Faculty of Business and Law<\/p>\n
School of Economics, Finance & Accounting<\/p>\n
Assignment Brief<\/p>\n
Module Title:<\/p>\n
Accounting for Business<\/p>\n
Assignment Number:<\/p>\n
2<\/p>\n
Module Code:<\/p>\n
289ACC<\/p>\n
Assignment Title:<\/p>\n
Business Case Study<\/p>\n
Assignment Weighting:<\/p>\n
50%<\/p>\n
Release Date:<\/p>\n
19\/11\/21<\/p>\n
Module Leader:<\/p>\n
Simon Horsman<\/p>\n
Submission<\/p>\n
Time and Place:<\/p>\n
18:00 03\/12\/21<\/p>\n
Online submission through Aula ONLY<\/p>\n
Assessment Information<\/p>\n
This assignment is an individual assignment designed to assess the following learning outcomes:<\/p>\n
2. Apply numeracy skills and qualitative judgment to aid financial decision making.<\/p>\n
3. Understand, apply and evaluate management accounting concepts and techniques in decision making.<\/p>\n
Coursework Assignment \u2013 PS Ltd<\/p>\n
As set out on page 2 and generally, this assignment requires you to write a draft business report to address the various issues within the case study. You are the Personal Assistant to Chris Roberts. 3 months ago, Chris was appointed by ABCD Plc, the parent company of Parker Seating Ltd (PS), as General Manager to turn PS around.<\/p>\n
In his\/her late 30\u2019s, after a business degree, Chris qualified as an accountant before joining ABCD as part of a trouble-shooting team. PS is his\/her first independent command, so to speak. You are part of the turnaround team. It\u2019s ABCD that pays both your salaries.<\/p>\n
The last few years have been very difficult for PS, a UK-based company whose principal activity is the manufacture of furniture, which it distributes to retailers. It has only survived through the support of its parent company, ABCD plc, to whom it currently owes a significant debt.<\/p>\n
ABCD has reached the point where it is prepared to take drastic action, including closing down PS. So PS needs rapidly to improve its financial performance, advancing on all fronts; as appropriate increasing revenue, and reducing costs and capital employed. Cash is available from ABCD if the case is strong.<\/p>\n
Below is the brief you have received from Chris Smith:<\/p>\n
Please draft a report to go out in my name as follows:<\/p>\n
Highest level of confidentiality<\/p>\n
Readership \u2013 ABCD\u2019s PS Steering Committee plus PS\u2019s top tier managers<\/p>\n
2,500 words maximum. Remember that clarity (e.g. from headings and bullet points) is the cardinal virtue in this organisation. Brevity is a bonus, so less than 2,500 words is good.<\/p>\n
But never cut corners or mislead \u2013 if something is complex or you just don\u2019t know (or cannot say) then make that clear, why, and ideally, how and when you can get back to clarity. Repetition kills credibility because it tells the reader that you don\u2019t know what you\u2019ve already said. Spell-checks are there to make everyone look literate. And as my time is more valuable than yours, you must do the proofreading.<\/p>\n
You have a few leads with which to start but I need from you elaboration, exploration and, in some cases, a recommendation. Specifically, I\u2019m looking for the following:<\/p>\n
As per normal for ABCD, an Executive Summary of the report to follow. Include here any comments you feel I should be to making about our prospects coming out of the Covid pandemic.<\/p>\n
Re Cash budgeting – the finance department have passed me some alarming figures. What\u2019s going on? We all need to know. Recommendations would be welcome including recommendations as to where we need to investigate.
See Document 2<\/p>\n
Comments on a possible new product line. See Document 3<\/p>\n
Comments on absorption costing and overhead recovery.
See Document 4<\/p>\n
Comments on the Faststitch-Bondright decision and capital investment appraisal.
See Document 5.<\/p>\n
Budgeting \u2013 where should PS be going? What Does Beyond Budgeting offer us?
