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Use of a job cost simulation to engage Gen Y students.(Instructor's Note)


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.


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.


Recommendations for Teaching Approaches


The primary objective of the case is to develop students' understanding of job cost processes and accounting for those processes. To complete the simulation successfully, students must possess a basic understanding of job cost accounting. This simulation may be used to supplement or illustrate classroom lectures or alternatively, may be assigned as a class project. The learning objectives for the simulation are to develop students' ability to:

1. Understand the flow of costs in a job cost production environment.

2. Understand and apply accounting for costs in a job cost production environment.

Implementation Guidelines

This simulation was designed to be used in introductory managerial accounting courses to facilitate student understanding and accounting for production flows in a job costing environment. The simulation can be easily modified to be used in upper level accounting classes by changing the simulation requirements. Suggested changes to modify the simulation are included in a later section of the notes. Our experience indicates that the simulation should be done after job costing has been covered in class. The simulation materials include [c]Legos, inventory lists, forms, and instructions.

The simulation can be used with pre-built prototypes, or students can build their own prototypes if time permits. Each set of [c]Legos is packaged with pictures of possible "product designs" that can be used for this purpose.

The simulation was designed to mimic a real production environment, complete with an inventory manager, job teams, and a cost accountant. Our experience, however, has shown that if students perform only one function they become isolated from the rest of the simulation. We discuss this further in the teaching notes below.


The first step in the simulation is to pass out and review the simulation instructions with the students. Instructors should stress that the exercise is meant to simulate a manufacturing environment and the processes that occur in that environment. Instructors then designate areas within the classroom to represent the stores warehouse, the production area, and the finished goods warehouse. Instructors should also point out that although inventory management, production, and cost accounting are normally done by unique individuals within an organization, students will perform all three functions to gain experience and understanding of the manufacturing process. Once students are comfortable with the procedures, instructors direct students to begin the simulation by performing the first three procedures in the inventory management instructions.

Inventory Management--Material Receiving

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.

There are thirteen different types of raw materials. 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. The inventory label contains the raw material item number that corresponds to the inventory list. Students count and record the amount of inventory on receiving reports and on an inventory cards. They use the inventory list (Exhibit 1) to obtain unit costs and then extend the inventory on the cards. Cards are placed with the inventory item in the stores warehouse. As noted above, we suggest that all students perform this function. Instructors can elect to have the students propose the entry to record the receipt of inventory upon completion of the receiving function or wait until production is complete and do all journal entries at that time. Exhibit 2 contains examples of completed receiving reports and inventory cards for a sample inventory item.

Production Processing--Material Needs

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 also need to 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.

Operationally, instructors begin by assigning students to teams. Each team is issued a job cost sheet, two material requisition forms, and a time card for each member of the team. Each team should either pick a prototype for their product or build one if instructors elect to allow students to create their own product. (For instructional purposes the completed forms for production of a prototype are provided in Exhibit 3). Teams enter job cost information (the job name, product description) on the job cost sheet. Each team member selects one of the job team roles as described in the procedures. Teams now perform the first two instructions as follows.

The team designer analyzes the prototype to determine the material requisition needs. Once material needs are determined, the team fills out the material requisition form, in duplicate, and forwards both copies to the materials storeroom requesting their materials.

Inventory Management--Issuance of Material

Students now "switch" from production to inventory management and complete instructions for issuance of raw materials to production. It is helpful to assign at least two person teams to each raw material and to designate one student from each team as the recipient of the issued material. Instructors direct half the raw material team to issue material based on the material requisitions and the other half to update the inventory cards as material is issued. The recipient can move through the stores warehouse, item by item, until their requisition is complete. Instructors can provide an empty [c]Ziploc bag with which to package the requested materials. Once all requisitions are filled, the materials manager signs both copies of the material requisition. Operationally, instructors may direct the team that fills the last item on the requisition form to sign the form and forward a signed copy to cost accounting. The remaining copy returns to production with the material, where it is used as the source document to record raw materials on the job cost sheet.

Production Processing--Actual Production

Students rejoin their teams in production bringing their raw materials and signed material requisition with them. The job coordinator receives the issued material and the team accountant enters the receipt of raw materials on the job cost sheet. Job teams build their product and keep track of their time on individual time tickets. When production is complete, team members total their time and the job accountant records it on the job cost sheet. Time tickets are forwarded to the cost accountant so that payroll can be recorded.

Overhead is applied on the basis of direct labor hours. Direct labor hours are accumulated on the time tickets and are used to calculate the applied overhead for each job. Students compute the amount and record overhead on their job cost sheet. Job coordinators for teams who complete production ship the finished good to the finished goods warehouse and forward the completed job cost sheet, with supporting documentation, to cost accounting.

