Utilizing Strategic Management Accounting Tools And Techniques
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Utilizing Strategic Management Accounting Tools And Techniques
ACC 8802. Assessment Task 1. Four Questions
Learning/Assessment Task 2: Individual Assignment
Description of Assessment 2:
Your answers to the requirements for the four (4) case studies will form the basis of this individual assessment task.
Purpose for Assessment 2
The purpose for this assessment is to assess you on (1) your knowledge and understanding the course content, (2) your application of that knowledge, (3) your critical analysis of information provided in the four (4) case studies.
The case study answers will relate to material covered for modules 3, 4 and 5.
- To demonstrate a theoretical knowledge of the role of strategic management accounting in supporting strategy development and the day-to- day operations of a sustainable organisation
- To apply strategic management accounting tools and techniques to improve the contribution and sustainability of value creating activities
- To utilise strategic management accounting tools and techniques skills to ensure the role of performance measurement and control systems in value creation is achieved, strategies are implemented and performance monitored and adjusted to improve the success of the strategies.
⮚ Please used the electronic submission via link “Submit your assessment task 1 here” provided on the study desk.
⮚ To receive marks for this assignment YOU MUST include your name and student number in your assignment file.
⮚ You can submit two files, a Word file and an excel file if you wish to provide your calculations
Due Date: Monday 14th October, 2019
Weighting: 60 % (Total marks for assignment out of 100 marks)
Marking Criteria: 100 marks have been allocated for the total marks for the assignment’s case studies. The individual marks for a requirement reflect the work level you need to undertake.
Question 1. (32 marks)
Black Falcon Pty Ltd makes premium range dog biscuits used to provide high level nutrition for dogs, which it introduced to the market in 2016 in the highly competitive premium dog food market. Black Falcon realises that it would be competing against well-known brands that have held market share based on their reputation for many years. From the feedback received at trade fairs during 2017, Black Falcon has been generally regarded as an equal standard of quality as the other premium providers. However, the product was initially provided at a low introductory price to encourage customers and retailers to purchase Black Falcon’s dog food. Black Falcon is now seeking to increase the price each year as the firm’s reputation grows.
Black Falcon produces very few defective products and insists upon the highest quality materials from its suppliers. Conversion Costs in each year depend on production capacity defined in terms of units that can be produced, not the actual units produced. Selling and customer-service costs depend on the number of customers that Black Falcon can support, not the actual number of customers it serves. See Table 1 below for information.
Table 1 – Performance and cost details for 2-year period 2018 2019 Number of bags produced and sold 13500 15000 Selling price $125 $135 Direct materials (20 kilograms per bag) 540,000 630,000 Direct materials cost per kilogram $2.00 $2.10 Units of Manufacturing practical capacity 15,000 15,000 Total conversion costs $129,000 $132,000 Conversion indirect overhead cost per unit of capacity (Standard fixed capacity cost per unit) $8.60 $8.80 Customer number capacity for selling and customer-service 4,300 4,200 Total selling and customer-service costs $8,200 $7,600 Selling and customer-service capacity cost per customer (Standard fixed capacity cost per unit) $1.91 $1.81
- Identify the business strategy adopted by Black Falcon PtyLtd and explain briefly how you reached your decision on the type of business strategy adopted. (2 marks)
- Calculate the operating profit for the two accounting years. (6 marks)
- Prepare the variances for the change in profit between the two years due to the growth strategy (16 marks)
- Prepare the variances to reconcile the change in profit between for the two accounting years due to the productivity strategy. (5 marks)
- Discuss the change in Black Falcon’s operating profit for the two accounting years.
Question 2. (22 marks)
Using the information below about Black Falcon Pty Ltd earlier, see Table 2 below. ( This data is not related to Table 1 above ).
Table 2 – Financial and Non-financial measure for other 3 perspectives Details of activity levels and costs included in above figures 2018 2019 Production staff training costs $5,000 $8,000 Order and checking costs for returning materials to suppliers $3,300 $500 Late delivery penalty of product delays caused by suppliers $125 $25 Measures of activity levels 2018 2019 Turnover of staff numbers 3 1 Number of staff training hours 15 35 Number of late deliveries of the product 3 1 Number of times faulty materials returned to suppliers 5 0 Number of new customers 1,000 1,500 Number of repeat order purchases by existing customers 10 20 Number of useable suggestions from employees 10 25
- Identify one Critical Success Factor (CSF) that could be used by Black Falcon for each perspective of the Balanced Scorecard. Provide at least 2 Key Performance Indicators (KPIs) that could measure each of the 4 CSFs. Comment on the linkage between the measures and the CSF. (Ensure that your KPIs consider Black Falcon’s strategy). (12 marks)
- If Black Falcon P/L had an additional strategy of appealing to their environmental and social stakeholders, list three (3) KPIs that could be used to measure this performance. State the BSC perspective that each of your 3 KPIs above would be placed into.
- If Black Falcon P/L wished to set up their operations in Chile (South America), using Hofstedes’ cultural dimensions, select two (2) KPIs, and describe how these KPI measures would be used in different ways to motivate staff to improve their performance. (For example, if you selected Hofstede’s ‘Long Term Orientation’, your measure would reward staff for meeting short term goals in Australia (e.g. monthly), and your measures would cover a longer period of time to reward staff in Chile). (URL: https://www.hofstede-insights.com/product/compare-countries/ ). (4 marks)
Question 2 (cont’d). Hofstede’s cultural dimensions: Australia is Blue: Chile is purple.
