download other types of files from the D2L assignment).
Part 2
The final deliverable for this part of the project will be a 3-4 page paper due on Sunday, November 6th.
Your paper should be done in a word document (please do not upload any other type of file including google sheets as I am unable to download other types of files from the D2L assignment) and should detail a proposed plan to the CEO of OPS of how to address the issues facing OPS. Below are a few questions to reflect on as you are putting together your final paper:
Is the current OPS portfolio of lines of business sustainable? If so, how can OPS improve profitability? Some things to consider are if the company should cut costs by eliminating some positions, if there are some lines of business that the company should consider eliminating, or if there are some products or services that the company should eliminate.
What could OPS have done earlier to reduce the pressure on the bottom line? How can OPS better budget for the upcoming years? What actions should OPS consider in response to the occurrence of certain oil price fluctuations?
Remember, we do not make decisions based only on financial data. There are many exhibits that we did not review in part 1 that contain information that you need to include in your evaluation of the current state of the business and in your plan to address the issues the company is facing. When you are discussing your plan, please be sure to address both financial and nonfinancial factors that led to your decisions. Also, when proposing a course of action, it may help your discussion with the CEO to perform calculations to demonstrate the financial impact that the proposed action would have on the business. In other words, quantify the financial benefit to the company for your proposed course of action. It may also help for the paper if you include a brief summary of the issues the company is facing and how your proposed actions would help to address these issues.
Grading
The first part of the project will be worth a total of 25 points, with the second part being worth 50 points for a total of 75 points for both parts of the project. Detailed grading rubrics will be shared with the class when each part is formally introduced to the class.
