Susan Jackson recently accepted an unpaid intern, Anakin (Bongjoo) Kim, a recent accounting grad who wants to do humanitarian service before pursuing a career in international business.

Susan Jackson recently accepted an unpaid intern, Anakin (Bongjoo) Kim, a recent accounting grad who wants to do humanitarian service before pursuing a career in international business. Susan is hoping that Anakin can use his management accounting knowledge to help HHC fulfill its mission. Specifically, she asked Anakin to address the following questions (these are the questions you are to answer in your submission):

What circumstances cause local Haitian peanuts to be more expensive than those produced in foreign countries? Consider how operating leverage and economies of scale affect the cost per kilogram.

How could cost-accounting information, such as break-even and target profit analysis, help Haitian farmers like Samuel Hilaire be more profitable? (Provide a minimum of three specific examples. If you cannot find the number you need, then make an assumption based on other case information.)

Most, if not all, other aid associations buy their peanuts from lower cost, higher-quality providers, but there are good reasons for HHC to buy local peanuts even though they cost more. First, do a quantitative cost-benefit analysis of buying local peanuts rather than foreign peanuts. Next, identify other qualitative costs and benefits such as those affecting local farmers, the economic viability of the country, and HHC’s relationship with UNICEF.

Think about HHC’s mission. What types of financial and nonfinancial information would help HHC lower its costs and still achieve its mission? How can cost accounting help HHC meet its objectives? Consider the appropriate costing system, key cost measures, and financial and nonfinancial impacts of using local peanuts.

Many HHC donors not only want to help, but also want to know how their donations will make a difference. What kinds of financial and nonfinancial measures could HHC provide to donors to show how they are helping the people of Haiti? Consider how donations might be used, such as for new labor-saving equipment, supplementing HHC’s budget, expanding capacity, and who might benefit from the donations.

What performance measures could HHC provide to UNICEF to help it achieve its goals and increase its purchases of RUTF made with local peanuts? Consider issues such as its mission, performance goals, food quality, and short-term versus long-term costs.

What do you think is the best way to help the country and people of Haiti? Support your answer. Consider the macroeconomic, microeconomic, and ethical implications of your recommendation. For example, consider (1) how HHC could persuade UNICEF to think more long-term, (2) how HHC could expand its capacity to produce more Medika Mamba (MM), and (3) how to best reduce the amount of food aid provided to Haiti, and provide more nonfood aid.

Your Word document should be 8–10 pages in length (not including the required cover and references pages). Submissions in excess of 10 pages are permitted. It is highly recommended that you include in bold type the questions you are required to answer, with the answers directly underneath each question.

You must include a minimum of six credible academic, or professional references beyond the course text, required and recommended readings, or other course materials.

Requirements:

ISSUESINACCOUNTINGEDUCATIONAmericanAccountingAssociationVol.33,No.1DOI:10.2308/iace-51854February2018pp.17–28CanManagementAccountingHelpAidAssociationsMakeToughChoicesinHaiti?KipR.KrumwiedeInstituteofManagementAccountantsGyungH.(Daniel)PaikW.DarrellWaldenUniversityofRichmondABSTRACT:Basedonanactualsituation,thiscaseexplorestheuseofmanagementaccountinganalysisinadifficultmake-or-buydecisionintherealworldofhumanitarianaid.Anaidorganizationproducesaspeciallydesigned,highlynutritiouspeanutbuttermedicinetosavethelivesofHaiti’smalnourishedchildren.ThechallengeisdecidingwhethertosourcethepeanutsfromHaitianfarmersandpaymoreorfromforeignsuppliersandpayless.Studentsperformbothquantitativeandqualitativecost-benefit,break-even,operatingleverage,andproductcostinganalysis.Performancemeasurement,incentiveissues,short-termversuslong-termthinking,micro-andmacroeconomics,andethicalissuesarealsoconsidered.Thecaseisbestsuitedforcostaccountingandmanagerial(particularlyM.B.A.managerial)accountingcourses.Keywords:productcosting;outsourcing;break-evenanalysis;nonfinancialperformancemeasures;managementaccounting;non-governmentalorganizations(NGOs);ethicaldecisionmaking.INTRODUCTIONTheRepublicofHaitiisaCaribbeancountrylocatedintheAtlanticOcean,southeastofCuba(onlyabout45nauticalmilesawayattheclosestpoint).Haitioccupiesthewestern,smallersideoftheislandthatitshareswiththeDominicanRepublic.Evenbeforetheterribleearthquakein2010,thenationof10millionpeoplestrainedtofeedandhouseitspeopleduetoahistoryofslavery,occupation,upheaval,corruptleaders,disease,andnaturaldisasters.TheaverageannualpercapitaincomeinHaitiisonlyUS$810,andevenlessinruralareas(aboutUS$350).Whena7.0-magnitudeearthquakestruckPort-au-PrinceonJanuary12,2010,theproblemreachedalarmingnewlevels.Theearthquakecausedthousandsofdeathsandwidespreaddestruction.ThenumberofmalnourishedchildreninHaitiisterriblyhigh:10percentofchildrenunderfiveyearsoldareacutelymalnourished(i.e.,reversible)andanother20percentarechronicallymalnourished(i.e.,stunted,whichisirreversible).InternationalfoodaidwastheonlyrecourseformorethanamillionHaitianfamilies.Lookingforwork,unemployedfarmersandtheirfamiliesflockedtomajorcities,whichwereunpreparedfortheinflux.Shantytownssprungup,jammedwithhousescobbledtogetherfromscrapmaterials.Shadaisonesuchshantytown;thisiswhereMadameMagalieandothersworktirelesslytosavemalnourishedchildreninafreehealthclinicsheruns.Inatypicalweek,theclinichelpsfeed150–250starvingchildren.Allofthechildrenareinvariousstagesofmalnutrition.Manyshowthesignsofmalnutritionsuchaslowweight,smallbody,largebelly,andchangesinskinandhaircolor.Untilrecently,mostofthechildrenwhocametoherclinicdiedofmalnutrition.Now,however,MadameWegratefullyacknowledgethehelpfulcommentsonpreviousversionsofthecasebyNickFessler,MatthewFish,theeditor,theassociateeditor,andthereviewers.Thiscaseisbasedonarealhumanitarianaidorganizationdedicatedtobringingready-to-usetherapeuticfoodtoHaiti.Althoughbasedonarealsituation,thenamesanddatainthecasearefictitious.Editor’snote:AcceptedbyLoriHolder-Webb.Submitted:January2015Accepted:June2017PublishedOnline:July201717

