Banking and Budgeting: A Case of Integrated Learning

• In Event: Teaching and Learning Cases

Abstract

Banking and Budgeting is a master budgeting case oriented toward introductory managerial or early cost accounting students which address accounting, broad management, and foundational competencies. The case is set in banking and manufacturing. United Bank has received an application for a short-term line-of-credit from Little Annin Flagmakers (LAF). Students are required to prepare LAF’s master budgets using spreadsheet technology (Excel) and then conduct a sales sensitivity analysis to understand uncertainty. Using this information, student make a credit decision. Primary discussion topics include: the lending decision, sales risk, credit risk, risk-return relationship, and the banking industry. Extension to the case allow students to explore business improvements and their effect on the financial needs, cost identification in manufacturing, inventory planning and capacity issues, and effects of seasonality on cash needs and operations. A video of the manufacturing environment is available for students to develop an understanding of the manufacturing processes and associated costs. Overall, this case provides a rich educational opportunity for early business students that does not require more than one day of valuable class time. Not only does this case develop accounting planning competencies, it also exposes students to two industries, banking and manufacturing, and develops technical Excel skills. Instructor resources include: teaching notes, instructor Excel solutions, and student Excel file with template.

Authors

• Anne M.A. Sergeant, Grand Valley State University

• Neal VandenBerg, Grand Valley State University