Use of a job cost simulation to engage Gen Y students.

Lippincott, Barbara ; Pergola, Teresa M.

CASE DESCRIPTION

Meeting the educational needs of the current generation of students, referred to as Gen Y students, is a pedagogical challenge. Research suggests that Gen Y students learn most effectively in environments where they are actively engaged and in control of their learning. The in-class learning simulation described in this paper is designed to appeal to the more active learning style of Gen Y students. The simulation focuses on the process flow and accounting for products in a job cost environment.

The simulation requires students to actively perform three different job functions in a manufacturing environment. First, they assume the role of inventory manager in which they receive and inventory raw materials. Second, they assume production roles, in which they analyze prototypes, order materials, build products, and accumulate production costs. Third, they assume the role of cost accountant. In this role, they account for the accumulation and application of product costs. By completing this simulation, students build a frame of reference for manufacturing production processes that should deepen their understanding of accounting in a production cost environment.

This simulation has a difficulty level appropriate for freshman and sophomores but can be easily adapted for upper level accounting classes. Several options for adaptability of content are presented in the instructor's notes. The simulation is designed to follow lectures on the text material and takes approximately one hour of class time. It does not require any outside preparation by students. Prior students have rated this simulation as a very helpful hands-on learning experience that greatly enhanced their understanding of the job cost process.

CASE SYNOPSIS

Introductory accounting courses are generally taught to undergraduate business majors as part of the required basic business core. Many of the students are non-accounting majors and may lack the motivation to study accounting. Most have little work experience and may also lack a frame of reference for the concepts taught in class. While these demographics have made accounting education challenging in the past, meeting the educational needs of the current generation of students, Gen Y students, is proving to be even more of a challenge.

Gen Y students (1984 to present) grew up with computers, the Internet, beepers, cell phones, MTV, and a proliferation of computer games. Learning styles of this generation are more active and visual than verbal (Eisner, 2004), causing traditional teaching methods to be less effective. For these students to learn, they must be actively engaged and in control of their learning (Arhin & Johnson-Mallard, 2003).

The use of non-traditional teaching aids has been shown to be beneficial to the learning process and is becoming more common (Gupta, Elson, & Ostapski, 2006; Hoffjan, 2005; Albrecht, 1995). The use of games and simulations to teach managerial accounting concepts engages students in the process, helps them relate the concepts to real-world situations, and enhances their ability to retain the knowledge without memorization. Goman (2006) refers to this style of learning as "edutainment", an environment where students want to be entertained to induce learning.

This simulation embodies these strategies by allowing students to design and build products in a manufacturing environment following the product from design through completion and sale using a job costing methodology. Students are actively engaged in both the manufacturing process and accounting for the manufacturing processes as they complete the exercise. Student feedback indicates that the simulation was perceived as an effective learning strategy.

THE SIMULATION

The simulation materials include simulation instructions, [c]Legos, product prototypes, inventory lists, and forms. The forms consist of a job cost sheet, material requisition forms, time sheets, raw material inventory cards, and receiving reports (see Exhibit 1 in instructors' notes for all simulation forms). The simulation mimics a job cost environment. The classroom is divided into a raw materials inventory area, a production area, and a finished goods area. Students are divided into groups and simulation instructions are distributed and reviewed. Students are required to perform three separate functions in the simulation, assuming different "player" roles, beginning with inventory management. The instructor assumes the role of factory supervisor assisting in all areas as needed.

Inventory Management

The first assignment, presented in Table 1, requires students to perform inventory management functions. Students performing this function are required to receive, count, and store inventory in the raw material inventory warehouse. The goal of this function is for students to understand that raw materials inventory is made up of different types of material which, in the aggregate, make up the general ledger balance in raw materials inventory. The subsidiary ledgers are the inventory cards, which can be actual cards as they are in this simulation or electronic records that record the same information.

Raw materials used in production consist of thirteen different [c]Lego shape-color combinations. An inventory list of each item, description, and price is provided to each student (See Exhibit 1 of instructors' notes). Each individual inventory item is delivered to the company packaged in a large [c]Ziploc bag with an inventory label attached to the outside of the bag. Students perform the procedures outlined in the simulation instructions for the inventory management position and create receiving reports and inventory cards for received materials.

Introduction Processing

The production processing assignment, presented in Table 2, requires the students to perform the production functions in a job cost manufacturing environment. The objective in the production process procedures is for students to understand how direct material and direct labor are assigned to jobs as the actual tasks are performed. They should also understand that overhead, the factory supervisor, the facilities surrounding them, etc., are not directly associated with their particular job. This should enhance their understanding of the need to allocate overhead since it cannot be directly charged. A final objective is for them to understand that costs accumulate by job. They should gain this understanding by summarizing the production cost on their job cost sheet.

Students are assigned to groups. Each group is to produce a unique product. "Jobs" consist of product prototypes built from [C]Legos by the instructor in advance of the class or the instructor can elect to allow students to design their own product prototypes. Suggested designs are included in each Lego kit if students wish to use these as a basis for their unique product design. Team members should pick one of the job team roles as described in the procedures and performs their functions.