Magaliehasapowerfulnewoption.Sheprovidesthechildrenwithakindofenrichedpeanutbuttercalled‘‘MedikaMamba,’’whichmeans‘‘peanutbuttermedicine’’inHaitianCreole,oneofHaiti’stwoofficiallanguages(theotherisFrench).MedikaMambaMedikaMambaisnoordinarypeanutbutter.Itisaready-to-usetherapeuticfood(RUTF)madefromroastedpeanuts(about76percentoftotalproductweight),powderedmilk,cookingoil,sugar,vitamins,andminerals.AndreBriend,aFrenchpediatricnutritionist,andMichelLescanne,afood-processingengineerandfounderofNutriset,developedtheformulationforthepeanut-butter-basedmedicinein1996.KnownasPlumpy’Nutinmanypartsoftheworld,ithasrevolutionizedhowmalnourishedchildrenaretreated.BeforeMedikaMamba,asitisknowninHaiti,severelymalnourishedchildrenweregivenliquidmilkwithaddedoil,sugar,vitamins,andminerals.Themilkhadtoberefrigerated,itcouldbegivenonlyinhospitals,anditoftenhadtobeadministeredwithafeedingtube.Eventhen,manychildrendidnotrecover.ThebeautyoftheMedikaMambaisthatcaregiverscanfeedittotheirchildrenathomewithaspoon,thekidslikeit,andthesurvivalrateismuchhigher.Typically,afulltreatmentprogramforonechildlastssixtoeightweeksandrequiresabout11kilograms(kg)ofMedikaMamba(120packets).Withinsixweeksofstartingtreatment,85percentofchildrenonMedikaMambarecover,farbetterthanthe25percentsurvivalratewitholdermilk-basedtreatments.ThePlumpy’NutpriceofafullMedikaMambatreatmentisabout$69.MedikaMambahasproventobeaneffectivetoolinfightingmalnutrition.Butabigissuehasemerged:wheretobuythepeanuts.SourcingDecisionsTheissuethathumanitarianaidgroupsfaceiswheretogetthepeanuts.Ideally,theywouldliketobuyMedikaMambamadewithlocalpeanuts,whichnotonlyhelpsfeedmalnourishedchildren,butalsogeneratesmuchneededjobsforHaitianworkersandcreatesamarketforHaitianpeanutfarmers.Thedownsideisthatfoodproducedinimpoverishedcountriesisoftenmoreexpensivethanfoodimportedfromcountriesthathavemoreadvancedeconomies.InHaiti,peanutsgrownbylocalfarmerscostmuchmorethanthoseavailablefromforeignsuppliersduetocropdiseases,havinglittleornomachinery,andsmall-scaleproductioncapacitythatlimitseconomiesofscale.Almostalltheworkmustbedonebyhand.Nutrisetistheleadingmanufacturerofpeanutbuttermedicineintheworld.Nutrisetisafor-profitcompanybasedinNormandy,France,andisdedicatedtomakingnutritionalproductsavailableforpreventingandtreatingmoderateandseveremalnutritionindevelopingcountries.ItinveststhemajorityofitsprofitsinresearchanddevelopmentandworkswithUnited18Krumwiede,Paik,andWaldenIssuesinAccountingEducationVolume33,Number1,2018