See Document 6<\/p>\n
+ + + + + + +<\/p>\n
You have therefore carried out some background research and have obtained the following documents.<\/p>\n
Document 1 \u2013 Past Unaudited Income Statements \u2013 Years to 30th September<\/p>\n
The following summary annual income statements relate to Parker Seating Ltd.<\/p>\n
Year<\/p>\n
2021<\/p>\n
2020<\/p>\n
2019<\/p>\n
2018<\/p>\n
2017<\/p>\n
\u00a3000<\/p>\n
\u00a3000<\/p>\n
\u00a3000<\/p>\n
\u00a3000<\/p>\n
\u00a3000<\/p>\n
Turnover<\/p>\n
6,304<\/p>\n
6,367<\/p>\n
6,431<\/p>\n
6,495<\/p>\n
6,560<\/p>\n
Cost of Sales<\/p>\n
(5,989)<\/p>\n
(6,049)<\/p>\n
(6,109)<\/p>\n
(6,170)<\/p>\n
(6,232)<\/p>\n
Gross Profit<\/p>\n
315<\/p>\n
318<\/p>\n
322<\/p>\n
325<\/p>\n
328<\/p>\n
Operating Expenses<\/p>\n
(490)<\/p>\n
(495)<\/p>\n
(500)<\/p>\n
(505)<\/p>\n
(510)<\/p>\n
Operating Profit\/(loss)<\/p>\n
(175)<\/p>\n
(183)<\/p>\n
(178)<\/p>\n
(180)<\/p>\n
(182)<\/p>\n
Document 2 \u2013 Cash budget<\/p>\n
Parker Seating Ltd\u2019s Finance Department has prepared the following cash budget and budgeted income statement for the first 6 months of 2022, a period in which the company is expected to return to profit.<\/p>\n
Cash budget <\/p>\n
January<\/p>\n
February<\/p>\n
March<\/p>\n
April<\/p>\n
May<\/p>\n
June<\/p>\n
\u00a3<\/p>\n
\u00a3<\/p>\n
\u00a3<\/p>\n
\u00a3<\/p>\n
\u00a3<\/p>\n
\u00a3<\/p>\n
Opening balance <\/p>\n
(4,976)<\/p>\n
(5,182)<\/p>\n
(16,736)<\/p>\n
(30,421)<\/p>\n
(43,095)<\/p>\n
(55,467)<\/p>\n
RECEIPTS: <\/p>\n
Cash sales <\/p>\n
65,655<\/p>\n
66,559<\/p>\n
68,066<\/p>\n
68,946<\/p>\n
69,209<\/p>\n
69,467<\/p>\n
Credit sales <\/p>\n
205,425<\/p>\n
198,285<\/p>\n
202,361<\/p>\n
208,324<\/p>\n
212,424<\/p>\n
214,651<\/p>\n
Total receipts <\/p>\n
271,080<\/p>\n
264,844<\/p>\n
270,427<\/p>\n
277,270<\/p>\n
281,632<\/p>\n
284,118<\/p>\n
PAYMENTS: <\/p>\n
Cash purchases <\/p>\n
(66,128)<\/p>\n
(69,093)<\/p>\n
(72,171)<\/p>\n
(74,751)<\/p>\n
(77,165)<\/p>\n
(79,662)<\/p>\n
Credit purchases <\/p>\n
(65,583)<\/p>\n
(64,173)<\/p>\n
(65,039)<\/p>\n
(65,866)<\/p>\n
(66,108)<\/p>\n
(66,094)<\/p>\n
Operating expenses <\/p>\n
(16,800)<\/p>\n
(17,640)<\/p>\n
(18,300)<\/p>\n
(18,756)<\/p>\n
(18,994)<\/p>\n
(19,003)<\/p>\n
Fixed overheads <\/p>\n
(10,500)<\/p>\n
(10,500)<\/p>\n
(10,500)<\/p>\n
(10,500)<\/p>\n
(10,500)<\/p>\n
(10,500)<\/p>\n
Production labour <\/p>\n
(106,096)<\/p>\n
(108,627)<\/p>\n
(111,677)<\/p>\n
(113,715)<\/p>\n
(115,076)<\/p>\n
(116,478)<\/p>\n
Administration costs <\/p>\n
(6,180)<\/p>\n
(6,365)<\/p>\n
(6,425)<\/p>\n
(6,356)<\/p>\n
(6,162)<\/p>\n
(5,854)<\/p>\n
Total payments: <\/p>\n
(271,286)<\/p>\n
(276,398)<\/p>\n
(284,111)<\/p>\n
(289,944)<\/p>\n
(294,004)<\/p>\n
(297,590)<\/p>\n
Net cash flow <\/p>\n
