Managerial Accounting Case Study of Zesla Global Client Engagement

This case study examines managerial accounting practices at Zesla Global Accounting, focusing on a scenario where a junior associate, Danielle Roper, faces challenges in accurately reporting her time spent on a client engagement due to unforeseen traffic delays. The case requires an analysis of alternative time-reporting methods, an evaluation of the consequences of different reporting options (120, 160, or another number of hours), and a recommendation for the most appropriate course of action. It also covers the impact of time lost in traffic, the calculation of direct labor efficiency variance, and the implications of tying employee bonuses to variance on employee reporting. The analysis includes student learning objectives, such as identifying alternatives, evaluating consequences, examining traffic impact, calculating variance, and making management recommendations. Desklib offers solved assignments and past papers to aid students.

Mini- Case Study: Managerial accounting for client engagement
Zesla Global Accounting is a mid-sized accounting firm headquartered in Columbus GA. The firm has
several clients in Georgia and Alabama. To examine client documents Zesla associates frequently travel
to Atlanta and Birmingham and stay overnight at hotel accommodations provided to them by the client.
Employees use their own car to travel daily from hotel to the client site.
Danielle Roper is a junior associate at accounting firm Zesla. Associates are required to report time spent
on client engagements using a new software called HR Connect. The actual time reported by associates
is used to forecast time required to complete future jobs for the same client as well as similar jobs for
other clients. The firm maintains a historical database of budgeted time and actual time spent by
associates on various projects. This data is used by the firm to determine year-end bonuses for
employees. The reported time is also used by the firm to prepare bids on future jobs to the same and
other clients.
Danielle completed a task at a client location in Atlanta. Her actual engagement time was 160 hours but
the firm had only budgeted 120 hours for the job. Part of the reason Danielle’s hours were longer is that
an important bridge on I-85 in Atlanta had collapsed snarling traffic downtown and causing
unexpected delays in travelling from her hotel to the client site. Danielle expects it took her an extra 30
minutes each day due to traffic delays on a 3 week engagement. Danielle also worked several hours on
the project while she was at her hotel room during after hours. Danielle is hesitant to report the 160
hours she actually worked because she fears she will be perceived as being inefficient on the job.
Associates at her firm usually report their actual time spent on the job at the same or a little above the
budgeted hours even if they spent more time on the project than was budgeted. Danielle is paid $25 per
hour for her services and the client is billed at the rate of $50 per hour including company overheads.
To complete this project you have to answer these two questions
1. Identify alternatives
There are various alternative to the given situation like the company can take the recording of
time on floor of the client and time for which the employee was in campus. This will give an
idea to the company as to what is the actual time required for completing the given job and
whether or not Danielle and other colleagues are efficient. Another process to judge the
actual working hours on the project is to have a software installed in system which will track
for how long the system has been active and thereby the time invested in the project,
provided that the laptop should be used for exclusively official purpose (Alexander, 2016).
Furthermore, the company should not consider the time of travelling all together or should
charge the client an average basis.
2. Evaluate the consequences of reporting 120 hours, 160 hours or some other number (be specific
and provide a justification for the number you recommend reporting)
In case the employee reports a lower time than the actual engagement time, the
consequences could be manifold. Some of which are that the firm makes a wrong estimation
of the budgeted time for the similar projects or for the future projects. In case, it estimates
more, it may lose the client or in case it estimates less time, then it may result in loss of
revenue. This also has an impact on the employee growth and bonuses as it may lead to
wrong rating and computation. This also may work against the other colleagues who are
putting in genuine efforts and still not achieving the target in the given deadlines (Belton,

2017). Therefore, here Danielle should report 160 – (21*0.5) = 160 – 10.5 = 149.5 hours as the
actual hours as she has lost 10.5 hours due to traffic downtown. The idea is reporting of actual
working hours may not always show the inefficiency but the budgeted hours set itself may be
wrong.
Student Learning Objectives
3. Identify alternatives
4. Evaluate the consequences of reporting 120 hours, 160 hours or some other number (be specific
and provide a justification for the number you recommend reporting)
5. Examine how the time lost in traffic should be accounted for
6. Calculate the direct labor efficiency variance
7. Evaluate the impact of tying an employee bonus to variance on employee reporting and how
your solution could impact Danielle’s bonus
8. Make a recommendation to management
Student Resources
1. Any introductory text in Managerial Accounting
2. Flexible budget variance vide on You Tube https://www.youtube.com/watch?v=0v-dtkbrPW4
3. http://accounting-simplified.com/management/variance-analysis/labor/efficiency.html
References
Alexander, F. (2016). The Changing Face of Accountability. The Journal of Higher Education, 71(4), 411-
431.
Belton, P. (2017). Competitive Strategy: Creating and Sustaining Superior Performance. London: Macat
International ltd. Retrieved from https://www.routledge.com/Competitive-Strategy-Creating-
and-Sustaining-Superior-Performance/Belton/p/book/9781912128808