Nationsagencies,governmentalbodies,andnon-governmentalorganizations(NGOs)toreducemalnutritionandhelpdevelopingcountriesmeettheirownfoodneeds.1ItsPlumpy’Nutbrandisahigh-qualityRUTF,withanaveragepricethatis18percentlowerthanMedikaMambaduetoeconomiesofscale.Itismadewithpeanutsfrombigforeigncompaniesthathavealargecapacityandcanproduceandshiphundredsofthousandsofkilogramsofhigherqualitypeanutsatamuchlowerprice.ThispresentsadilemmatohumanitarianaidgroupslikeUNICEF2thattrytohelpfeedmalnourishedchildren.HowmuchextrashouldtheybewillingtopayforthepeanutbuttermedicinemadewithHaitian-grownpeanuts?Itwouldbeidealtobuymedicinemadewithlocalpeanutstohelpfarmersbeabletofeedtheirownchildrenandreducethetotalnumberofmalnourishedchildren.Butpurchasingmedicinemadewithhigher-qualitypeanutsfromforeignsuppliersatalowerpriceallowsthemtofeedmoreseverelymalnourishedchildren,whichmeansthatmorelivescanbesaved.TohelpfarmersimprovethequalityandpriceofHaitianpeanuts,thereisasmallbutgrowingNGOlocatedinHaiticalledHelpingHaitianChildren.HelpingHaitianChildren(HHC)Overtheyears,manyaidprogramshavecometoHaititotrytoeasetheplightofthisstrugglingcountry.In2003,apediatricianfromSacramento,California(U.S.)namedSusanJacksonarrivedandhopedtohelpmakeadifferenceinthelivesofmalnourishedHaitianchildren.Afterashorttime,shecommittedherselftorelievingthechildren’ssufferingandstartedanonprofitorganizationnamedHelpingHaitianChildren(HHC).HHCisasocialenterprisewhosemissionisto‘‘saveHaiti’smalnourishedchildrenfromstarvationandstunteddevelopment.’’AbigpartofthatmissionisprovidingRUTFtoHaiti,especiallythepeanutbutter-basedmedicinetheycallMedikaMamba.Intheearlydays,HHCworkerscookedpeanutspurchasedfromforeignsuppliersoveranopenflameinachurchschoolroominCap-Haitien.TheymadetheMedikaMambabyhandanddelivereditinsmallplastictubstooutpatientclinics.Originally,HHC’sobjectivewasrescue—savingchildren’slives.Butafterawhile,Dr.Jacksonwonderedifsavingchildrenwasreallyenough.Sheobservedthatsomerescueonlyledtomorerescue.Therootcauseofmalnourishedkidsisthattheirparentsareunemployedandthereforehavenomoneytobuyfoodfortheirfamily.Sheandherstaffdecidedtobroadentheirobjectives.IfHHCproducedMedikaMambainmuchgreatervolumesintheirownHaitianfactory,thentheycouldhelpfeedevenmorechildrenplusprovidemuch-neededjobstotheirparents.TheyconvertedarentedhouseintoasmallfactoryandsoonbecameamajorsuppliertoUNICEFforthepeanutbuttermedicinetobedistributedinHaiti.Further,theybeganbuyingtheirpeanutsfromlocalfarmers.In2012,HHCopenedanew18,000-square-footfactorythatincludedmodernproductionequipmentjustafewmilesfromtheslumsofCap-Haitien.Tofinancethenew$3.2millionfactory,itraised$2.8millionfromdonorsandusedabridgeloanforthebalance.Thisfactoryproducesbetween5,000and8,000kgofMedikaMambaperweekandhasthecapacitytofeed80,000childrenperyear(theoldfactoryproducedonlyenoughtofeed8,000childrenperyear).TheMedikaMambapackagesthatitproducesarepurchasedbyUNICEFortheWorldFoodProgramandthendeliveredtohospitalsandclinicsthroughoutHaiti.HHChas22employeesplusthreeothersworkinginitsagriculturalassistanceprograms.Currently,HHCbuysallofthepeanutsneededfrom300localfarmersandhopestoincreasethatnumbertosomewherebetween400and500inthenextyear.Exhibit1illustratestheflowofpeanutstoRUTFtoHaitianchildren.Exhibit2showsHHC’sfinancialstatementsforthemostrecentfiscalyears.PlightofHaitianFarmersAccordingtoAmollo(2014),morethan16,000Haitiancivilservantsorgovernmentemployeeswerekilledinthe2010earthquake,andessentiallyallgovernmentandcommunicationsystemsweredestroyed.TheUnitedNationssteppedintoleadtherecoveryandrebuildingefforts,leadingsometocallHaitian‘‘NGONation.’’AstheextentofthedamageanddesperateneedoftheHaitianpeoplebecameknown,donationsandaidcamefromallovertheworld.ThesuccessstoriesofRUTFinsavingthousandsofpainfullythinchildrenledtomillionsofdollarsindonationsfromconcernedcountries,ledbytheU.S.Manyphilanthropicorganizationsprovidedlargeamountsofimportedfoodforfreedistribution.Withthefoodbeingprovidedforfree,itwasdifficult,ifnotimpossible,forlocalproviderstoselltheirfoodproducts.Ifthegovernmenthadbeenfullyfunctional,thenperhapsitcouldhavestartedmanagingtheamountofimportedfoodbyimposingimporttaxestomakethemmoreexpensiveandmotivatethelocalpopulationtobuyHaitianproducts.SomefeelthehugeinfluxoffoodaidisjeopardizingthelocaleconomyandpushingtheHaitianpeopledeeperintopoverty(Amollo2014).1FromNutriset’swebsite:http://www.nutriset.fr/en/homepage-nutriset.html2OriginallynamedUnitedNationsInternationalChildren’sEmergencyFund,itisnowbetterknownbyitsacronymUNICEF.UNICEFisheadquarteredinNewYorkCity,andisabrandknownthroughouttheworldforhumanitarianaid.Itistheleadingadvocateforchildren’srightsandisactiveinmorethan190countries.Itreliesoncontributionsfromgovernmentsandprivatedonors.UNICEFspecificallyrequestedUS$22millionin2015totreatHaitianchildrensufferingfromsevereacutemalnutrition(SAM).Source:https://www.unicef.org/about-usCanManagementAccountingHelpAidAssociationsMakeToughChoicesinHaiti?19IssuesinAccountingEducationVolume33,Number1,2018