This process has gone very well in the classroom environment and students really seem to have fun building their products. However, our experience with the simulation resulted in a number of suggestions for more effective implementation of this process. We suggest that once the designer identifies the material needs that instructors send the entire team to pull inventory from the stores warehouse. Assigning this function to one student per team creates a bottleneck in the stores warehouse and leaves other team members sitting and waiting for their materials. We have also found that students do not like setting their own labor rates and times. They prefer a more structured approach in which they are told the hourly rate of pay and how much total labor should be used to build their product. In response to their suggestions, we suggest that instructors assign the number of hours that each product should use and then allow students to allocate the hours among the team members. Instructors can elect to assign twenty labor hours among the teams, which results in allocated overhead equal to actual overhead, or can change the amount of actual labor hours so that overhead is under or over applied at the end of the period.

To enhance understanding of how individual jobs make up the work-in-process and finished goods inventory balances, instructors can direct one or more teams to stop production prior to completion. This results in one or more jobs that remain in work-in-process while the rest of the jobs move to finished goods. After the teams record the movement of the jobs from production, students can visually see the jobs supporting the general ledger balance for each type of inventory.

The professor, acting as the factory supervisor, provides help to groups as needed. Students have done well with the material requisitions, building the product, and accumulating material and labor costs on job cost sheets, but sometimes need help with the overhead allocation.

Cost Accountant

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 their job cost sheet in a T account on the board, labeling direct material, direct labor, and overhead. As a class, students now assume the role of cost accountant and use the professor as their "scribe". Students direct the professor to record the transactions described in Table 3 of the instructions. (Sample journal entries appear in Exhibit 3). These functions are performed as a group to allow students to synthesize their individual group activities into a single set of summary journal entries. Instructors begin by recording the receipt of raw material, unless previously recorded during the initial receipt of inventory. Labor is recorded for both hourly workers, from the time tickets, and for salaried personnel, found in instruction 2 of Table 3. Overhead costs are recorded based on the information in time 3 of Table 3. These first three instructions represent the accumulation of product costs.

Instructions 4 through 7 of Table 3 involve recording the application of product costs to production. Instructors start with raw materials using material requisitions as the source documents and also refer to the T accounts summarizing the jobs that the team accountants previously recorded on the board. This helps students to visually see that the summary entry is the sum of all the individual amounts applied to each job. The application of labor involves both direct time from time tickets and indirect time recorded with the payroll. Direct time is charged directly to work-inprocess, while indirect time is charged to manufacturing overhead. Overhead is applied on the basis of direct labor hours, the allocation base used in the predetermined overhead rate. Finally, students direct the professor to record the movement of any completed jobs out of work-in-process into finished goods. As the entries are prepared, instructors post them to T accounts and then have the students compute the balances. Students identify which jobs support which balances at the end of the exercise.

At this point, instructors direct students to select a job for sale and to compute a selling price equal to cost plus a 20% markup. Students propose the journal entries to record the sale. Finally, students analyze the manufacturing overhead account and dispose of any over or under applied amounts.

Students sometimes struggle with journalizing the processes they have just completed. Instructors may have to prompt students with questions to get them to visualize what occurred. For example, if students cannot record the application of materials to production, instructors should ask questions about where they got the materials and what they did with them. Students will remember that they got them from the "raw materials section of the classroom" and that they took them to the "production area of the classroom". This helps them logically derive the entry.

Experiential Classroom Use

The case has been used in ten sections of undergraduate managerial accounting courses. The simulation takes approximately forty-five minutes to an hour to complete. The simulation was first performed in two sections of managerial accounting from which the authors solicited verbal feedback to help perfect the implementation. In subsequent semesters, adjustments were made and an assessment questionnaire was administered to the students. The ratings for the specific questions were as follows (n = 48):

Did this project help you understand a job cost environment?

It received a rating of 4.15/5.00 where a 5 is "quite a bit" and a 1 is "not at all" (SD = .61849).

Did this project help you understand accounting in a job order cost environment?

It received a 3.98/5.00 where a 5 is "quite a bit" and a 1 is "not at all" (SD = .60105).

How did this project compare to learning about job order costing by reading the book?

It received a 4.50/5.00 where a 5 is "quite a bit" and a 1 is "not at all" (SD = .79894).

How did the project compare to learning about job costing by hearing a lecture?

It received a 4.50/5.00 where a 5 is "quite a bit" and a 1 is "not at all" (SD = .71459).

How did this project compare to learning about job order costing by doing homework problems?

It received a 4.20/5.00 where a 5 is "quite a bit" and a 1 is "not at all" (SD = .87418).

The student comments were very positive (summarized in Exhibit 4).

Student feedback indicates that students felt the simulation 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.

Simulation modifications

The simulation can be modified for use in upper level accounting classes. Suggested modifications include (1) assigning the simulation after covering classroom material on job costing, process costing, and activity-based-costing; have the students design the costing system or alternatively, critique and suggest improvements to the production processes and/or the accounting procedures, (2) assign an additional module in which students must identify indirect production costs and design a system for application of overhead to production; have students calculate the rate or rates and apply overhead based on their system design, (3) delete the forms from the simulation and have students design the forms necessary to document to flow of costs, and/or (4) expand the disposition of overhead section by including the assumption that over or under applied overhead is material. This elevates the disposition of overhead to upper level accounting in which students must prorate the over or under applied overhead among inventory and cost of goods sold.