Question 3. (30 marks)
Green Batteries Pty Ltd is considering the purchase of a wind turbine generator in order to generate electricity and to reduce the electricity costs for their offices, which are located in Toowoomba. Currently the business uses 40,000 kilowatt hours (kWh) per quarter (3 months) at an average cost of $0.40 per kWh, supplied by the local coal fired power station. The current required rate of return used to evaluate projects is 6%, with a required payback period of 4 years.
The Queensland government started a scheme to provide an incentive for business to use alternative sources of renewable power. The incentives are 5% immediate reimbursement of the purchase and installation costs. This reimbursement can be paid to the supplier providing and installing the equipment. Therefore, the net cash flow from Green Batteries Pty Ltd is the purchase cost plus the installation cost less the 5% incentive back from government to offset these costs.
Turbine 1 Turbine 2 Cost of wind turbine generator $10,000 $9,000 Cost to install turbine and generator (by supplier) $750 $850 Expected cash incentive back from government to offset cost of the panels, paid immediately the wind turbine generator installed 5% of total costs 5% of total costs Turbine expected (on average) generated kilowatt 300 kW per month 350 kW per month for first 5 yrs, then 295 kW/month for next 10 years Generator’s expected life (in years) 15 years 15 years
- Calculate the total initial investment and the net annual savings from installing the wind generator for each of the 2 projects. (8 marks)
- Calculate the payback period of each wind generator. (4 marks)
- Comment on whether either project meets the company’s Payback Period requirements and whether you should base your decision only in the payback period calculation.
- Calculate the net present value (NPV) of the project with a required rate of return at 6%. Where the savings are the same each year, use the present value table in Appendix 1. Where the savings differ in different time periods, you may need to subtract one NPV factor index from another NPV factor index. (12 marks)
- Comment on whether Green Batteries should proceed with either project using the Net Present Value method. (1 mark)
- Comment on one limitation with the payback period method compared to the NPV method. (2 marks)
- What qualitative, non-financial factors (not included in the quantitative analysis) would influence your opinion on whether the investment in the wind generator should proceed. (2 marks)
Question 4. (16 marks)
Chad Pty Ltd is preparing to design and implement sustainability systems and processes. You find (as the environmental director) that energy is a key resource for business operations; first for heating water and second for operational and security lighting. Management of these key resources for business operations can save the company money. Therefore the first step is to measure the water flow at the premises. The company only operates their fruit and vegetable cleaning and production for 260 days of the year. You report directly to William South, the CFO.
Chad P/L is interested in saving water costs, so they have installed large underground water tanks that collect the rainwater from the roof system. These tanks are now full and operational.
The daily rinsing process for fruit and vegetables requires the tap to run for 40 minutes per day and use 11 litres of water flow per minute. The water is heated to 60oC. The table below provides the number of kWh required to heat one kilolitre of water to various temperatures.
Hot Water Temperature kWh required make one kilolitre of hot water 45oC 56 kWh 50oC 62 kWh 60oC 77 kWh 70oC 98 kWh
Required: Please note all your answers should be to two decimal points (cents)
- a) If the business uses water heated to 60oC, assuming the electricity cost per kilolitre is $0.40 per kWh, calculate the annual electricity cost to the business associated with the heating of water used to 60o (4 marks)
- b) If the business uses water heated to 50oC (assuming the electricity cost per kilolitre is $0.40 per kWh), calculate the dollar saving if this lower temperature is used.
- c) You are considering fitting the tap with a high pressure flow restrictor that will reduce water flow to 5 litres of water flow per minute. You expect run the tap still for 40 minutes per day. Calculate the electricity cost and cost savings if the reduced water flow was heated to (i) 60 degrees and (ii) to 50 degrees. (4 marks)
- d) Compare and describe the cost results, and provide an informal report (memo email) to your supervisor giving your recommendations of how your organisation should proceed. Discuss any non-financial factors that need to be considered. (You will be marked on spelling and grammar for this section d). (4 marks)
Appendix 1: for Question 3. Present Value of an Ordinary Annuity of $1
n 1% 2% 3% 4% 5% 6% 8% 10% 12% 1 0.990 0.980 0.971 0.966 0.952 0.943 0.926 0.909 0.893 2 1.970 1.942 1.913 1.887 1.859 1.834 1.783 1.736 1.690 3 2.941 2.884 2.829 2.775 2.723 2.673 2.577 2.487 2.402 4 3.902 3.808 3.717 3.630 3.546 3.465 3.312 3.170 3.037 5 4.853 4.713 4.580 4.452 4.329 4.212 3.993 3.791 3.605 6 5.795 5.601 5.417 5.242 5.076 4.917 4.623 4.355 4.111 7 6.728 06.472 6.230 6.002 5.786 5.582 5.206 4.868 4.564 8 7.651 7.325 7.020 6.733 6.463 6.210 5.747 5.335 4.968 9 8.566 8.162 7.786 7.435 7.108 6.802 6.247 5.759 5.328 10 9.471 8.983 8.530 8.111 7.722 7.360 6.710 6.145 5.650 11 10.368 9.787 9.253 8.760 8.306 7.887 7.139 6.495 5.938 12 11.255 10.575 9.954 9.385 8.863 8.384 7.536 6.814 6.194 13 12.134 11.348 10.635 9.986 9.394 8.853 7.904 7.103 6.424 14 13.003 12.106 11.296 10.563 9.898 9.295 8.244 7.367 6.628 15 13.865 12.849 11.938 11.118 10.380 9.712 8.559 7.606 6.811 16 14.718 13.578 12.561 11.652 10.838 10.056 8.851 7.824 6.974 n 1% 2% 3% 4% 5% 6% 8% 10% 12%
Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.
Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.
Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
The background and/or significance are missing. No search history information is provided.
Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.
There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
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Utilizing Strategic Management Accounting Tools And Techniques