UsingpeanutsgrownbyHaitianfarmerstomakeMedikaMambahasbothadvantagesanddisadvantages.OneadvantageisthenorthernplainsofHaitiareamongthemostfertileagriculturalareasintheworld.Thesoilfertilityisexcellentandwaterisplentiful.Justaboutanycropwouldgrowwellthere.Theareahasgreatpotentialforagriculturalsuccesswitheffectivemanagementandinvestment.Ontheotherhand,oneofthebiggestchallengesisthatpeanutsgrowninHaitiareoftencontaminatedwithaflatoxins,oneofthemostseriouscancer-causingsubstancesknown,especiallyacauseoflivercancer.Mostfarmerscannotaffordtobuytheneededfertilizer.Toensuretheirproductdoesnotcontainthesetoxins,HHCmusttesteverybatchbyhand.Further,theyieldsinHaitiaremuchlowerthanthoseintheUnitedStates.Forinstance,peanutfarmersinGeorgia(U.S.)canproducefourtimestheamountofpeanutsperacrethanHaitianfarmerscanproduce.Themainreasonsfortheloweryieldperacrearelackofequipmentandhighcostoffertilizer.HHC’semphasisonlocalproductionhasgreatlybenefittedmanyHaitianfarmers.ButmostfarmsinHaitistrugglemightilytomakeanykindofprofit.AnexampleofatypicalfarmerisSamuelHilaire.Herentsapproximatelytwoacresoflandandgrowspeanuts;hisrentis$100permonthfor10monthsoutoftheyear.Unlikebigpeanutfarmsinothercountries,hedoesnothavemodernequipmentorfertilizer.Hepaysafewpeopletohelptendthefarmandtheyallworklong,harddaysduringthegrowingseason.Whenaskedhowitisgoing,Samuelreplied,‘‘Itishard,man.Lastyear,weproduced64sacksbutgotonly48sacksofgoodpeanutsthatpassedinspection.Thepricewas$0.74perkgandwebarelybrokeeven.Thisyear,withsomehelpfromHHC,wehopetoharvest70sacksandyieldatleast60sacksofgoodpeanuts[about3,000kg].Butevenifwedo,thepriceatthemarket[inPort-au-Prince]isonlyabout$0.61perkgnow.’’Samuelhopestoearnenoughprofittobeabletofeedhisfamilyuntilnextseasonandpayforhisfourchildrentobeabletogotoschool.Buthisoptimismisstartingtowane.Itishardtocompetewithforeignpeanutcompaniesthatcanproduceandshiphundredsofthousandsofkilogramsofhigherqualitypeanutsatamuchlowerprice.Afewfarmersarestartingtohavesomesuccess,however.Ononesuchfarm,therearemanypilesofrecentlypulledpeanutplants.Menandwomenarepickingthepeanutsfromtheplantsandputtingthemintobuckets.Astheydoso,theyaresingingandyoungmenareplayingwoodenflutes.Thepartyatmosphereatharvesttimeisatradition,butitisevenmoresoherebecausetheyieldisgoodandthepeanutswillbesoldtoHHC.HHChasalsohelpedthefarmincreaseitsyieldbyprovidingasmalltractortohelpclearthefieldsandhelpingthemtobuyapesticidethathelpspreventfungaldiseasesthatcauseaflatoxincontamination.Infact,thefarmisyieldingalmosttwiceasmanypeanutsasitdidjustafewyearsago.Pushingawheelbarrowfullofpeanuts,farmerBenGarconsmilesandsays,‘‘Inmywholelife,I’veneverseenpeanutslooksogoodasthis.’’Heisonhiswaytoaco-opsponsoredbyHHCthatisacouplemilesaway.ManymoreHaitianpeanutfarmerswouldliketoselltoHHCandgethelptoincreasetheiryieldsand,additionally,haveareliablemarketfortheirpeanuts.HHC’slong-termplansaretocontinuehelpingHaitianpeanutfarmersincreasetheiryieldsEXHIBIT1FlowofRUTFinHaiti20Krumwiede,Paik,andWaldenIssuesinAccountingEducationVolume33,Number1,2018

andlowerthecostperkilogram.Withhelpfromdonors,itsnewfactory,andahugecustomerlikeUNICEF,SusanJacksonthinksthatHHCcanhelpHaitianfarmersprovideallthepeanutsneededatagoodprofit.Thechallengeisconvincingthebigfoodaidorganizations,UNICEFandWorldFoodProgram,tobuymorelocalRUTFatatimewhenthoseagenciesareunderincreasingpressuretolowertheircostsandfeedmorestarvingchildren.CanManagementAccountingHelp?TobuypeanutbuttermedicinefrompeanutsgrowninHaiti,UNICEFhasbeenwillingtopayupto20%moreforsomeofitsRUTFthanitwouldpayforNutriset’sPlumpy’Nutthatismadewithpeanutsgrowninothercountries.ButUNICEFisstillpricesensitiveasitstrivestoachieveitsgoals.Amongitsspecificgoals,UNICEFhopestohelpfeed20,000Haitianchildrenunderfiveyearsoldwhosufferfromsevereacutemalnutrition(SAM).Thus,thenumberofSAMchildrenfedisakeyperformancemeasureforUNICEF.UNICEFisalsobrand-sensitive.Itsstrongbrandrecognitionhelpsitraisemoneyanddotheworkitdoesallaroundtheworld.Thus,itseekstobethemajorproviderofhumanitarianaidtoHaitiandfeedasmanySAMchildrenaspossible.Thisprovidesanincentivetobuythelowest-costRUTFitcanfind.EXHIBIT2HHC’sFinancialStatementsPanelA:HHC’sBalanceSheetsasof9/30/13and9/30/14YearEnded9/30/20139/30/2014AssetsCurrentAssets:CashandEquivalents$801,248$1,340,227AccountsReceivable347,594162,279GrantsReceivable218,63670,832OtherReceivables276,066208,537Inventories457,288445,828Prepaidexpenses50,38044,310TotalCurrentAssets$2,151,212$2,272,013Propertyandequipment(net)3,025,3152,797,317TotalAssets$5,176,527$5,069,330LiabilitiesandNetAssetsCurrentLiabilities:AccountsPayable$170,674$133,096InterestPayable45,69633,215OtherLiabilities38,98848,464UnearnedRevenues238,506180,668TotalCurrentLiabilities$493,864$395,443Non-CurrentLiabilitiesNotesPayable772,632792,288TotalLiabilities$1,266,496$1,187,731NetAssetsUnrestricted$3,843,503$3,850,727TemporarilyRestricted66,52830,872TotalNetAssets$3,910,031$3,881,599TotalLiabilitiesandNetAssets$5,176,527$5,069,330Source:Caseauthors.(continuedonnextpage)CanManagementAccountingHelpAidAssociationsMakeToughChoicesinHaiti?21IssuesinAccountingEducationVolume33,Number1,2018