(206)<\/p>\n
(11,554)<\/p>\n
(13,685)<\/p>\n
(12,674)<\/p>\n
(12,371)<\/p>\n
(13,472)<\/p>\n
Balance c\/f <\/p>\n
(5,182)<\/p>\n
(16,736)<\/p>\n
(30,421)<\/p>\n
(43,095)<\/p>\n
(55,467)<\/p>\n
(68,939)<\/p>\n
Budgeted income statement <\/p>\n
January<\/p>\n
February<\/p>\n
March<\/p>\n
April<\/p>\n
May<\/p>\n
June<\/p>\n
\u00a3<\/p>\n
\u00a3<\/p>\n
\u00a3<\/p>\n
\u00a3<\/p>\n
\u00a3<\/p>\n
\u00a3<\/p>\n
Sales <\/p>\n
263,940<\/p>\n
268,920<\/p>\n
276,390<\/p>\n
281,370<\/p>\n
283,860<\/p>\n
286,350<\/p>\n
Cost of sales <\/p>\n
(225,648)<\/p>\n
(229,905)<\/p>\n
(236,291)<\/p>\n
(240,549)<\/p>\n
(242,678)<\/p>\n
(244,806)<\/p>\n
Gross profit <\/p>\n
38,293<\/p>\n
39,015<\/p>\n
40,099<\/p>\n
40,821<\/p>\n
41,183<\/p>\n
41,544<\/p>\n
Operating expenses <\/p>\n
(17,640)<\/p>\n
(18,300)<\/p>\n
(18,756)<\/p>\n
(18,994)<\/p>\n
(19,003)<\/p>\n
(18,784)<\/p>\n
Fixed overheads <\/p>\n
(15,500)<\/p>\n
(15,500)<\/p>\n
(15,500)<\/p>\n
(15,500)<\/p>\n
(15,500)<\/p>\n
(15,500)<\/p>\n
Administration costs <\/p>\n
(6,180)<\/p>\n
(6,365)<\/p>\n
(6,425)<\/p>\n
(6,356)<\/p>\n
(6,162)<\/p>\n
(5,854)<\/p>\n
Total expenses <\/p>\n
(39,320)<\/p>\n
(40,165)<\/p>\n
(40,682)<\/p>\n
(40,850)<\/p>\n
(40,665)<\/p>\n
(40,138)<\/p>\n
Operating profit\/(loss) <\/p>\n
(1,028)<\/p>\n
(1,150)<\/p>\n
(583)<\/p>\n
(28)<\/p>\n
518<\/p>\n
1,406<\/p>\n
The following information is relevant to the cash budget:<\/p>\n
Credit customers are allowed one month\u2019s credit on sales;<\/p>\n
Credit suppliers allow one month credit on raw materials purchases;<\/p>\n
Production labour is included in the cost of sales in the budgeted income statement.<\/p>\n
The following information from the budgeted Statement of Financial Position is also available.<\/p>\n
Jan<\/p>\n
Feb<\/p>\n
Mar<\/p>\n
Apr<\/p>\n
May<\/p>\n
Jun<\/p>\n
\u00a3<\/p>\n
\u00a3<\/p>\n
\u00a3<\/p>\n
\u00a3<\/p>\n
\u00a3<\/p>\n
\u00a3<\/p>\n
Trade receivables <\/p>\n
198,285<\/p>\n
202,361<\/p>\n
208,324<\/p>\n
212,424<\/p>\n
214,651<\/p>\n
216,883<\/p>\n
Trade payables<\/p>\n
64,173<\/p>\n
65,039<\/p>\n
65,866<\/p>\n
66,108<\/p>\n
66,094<\/p>\n
66,046<\/p>\n
Inventories<\/p>\n
Finished goods <\/p>\n
39,594<\/p>\n
45,183<\/p>\n
51,069<\/p>\n
57,365<\/p>\n
64,451<\/p>\n
72,327<\/p>\n
Raw materials <\/p>\n
55,637<\/p>\n
62,901<\/p>\n
70,437<\/p>\n
78,167<\/p>\n
86,738<\/p>\n
96,241<\/p>\n
Document 3 \u2013 New product line<\/p>\n
Parker are considering introducing a new line of sofa. The sofa has been developed and is ready to go into production. However, management need to decide whether to manufacture the sofa in a new factory unit near their main premises in North West England or to outsource production to a supplier company.<\/p>\n