Cost Accounting

The objective for this function is for students to understand how to account for the tasks they just performed and for the movement of materials and jobs throughout the production process. Team accountants summarize job costs in T accounts on the board. The T account represents the job cost sheet prepared by the team during production. As a class, students now assume the role of cost accountant, described in Table 3, using the professor as their "scribe". Students direct the professor to record the accumulation of manufacturing costs using the source documents prepared by the teams and the summary of job costs on the board. These functions are performed as group to allow students to synthesize their individual group activities into a single set of summary journal entries. Students propose the appropriate entries to record the application of job costs to production, the movement of completed jobs out of production, and the sale of a job. The final objective is for students to dispose of any remaining overhead balances and to reconcile subsidiary job accounts to general ledger inventory control accounts.

The simulation has been used in ten sections of undergraduate managerial accounting courses. Student feedback indicates that students felt it enhanced their understanding of job costing and accounting for job costing and was much better than reading the text, hearing a lecture, or preparing homework answers. Students also reported that visualizing the process really enhanced their learning and kept them from just memorizing the steps.

REFERENCES

Albrecht, W. D. (1995). A Financial Accounting and Investment Simulation Game. Issues in Accounting Education, 10(Spring), 127-141.

Arhin, Afua Ottie, & Johnson-Mallard, Versie (2003). Encouraging Alternative Forms of Self Expression in the Generation Y Student: A Strategy for Effective Learning in the Classroom. ABNF Journal, 14(6), 121-122.

Eisner, Susan P. (2004). The Class Talk Show: A Pedagogical Tool. S.A.M. Advanced Management Journal, 69(1), 34-49.

Goman, Carol Kinsey (2006). Communicating For A New Age. Strategic Communication Management, 10(5), 8-9.

Gupta, Sanjay, Elson, Raymond J., & Ostapski, S. Andrew (2006). The Puzzle Game: A Novel Approach to Teaching Accounting. Accounting Instructors' Report, Fall(2006), 1-10.

Hoffjan, Andreas (2005). Calvados--A Business Game for Your Cost Accounting Course. Issues in Accounting Education, 20(1), 63-80.

Barbara Lippincott, The University of Tampa

Teresa M. Pergola, The University of Tampa

Table 1

Inventory Manager: In this assignment, you will perform the tasks of an
inventory manager in a manufacturing environment.

The steps to complete the assignment are as follows:

Receipt of raw materials:

1. Count and fill out a receiving report for each unique raw material
delivered and forward complete receiving reports to the cost
accountant

2. Record the purchase of raw materials on inventory cards, one for
each type of raw material. Use the inventory list to aid you in
inventory costing.

Issuance of raw materials to production:

1. Receive material requisitions from production teams.

2. Issue material to teams, complete and sign the material requisition
slips, and update the inventory cards.

3. Forward signed material requisitions to cost accounting.

Table 2

Job Teams:

Job Coordinator
Designer
Production Staff
Team Accountant

Production Processing: In this assignment, you will perform the tasks
of a job team that builds the Product on the shop floor.

The steps to complete the assignment are as follows:

1. The designer reviews the production steps, analyzes the prototype,
and identifies the material needs.

2. The job coordinator issues material requisitions and receives
material.

3. Production staff builds the product.

4. All members keep track of time on times sheets as work begins by
job.

5. All members submit time sheets weekly to cost accounting.

6. The team accountant completes the job cost sheet, using material
requisition forms, time tickets, and predetermined factory overhead
rates. The predetermined overhead rate is $150 per direct labor hour,
which is based on a total of 20 estimated direct labor hours.

7. Job coordinator ships the completed job to finished goods and
forwards completed job cost sheets to cost accounting.

Table 3

Cost Accounting: In this assignment, you will perform the tasks of a
cost accountant in a job cost manufacturing environment.

The steps to complete the assignment are as follows:

Journalize the following transactions and post the entries to T
accounts:

1. From inventory receiving reports, record the receipt of raw material
inventory.

2. From time cards and from salaried payroll, record the payroll.
Salaried employees consist of the inventory manager ($500), and the
factory supervisor ($2,500). Payroll taxes are 8% of gross wages.

3. Record overhead costs. Overhead costs consist of:

a. Purchasing and storage of raw materials $100

b. Insurance $200

c. Fuel surcharge for delivery of materials $200

4. From duplicate copies of material requisitions forms, record
application of material to work-in-process and manufacturing
overhead.

5. Apply labor to jobs and overhead.

6. Apply overhead to work-in-process.

7. Receive job cost sheets and record the transfer of completed jobs
to finished goods inventory.

Assume that one of the jobs has now been sold and do the following:

1. Choose the job that is sold.

2. Calculate a selling price equal to cost plus a 20% markup for
profit.

3. Record the sale of the job.

Complete the accounting process by:

1. Analyze the inventory account.

2. Prepare the journal entry to dispose of any over or under applied
overhead.

3. Reconcile the T accounts to the subsidiary job accounts that support
their balances (Raw material inventory, Work-in-Process, Finished goods
inventory)