SusanJacksonrecentlyacceptedanunpaidintern,Anakin(Bongjoo)Kim,arecentaccountinggradwhowantstodohumanitarianservicebeforepursuingacareerininternationalbusiness.SusanishopingthatAnakincanusehismanagementaccountingknowledgetohelpHHCfulfillitsmission.Specifically,sheaskedAnakintoaddressthefollowingquestions.QuestionsforAnakin1.WhatcircumstancescauselocalHaitianpeanutstobemoreexpensivethanthoseproducedinforeigncountries?Considerhowoperatingleverageandeconomiesofscaleaffectthecostperkilogram.2.Howcouldcostaccountinginformation,suchasbreak-evenandtargetprofitanalysis,helpHaitianfarmerslikeSamuelHilairebemoreprofitable?(Provideaminimumofthreespecificexamples.Ifyoucannotfindanumberyouneed,thenmakeanassumptionbasedonothercaseinformation.)3.Most,ifnotall,otheraidassociationsbuytheirpeanutsfromlowercost,higher-qualityproviders,buttherearegoodreasonsforHHCtobuylocalpeanutseventhoughtheycostmore.First,doaquantitativecost-benefitanalysisofbuyinglocalpeanutsratherthanforeignpeanuts.Next,identifyotherqualitativecostsandbenefitssuchasthoseaffectinglocalfarmers,theeconomicviabilityofthecountry,andHHC’srelationshipwithUNICEF.EXHIBIT2(continued)PanelB:HHC’sIncomeStatementsforFiscalYearsEnding9/30/13and9/30/14YearEnded9/30/20139/30/2014SupportandFundraising:Contributions$525,145$482,299Grants224,689111,890Mambasales2,038,9902,119,567Interestincome2,3434,432Otherincome18,32113,689Non-cashcontributions49,50035,324Totalsupportandrevenue$2,858,988$2,767,201CostofGoodsSold:Peanuts$189,296$201,379Otheringredients68,59964,408Directlabor767,543860,545Overhead1,140,9841,188,372CostofGoodsSold$2,166,422$2,314,704Otherprogramexpenses$32,802$36,588Totalprogramexpenses$2,199,224$2,351,292SupportExpensesGeneralandadministrative165,229203,128Fundraising155,556241,213Totalsupportexpenses$320,785$444,341Totalexpenses$2,520,009$2,795,633Changeinnetassets338,979(28,432)Netassets,beginningofperiod3,571,0523,910,031Netassets,endofperiod$3,910,031$3,881,599Source:Caseauthors.Note1OnSummaryofSignificantAccountingPolicies(excerpt)UnrestrictedNetAssets:representresourcesoverwhichtheBoardofDirectorshasunlimiteddiscretionarycontroltocarryouttheactivitiesoftheOrganizationinaccordancewiththeArticlesofIncorporationandBy-Laws.TemporarilyRestrictedNetAssets:representresourceswhoseuseislimitedbydonor-imposedrestrictionsthatwillbemeteitherbyactionsoftheOrganizationorbythepassageoftime.Inventory:Inventoriesconsistofrawingredients,workinprocess,andfinishedproductandtendtobefairlystableeachyear.Totalproductproducedandsoldinfiscalyears2013and2014isapproximately255,186and268,905kilograms,respectively.22Krumwiede,Paik,andWaldenIssuesinAccountingEducationVolume33,Number1,2018

4.ThinkaboutHHC’smission.WhattypesoffinancialandnonfinancialinformationwouldhelpHHCloweritscostsandstillachieveitsmission?HowcancostaccountinghelpHHCmeetitsobjectives?Considertheappropriatecostingsystem,keycostmeasures,andfinancialandnonfinancialimpactsofusinglocalpeanuts.5.ManyHHCdonorsnotonlywanttohelp,butalsowanttoknowhowtheirdonationswillmakeadifference.WhatkindsoffinancialandnonfinancialmeasurescouldHHCprovidetodonorstoshowhowtheyarehelpingthepeopleofHaiti?Considerhowdonationsmightbeused,suchasfornewlabor-savingequipment,supplementingHHC’sbudget,expandingcapacity,andwhomightbenefitfromthedonations.6.WhatperformancemeasurescouldHHCprovidetoUNICEFtohelpitachieveitsgoalsandincreaseitspurchasesofRUTFmadewithlocalpeanuts?Considerissuessuchasitsmission,performancegoals,foodquality,andshort-termversuslong-termcosts.7.WhatdoyouthinkisthebestwaytohelpthecountryandpeopleofHaiti?Supportyouranswer.Considerthemacroeconomic,microeconomic,andethicalimplicationsofyourrecommendation.Forexample,consider(1)howHHCcouldpersuadeUNICEFtothinkmorelong-term,(2)howHHCcouldexpanditscapacitytoproducemoreMedikaMamba(MM),and(3)howtobestreducetheamountoffoodaidprovidedtoHaiti,andprovidemorenon-foodaid.REFERENCESAmollo,C.A.2014.PeanutButterDrive:AHumanRightsPerspective.SanBernardino,CA:CreateSpaceIndependentPublishingPlatform.CanManagementAccountingHelpAidAssociationsMakeToughChoicesinHaiti?23IssuesinAccountingEducationVolume33,Number1,2018