Information relevant to this decision is given in the following table:<\/p>\n
In-house manufacture<\/p>\n
Outsourced manufacture<\/p>\n
Sales price (per sofa)<\/p>\n
\u00a3550.00<\/p>\n
\u00a3550.00<\/p>\n
Direct materials cost (per sofa)<\/p>\n
\u00a3220.00<\/p>\n
\u00a30.00<\/p>\n
Direct labour cost (per sofa) <\/p>\n
\u00a3200.00<\/p>\n
\u00a30.00<\/p>\n
Buy-in cost from outsourced manufacturer<\/p>\n
\u00a30.00<\/p>\n
\u00a3500.00<\/p>\n
Fixed manufacturing overheads <\/p>\n
\u00a3550,000<\/p>\n
\u00a30<\/p>\n
Fixed administrative overheads <\/p>\n
\u00a3150,000<\/p>\n
\u00a3150,000<\/p>\n
Fixed selling and distribution overheads <\/p>\n
\u00a3125,000<\/p>\n
\u00a3125,000<\/p>\n
Break-even point (sofas)<\/p>\n
6,347<\/p>\n
5,500<\/p>\n
Unit sales (sofas)required to achieve a budgeted profit of \u00a3500,000 <\/p>\n
10,193<\/p>\n
15,500<\/p>\n
Margin of safety at budgeted profit level<\/p>\n
38%<\/p>\n
65%<\/p>\n
In addition, the following profit-volume chart has been produced:<\/p>\n
Document 4 \u2013 Full (absorption) costing<\/p>\n
Parker Seating Ltd\u2019s product costing team have provided you with the following information on the current method used to charge overhead costs to products. The table shows each overhead cost and the apportioned and reapportioned costs by cost centre together with the apportionment bases used.<\/p>\n
Department<\/p>\n
Lounge Furniture<\/p>\n
Dining furniture<\/p>\n
Bedroom Furniture<\/p>\n
Mainte<\/p>\n
-nance<\/p>\n
Adminis<\/p>\n
-tration<\/p>\n
Total<\/p>\n
Direct materials (\u00a3)<\/p>\n
437,102<\/p>\n
669,033<\/p>\n
557,528<\/p>\n
0<\/p>\n
0<\/p>\n
1,663,663<\/p>\n
Direct labour (\u00a3)<\/p>\n
184,691<\/p>\n
282,690<\/p>\n
235,575<\/p>\n
0<\/p>\n
0<\/p>\n
702,956<\/p>\n
Direct costs<\/p>\n
621,793<\/p>\n
951,724<\/p>\n
793,103<\/p>\n
0<\/p>\n
0<\/p>\n
2,366,619<\/p>\n
Overheads<\/p>\n
Indirect labour (direct labour)<\/p>\n
10,299<\/p>\n
15,764<\/p>\n
13,137<\/p>\n
0<\/p>\n
0<\/p>\n
39,200<\/p>\n
Rent (floor area)<\/p>\n
14,377<\/p>\n
17,775<\/p>\n
17,644<\/p>\n
1,359<\/p>\n
1,046<\/p>\n
52,200<\/p>\n
Machine insurance (machine value)<\/p>\n
979<\/p>\n
1,489<\/p>\n
3,779<\/p>\n
254<\/p>\n
– <\/p>\n
6,500<\/p>\n
Heating (floor area)<\/p>\n
2,864<\/p>\n
3,541<\/p>\n
3,515<\/p>\n
271<\/p>\n
208<\/p>\n
10,400<\/p>\n
Machine power (machine hours)<\/p>\n
3,675<\/p>\n
3,325<\/p>\n
2,800<\/p>\n
0<\/p>\n
0<\/p>\n
9,800<\/p>\n
Machine depreciation (machine value)<\/p>\n
1,175<\/p>\n
1,786<\/p>\n
4,534<\/p>\n
304<\/p>\n
0<\/p>\n
7,800<\/p>\n
Total apportioned overhead costs<\/p>\n
33,370<\/p>\n
43,680<\/p>\n
45,409<\/p>\n
2,188<\/p>\n
1,254<\/p>\n
125,900<\/p>\n
Re-apportion maintenance (machine hours)<\/p>\n
820<\/p>\n
742<\/p>\n
625<\/p>\n
(2,188)<\/p>\n