This simulation attempts to engage Gen Y students in the learning process by using a hands-on approach to manufacturing and accounting for production in a job cost environment. It takes less than one class period and seems to give students a frame of reference for production processes. Post-implementation survey responses indicate that students liked the simulation, felt that it enhanced their understanding of production processes and accounting for production in a job cost environment. They preferred this method over lectures, reading the text, and doing homework. The simulation is appropriate for use in managerial accounting courses and in upper level accounting courses, with modification.


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), 3449.

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
Exhibit 1: Inventory List and Simulation Forms

Inventory Item   Item Number   Colors Available             Price

8 x 2's          8 x 2         Yellow, orange, red, light   $2.50 each
                                 blue, dark blue, lime
Supports         Supports      Dark blue                    $.90 each
8 x 1's          8 x 1         Dark blue, lime green,       $1.75 each
                                 dark green, yellow,
                                 orange, red, and light
Eyes             Eyes          Yellow, green                $.50 each
Bases            Bases         Yellow, red, green, and      $1.00 each
                                 dark blue
16 x 2           16 x 2        Red and blue                 $5.00 each
Squares          SQ--DG        Dark green                   $.50 each
Squares          SQ--O         Orange                       $.50 each
Squares          SQ--LB        Light blue                   $.50 each
Squares          SQ--R         Red                          $.50 each
Squares          SQ--LG        Lime green                   $.50 each
Squares          SQ--Y         Yellow                       $.50 each
Squares          SQ--DB        Dark blue                    $.50 each

Sample Journal Entries:
Assume production of 4 jobs with the following costs:

Job        Ship     Flower     Dragon       Fish      Total

DM         18.40      25.00      24.50      11.50      79.40
DL         75.00      60.00      45.00      80.00     260.00
OH      1,125.00   1,500.00     675.00   1,200.00   4,500.00
Total   1,218.40   1,585.00     744.50   1,291.50   4,839.40

The ship, flower, and dragon are completed; the dragon is sold at a 20% on cost.
JE   Account Title                             Debit      Credit

1    Raw Materials Inventory                   258.45
       Accounts payable                                    258.45
     Record receipt of all raw materials
2    Factory labor                           3,260.00
       Wages payable                                     2,999.20
       Taxes payable                                       260.80
     To record payroll; direct 260.00;
       indirect 3,000.00; employee payroll
       taxes withheld of 8%
3    Manufacturing overhead                    500.00
       Accounts payable                                    500.00
     To record overhead bills
4    Work-in-process Inventory                  79.40
       Raw materials inventory                              79.40
     To record the application of direct
       materials to production
5    Work-in-process Inventory                 260.00
     Manufacturing overhead                  3,000.00
       Factory labor                                     3,260.00
     To record the application of direct
       labor to production
6    Work-in-process inventory               4,500.00
       Manufacturing overhead                            4,500.00
     To record the application of overhead
       to production based on 30 total
       direct labor hours
7    Finished goods inventory                3,547.90
       Work-in-process inventory                         3,547.90
     To record the completion of
       production jobs
8    Accounts receivable                       893.40
       Sales                                               893.40
9    Cost of goods sold                        744.50
       Finished goods inventory                            744.50
     To record the sale of the dragon.
10   Manufacturing overhead                  1,000.00
       Cost of goods sold                                1,000.00
     To dispose of overapplied overhead

Raw Materials Inventory
JE Ref    Debit    Credit

1         258.45
4                  79.40
Balance   179.05

Work-in-Process Inventory
JE Ref    Debit    Credit

1         258.45
4                  79.40
Balance   179.05

Work-in-Process Inventory
JE Ref    Debit     Credit

4         79.40
5         260.00
6         4500.00
7                   3547.90
Balance   1291.50

WIP ending balance is equal to the costs in "fish".

Finished Goods Inventory
JE Ref    Debit     Credit

7         3547.90
9                   744.50
Balance   2803.40

Finished goods ending balance is equal to the costs in "ship" and "flower".
Exhibit 4: Student Comments

Summary of Student Comments:

* Learn better from hands-on situation rather than reading or listening

* Learned the process well

* It really helped me connect all the steps

* A fun activity overall

* Understand the process more after this exercise

* As a visual learner, I can better understand the process from an
exercise like this

* Good visual to complement other ways of learning

* I had a really hard time understanding from the book and the lecture;
the simulation was very helpful

* Experience teaches people better than reading and listening

* It helped a great deal to see the breakdown of the process

* It was nice change and helped me to understand some of the more
difficult aspects of job costing

* It helps to walk through each step; I'll be able to visualize
the process better and not just memorize the steps

Suggestions for Improvement:

* More time spent

* When assigned as an inventory manager, I felt isolated from the
rest of the project

* Be more specific about labor hours and rates so they will be more
alike between groups

* Assign set labor rates
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Article Details
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Title Annotation:Instructor's Note
Author:Lippincott, Barbara; Pergola, Teresa M.
Publication:Journal of the International Academy for Case Studies
Article Type:Report
Geographic Code:1USA
Date:Mar 1, 2009
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