CASELEARNINGOBJECTIVESANDIMPLEMENTATIONGUIDANCEThepurposeofthisinstructionalcaseistogivestudentsauniqueopportunitytoapplytheircostandmanagerialaccountingknowledgetoanimportantreal-world,life-or-deathissuethatrequiresethicalreasoningandjudgments.DuetothestrongfocusonpublicaccountinginmostU.S.accountingprogramstoday,accountingstudentsoftengettheimpressionthatmanagementaccountingisnotsoimportanttothem.ThiscaseillustrateshowmanagementaccountinganalysiscanhelpNGOsthatarefacingtoughissuestoachievetheirmission.Thecaseisbasedonarealsocialenterprise(Meds&FoodforKids[MFK])whosemissionissavingthelivesofHaiti’smalnourishedchildren.Itintroducesstudentstoanongoingcrisisinasmallimpoverishedislandcountrythatisexperiencingseriousgoverningandeconomicissues.AlthoughthesettingforthecaseisHaiti,theissuesinvolvingfeedingmalnourishedchildrenandhelpingpoorcountriesandrefugeestohelpthemselvesarerelevantaroundtheworldtoday.Thebackgroundstoryforthiscaseiscompellingforbothstudentsandfacultybecauseitshowsthat—althoughnotsufficientformakingtougheconomicalandethicaldecisions—accountinganalysiscanbeusedtobetterunderstandtheethicalissuesatthecenterofthestory.Thecasecontributestotheaccountingcaseliteratureinseveralimportantways.First,ittakesthereaderintoareallife-or-deathsituationinwhichmanagementaccountinganalysiscanbehelpful,andincludesmanynonfinancialfactorstoconsider.Second,itaddstotheverylimitednumberofaccountingcasesthatinvolvenon-governmentalorganizations(NGOs),especiallyfromacostandmanagerialviewpoint(RobertsandZamora2012).Third,itillustratesthatloweringcostsisnotalwaysbeneficialforanorganizationinfulfillingitsmissionandmeetingitsstrategicobjectives.Finally,itshowsstudentsthatalthoughaccountinginformationcanbehelpful,aloneitdoesnotprovidenearlyenoughinformationtoaddresstheserioushealthandeconomicissuesfacedinpoorandwar-torncountries,aswellastomakethetougheconomicandethicaldecisionsthatneedtobemade.CaseLearningObjectivesThegoalsofthiscasearetoenhancestudents’skillsinthefollowingfourareas:1.ApplycostandmanagementaccountingknowledgetohelpaddressissuesfacingNGOs.2.Identifyquantitativeandqualitativecostsandbenefitsofsourcingoptions.3.Evaluatewhattypesoffinancialandnonfinancialmeasurescanhelpanorganizationtoachieveitsmission.4.Developandimproveunstructuredproblem-solving,critical-thinking,andethical-reasoningskills.Theselearningobjectivesaregenerallyconsistentwithcourseobjectivesinupper-levelcostaccountingorcoregraduatemanagerialaccountingcourses.Thecaseallowsforflexibilityindepthandbreadth,dependingontheinstructor’sspecificlearningobjectives.Thequestionsaremuchmorethought-provokingandrealisticthantypicaltextbookhomeworkproblems.ThequestionsrequirestudentstoconsidernotonlythedifficultsituationfacedinHaiti,butalsohowthecostandmanagerialaccountingtoolstheyhavepreviouslylearnedaboutcanbeappliedtoaverydifferentscenariothanthosetheyareusedto.Instructorswhowishtofocusonethical-reasoningskillswillfindampleopportunitieswithinthecaseandcasequestionstogeneratespiritedclassdiscussionsandwritingassignments.Thecasemeetsmostcommonbusinessschoolandaccountinglearninggoals.Theseincludehelpingstudentsto:Improvetechnicalaccountingandbusinessknowledge.Developethical-reasoningskills.Developandimproveunstructuredproblem-solvingandcritical-thinkingskills.Improvewrittenandoralcommunicationskills.ImplementationGuidanceThecaseismostsuitableforupperdivisionundergraduatecostaccountingcoursesorgraduatecourses(M.Acc.orM.B.A.)relatingtocostormanagerialaccounting,ethicaljudgment,orglobalawareness.Thecasequestionsrequireunstructuredproblem-solvingskillsthatstudentsoftenhavenothadmuchexperiencefacing(henceagoodreasonforusingthecase).Ithasbeenusedasbothawritingassignmentandthebasisforin-classdiscussion.Thecasehasbeensuccessfullyusedindifferentways.Inupperdivisioncostaccountingcourses,ithasbeenusedatthebeginningofthesemesterasawritingassignmentandclassdiscussiontoillustratethatcostandmanagerialaccountingconceptsandmethodscanhaveanimportantimpactontheworld.Anotherinstructorusedittowardtheendofthesemesterasawritingassignmentandabasisforclassdiscussionandreviewofcoursematerial.Ittakesabout2–3hoursforthestudentstostudythecaseandanswerthecasequestionsbeforeclass.Basedonfeedbackfromtheinstructorswhousedthecase,itcantakebetween40to75minutesforclassdiscussion,dependingonthewaythecaseisused.24Krumwiede,Paik,andWaldenIssuesinAccountingEducationVolume33,Number1,2018

Thecasecanandhasbeenusedinaprinciplesofmanagerialaccountingclasstoillustratehowmanagerialaccountingcanhaveareal-worldimpact.Thesestudentswillneedalittlemoreguidancefromtheinstructorthanthoseinupper-levelcourses.Thecasecanbesimplifiedtobeusedasanintroductiontotheapplicabilityofmanagementaccountingtoreal-worldissues.Instructorsshouldusetheirjudgmentastowhichcasequestionstocover,levelofdifficulty,andhowlongtospendonthecasetoachievetheirlearningobjectives.StudentsareimmediatelydrawnintothestorywhentheyseethemalnourishedchildrenandhowMedikaMamba(MM)cansavethem.Thestoryoftherealaidagencyisalsocompellingbecauseitshowshowonepersoncanmakeabigdifferenceintheworld.WerecommendintroducingthecaseusingMFK’swebsite(http://mfkhaiti.org)oroneofthemanyexcellentvideosavailableonYouTube,dependingontimeavailable.Instructorshaveoptionsastohowtheyusethecase.Instructorsmaystaywithinthecasequestions,butwehavefoundthatclassdiscussionsdevelopintorichdiscussionsaboutworldhunger,theroleofnonprofitorsocialenterpriseorganizations,andevaluatingperformancebasedonbothfinancialversusnonfinancialresults.Thecasequestionscertainlyhelplaunchthesediscussionsandleadtomorequestionsandissuestoconsider.Eithersomeorallofthequestionscanbeuseddependingontheinstructor’slearningobjectives.Thequestionscanalsobebrokenupandcoveredasdifferenttopicsarecoveredinclass.Belowaresomewaysthecasequestionscanbeusedfordifferenttopics:TopicQuestionsCost-volume-profit(CVP)analysis(e.g.,costbehavior,operatingleverage,break-evenanalysis)1,2Differentialanalysis(especiallyoutsourcing);Productcosting3,4Nonfinancialperformancemeasures5,6Ethicaldecisionmaking7Thecaseisrelativelyshortandeasytoread.Itcanbereadinabout15minutes.Ifstudentshavereadthecaseandcomepreparedtoanswerthecasequestions,itcaneasilybecoveredina75-minuteclass.Lesstimeisrequiredifonlysomeofthecasequestionsareused.Thecasecouldalsobeusedasa30-minutepresentationofthesituationanddiscussionoftheethicalissues.Studentsreadilyengageinthiscaseandliketodebatethepotentialoptions.Initially,studentsoftenleantowardhelpingthelocalfarmersasmuchaspossibletofeedtheirownchildrenandneedtoberemindedthatthereareusuallybothpositiveandnegativeconsequencesforalldecisionoptions.EvidenceofEnhancedStudentLearningThecurrentandpreviousversionsofthecasehavebeenusedsuccessfullyseveraltimesbyatleastseveninstructors,includingthecaseauthorsandfournon-authors,atfourdifferentschools,whichincludethreehighlyselectiveprivateuniversitiesandalessselectivepublicuniversity.Theassessmentquestionswerebasedonthelearningobjectivesforthecase.Additionalquestionsrelatedtostudents’impressionsoftheimportanceofcostandmanagerialaccounting,theirunderstandingofbreak-evenandrelevantcostsanalysis,theirinterestlevel,andthevalueofthecaseasalearningexperience.AssessmentquestionsusedaLikertscale,where1¼Stronglyagree,2¼Agree,3¼Neutral,4¼Disagree,5¼Stronglydisagree(seeTable1).Notethatthelowertheratingthebetterforquestions1,2,4,7,9,10,and11;andthehighertheratingthebetterforQuestions3,5,6,and8.Studentswerealsoaskedopen-endedquestionsaimedatmakingimprovementstothecase.DuringSpring2017,thelatestversionofthecasewasusedinanM.B.A.managerialaccountingcourse,aprinciplesofmanagerialaccountingcourse,andacostaccountingcourse.Studentfeedbackhasalwaysbeenverypositive.AsshowninTable1,themeanscoresforthreecourseswereallmorefavorablethan3.0(neutral),whichsuggeststhatthelearningobjectivesweremet.IntheM.B.A.managerialaccountingclassataprivateuniversity,theprofessorassignedthecasequestionsasagroupproject.TheM.B.A.students(n¼11)ratedthecaseverypositivelyandagreedmoststronglywiththefollowingquestions:1.Thiscasehelpedmelearnhowtousemanagementaccountinganalysistoaddressissuesfacingnon-governmentalorganizations(NGOs).(2.00)2.Myabilitytoidentifyquantitativeandqualitativecostsandbenefitsofsourcingoptionsimprovedastheresultofcompletingthiscase.(2.00)3.Thiscasedidnotimprovemyabilitytomeasuretheimpactofsourcingdecisionsonthecostofaproduct.(2.00,reversed-scored)5.Ididnotfindthecaseinteresting.(1.82reversedscored)7.Myimpressionoftheimportanceofcostandmanagementaccountingincreasedastheresultofcompletingthiscase.(2.00)11.Ifeelthiscasewasavaluablelearningexperience.(1.82)CanManagementAccountingHelpAidAssociationsMakeToughChoicesinHaiti?25IssuesinAccountingEducationVolume33,Number1,2018

Table1showsthatthestudentsintheprinciplesofmanagerialaccountingclassalsoratedthecaseveryhighly.Theprofessorassignedthecasequestionsasagroupproject.Basedonfeedback,studentsfoundthecasetobeaverypositivelearningexperience.Students(n¼43)agreedmoststronglywiththefollowingquestions:1.Thiscasehelpedmelearnhowtousemanagementaccountinganalysistoaddressissuesfacingnon-governmentalorganizations(NGOs).(1.81)2.Myabilitytoidentifyquantitativeandqualitativecostsandbenefitsofsourcingoptionsimprovedastheresultofcompletingthiscase.(1.88)4.Thiscaseimprovedmyabilitytoevaluatewhattypesoffinancialandnonfinancialinformationcanhelpanorganizationachieveitsmission.(1.55)5.Ididnotfindthecaseinteresting.(1.67reverse-scored)10.Thiscasehelpedimprovemyabilitytoidentifyrelevantinformationfromacomplexsetoffacts.(1.83)11.Ifeelthiscasewasavaluablelearningexperience.(1.67)TABLE1LearningAssessmentQuestionsSummaryResults(Spring2017)InstitutionTypePrivatePrivatePublicCourseM.B.A.ManagerialElectivePrinciplesofManagerialAccountingElectiveCostAccountingAccountingMajorsProfAProfBProfBNumberofstudentsn¼11n¼43n¼791.Thiscasehelpedmelearnhowtousemanagementaccountinganalysistoaddressissuesfacingnon-governmentalorganizations(NGOs).2.001.811.502.Myabilitytoidentifyquantitativeandqualitativecostsandbenefitsofsourcingoptionsimprovedasaresultofcompletingthiscase.2.001.881.713.Thiscasedidnotimprovemyabilitytomeasuretheimpactofsourcingdecisionsonthecostofaproduct.a4.00(2.00)4.02(1.98)4.07(1.93)4.Thiscaseimprovedmyabilitytoevaluatewhattypesoffinancialandnonfinancialinformationcanhelpanorganizationachieveitsmission.2.091.551.675.Ididnotfindthecaseinteresting.a4.18(1.82)4.33(1.67)4.50(1.50)6.Theamountoftimerequiredtocompletethecasewasexcessive.a4.00(2.00)3.52(2.48)3.50(2.50)7.Myimpressionoftheimportanceofcostandmanagementaccountingincreasedasaresultofcompletingthiscase.2.002.021.838.Thiscasedidnothelpincreasemyunderstandingoftheusefulnessofbreak-evenanalysis.a4.00(2.00)3.86(2.14)4.45(1.55)9.Thiscaseimprovedmyethicalreasoningskills.2.552.121.8110.Thiscasehelpedimprovemyabilitytoidentifyrelevantinformationfromacomplexsetoffacts.2.361.831.5711.Ifeelthiscasewasavaluablelearningexperience.1.821.671.43Scale:Lowerthebetter.1¼Stronglyagree,2¼Agree,3¼Neutral,4¼Disagree,5¼Stronglydisagree.aReverse-scoredquestions.26Krumwiede,Paik,andWaldenIssuesinAccountingEducationVolume33,Number1,2018

Intheupper-divisioncostaccountingcourse,theinstructorusedthecasetowardtheendofthesemesterasawritingassignmentandabasisforclassdiscussionandreviewofcoursematerial.Studentsinthecostaccountingcourse(n¼79)agreedmoststronglywiththefollowingquestions:1.Thiscasehelpedmelearnhowtousemanagementaccountinganalysistoaddressissuesfacingnon-governmentalorganizations(NGOs).(1.50)2.Myabilitytoidentifyquantitativeandqualitativecostsandbenefitsofsourcingoptionsimprovedastheresultofcompletingthiscase.(1.71)4.Thiscaseimprovedmyabilitytoevaluatewhattypesoffinancialandnonfinancialinformationcanhelpanorganizationachieveitsmission.(1.67)5.Ididnotfindthecaseinteresting.(1.50reverse-scored)8.Thiscasedidnothelpincreasemyunderstandingoftheusefulnessofbreak-evenanalysis.(1.55reverse-scored)10.Thiscasehelpedimprovemyabilitytoidentifyrelevantinformationfromacomplexsetoffacts.(1.57)11.Ifeelthiscasewasavaluablelearningexperience.(1.43)Inaddition,manystudentsprovidedwrittencommentsinresponsetotheopen-endedquestion,‘‘Overall,whatdidyoulikeaboutthecase?’’and‘‘Whatcouldbeimproved?’’Thefollowingarerepresentativeofthestudents’comments:Whatdidyoulikeaboutthecase?Itwaslife-likerealworldproblemthatwecouldallrelatetoasagroup.(costaccountingstudent)Ithoughtthatitwasreallyinterestinganditwasnicetouseaccountingtolookatanactualproblemintheworld.(costaccountingstudent)Ilikedthestoryofthecaseandthebackground.AlsoIlikedhowitexplainedtherealworldoptionsthecompanyhadtoface.(costaccountingstudent)Iappreciatedthatthiscasewasbasedonarelevant,real-wordissue.Also,Ithinkthecaseinformationprovidedwasextensiveandeasytoread,sotherewasnotamajorissuewithunderstandingtheissueathand.(managerialstudent)Ilikedtheethicalpartaboutit.Obviouslyallfirmswantedtohelpthemalnourishedchildren,butwheredoesthecostofproductionoutweighthebenefitofnourishmentofthechildren?(managerialstudent)Thewaythesubjectdemonstratedtheinterconnectivityofaccountingandethicalprinciplesfordecision-making.(M.B.A.student)Learnedfrommygrouphowtoapplyaccountingcostprinciplestoafactbasedrealsituation.Itwassufficientlycomplexwithoutbeingoverlyconfusingandreallygotthepointsacross.(M.B.A.student)IlikedtheNGOaspect.Itprovidedaglimpseofhowmanagementaccountingcanhelpachievefinancialandnon-financialgoals.IfeltIwasabletoapplywhatIlearnedinmanagementaccountingtothecase.(M.B.A.student)Studentsoftenexpresstheirdiscomfortwiththeless-structurednatureofcases.Theyareusedtotextbookproblemswithallthedataprovidedinatable.Animportantreasonforusingcasesistohelpthemunderstandthatthereareno‘‘textbook’’problemsintherealworld.CONCLUSIONInclosing,thereareseveralreasonswhywethinkusingthiscaseisagreatwayforaccountingstudentstolearn.First,itintroducesstudentstoanimportant,real-worldethicalissuethatinvolvesanongoinglife-or-deathcrisisinacountrythathasseriousgoverningandeconomicproblems.Second,accountingstudentsoftenfeelthatmanagementaccountingisnotimportanttothembecausetheyplantostarttheircareersworkingforaCPAfirm.Thecaseexposesthemtoauniqueandengagingsituationinwhichmateriallearnedintheircostandmanagerialaccountingcoursesishelpful.Third,studentsincreasetheirunderstandingofcostandmanagerialpractices,understandwhythosepracticesshouldfitwiththemissionandstrategyoftheorganization,andimprovetheirabilitytoassesstheimplicationsoftheiranalysis.Theylearnthatoutsourcingdecisionscanhavemajoreconomicandhumanimplications.Finally,andmaybemostimportantly,thecasehelpsstudentstodeveloptheirethical-reasoningskillsandbetterappreciatetheimportanceofNGOsandtheethicalchallengesfacingthem.TEACHINGNOTESTeachingNotesareavailableonlytofull-membersubscriberstoIssuesinAccountingEducationthroughtheAmericanAccountingAssociation’selectronicpublicationssystemathttp://aaapubs.org/.Full-membersubscribersshouldusetheirCanManagementAccountingHelpAidAssociationsMakeToughChoicesinHaiti?27IssuesinAccountingEducationVolume33,Number1,2018

usernamesandpasswordsforentryintothesystemwheretheTeachingNotescanbereviewedandprinted.PleasedonotmaketheTeachingNotesavailabletostudentsorpostthemonwebsites.IfyouareafullmemberofAAAwithasubscriptiontoIssuesinAccountingEducationandhaveanytroubleaccessingthismaterial,thenpleasecontacttheAAAheadquartersoffi[email protected](941)921-7747.REFERENCESRoberts,A.A.,andV.L.Zamora.2012.Onelaptopperchild:The$100Challenge.IssuesinAccountingEducation27(3):799–817.doi:10.2308/iace-5016328Krumwiede,Paik,andWaldenIssuesinAccountingEducationVolume33,Number1,2018

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