0<\/p>\n
0<\/p>\n
Re-apportion administration (employees)<\/p>\n
462<\/p>\n
429<\/p>\n
363<\/p>\n
0<\/p>\n
(1,254)<\/p>\n
– <\/p>\n
Total re-apportioned overhead costs<\/p>\n
34,652<\/p>\n
44,851<\/p>\n
46,397<\/p>\n
0<\/p>\n
0<\/p>\n
125,900<\/p>\n
Machine hours<\/p>\n
21,356<\/p>\n
19,322<\/p>\n
16,271<\/p>\n
Overhead absorption rate per machine hour (\u00a3)<\/p>\n
1.62<\/p>\n
2.32<\/p>\n
2.85<\/p>\n
The costing team have been reviewing the overhead costing methodology and have prepared the following proposal for a revised costing method.<\/p>\n
Department<\/p>\n
Lounge Furniture<\/p>\n
Dining furniture<\/p>\n
Bedroom Furniture<\/p>\n
Mainte<\/p>\n
-nance<\/p>\n
Adminis<\/p>\n
-tration<\/p>\n
Total<\/p>\n
Direct materials (\u00a3)<\/p>\n
437,102<\/p>\n
669,033<\/p>\n
557,528<\/p>\n
0<\/p>\n
0<\/p>\n
1,663,663<\/p>\n
Direct labour (\u00a3)<\/p>\n
184,691<\/p>\n
282,690<\/p>\n
235,575<\/p>\n
0<\/p>\n
0<\/p>\n
702,956<\/p>\n
Direct costs<\/p>\n
621,793<\/p>\n
951,724<\/p>\n
793,103<\/p>\n
0<\/p>\n
0<\/p>\n
2,366,619<\/p>\n
Overheads<\/p>\n
Indirect labour (employees)<\/p>\n
9,147<\/p>\n
8,493<\/p>\n
7,187<\/p>\n
6,533<\/p>\n
7,840<\/p>\n
39,200<\/p>\n
Rent (employees)<\/p>\n
14,377<\/p>\n
17,775<\/p>\n
17,644<\/p>\n
1,359<\/p>\n
1,046<\/p>\n
52,200<\/p>\n
Machine insurance (machine hours)<\/p>\n
2,438<\/p>\n
2,205<\/p>\n
1,857<\/p>\n
0<\/p>\n
0<\/p>\n
6,500<\/p>\n
Heating (employees)<\/p>\n
2,427<\/p>\n
2,253<\/p>\n
1,907<\/p>\n
1,733<\/p>\n
2,080<\/p>\n
10,400<\/p>\n
Machine power (machine hours)<\/p>\n
3,675<\/p>\n
3,325<\/p>\n
2,800<\/p>\n
0<\/p>\n
0<\/p>\n
9,800<\/p>\n
Machine depreciation (machine hours)<\/p>\n
2,925<\/p>\n
2,646<\/p>\n
2,229<\/p>\n
0<\/p>\n
0<\/p>\n
7,800<\/p>\n
Total apportioned overhead costs<\/p>\n
34,987<\/p>\n
36,698<\/p>\n
33,623<\/p>\n
9,626<\/p>\n
10,966<\/p>\n
125,900<\/p>\n
Re-apportion maintenance (machine value)<\/p>\n
1,509<\/p>\n
2,294<\/p>\n
5,823<\/p>\n
(9,626)<\/p>\n
0<\/p>\n
0<\/p>\n
Re-apportion administration (floor area)<\/p>\n
3,166<\/p>\n
3,914<\/p>\n
3,885<\/p>\n
0<\/p>\n
(10,966)<\/p>\n
0<\/p>\n
Total re-apportioned overhead costs<\/p>\n
39,662<\/p>\n
42,906<\/p>\n
43,331<\/p>\n
0<\/p>\n
0<\/p>\n
125,900<\/p>\n
Machine hours<\/p>\n
21,356<\/p>\n
19,322<\/p>\n
16,271<\/p>\n
Overhead absorption rate per machine hour (\u00a3)<\/p>\n
1.86<\/p>\n
2.22<\/p>\n
2.66<\/p>\n
The Sales Director has expressed the view that this new method is superior because it reduces the overheads chargeable to the Dining and Bedroom Furniture profit centres, both of which have struggled to increase sales and make profits over the past few years. The reduction in overhead costs charged to these departments will help them to increase sales, by reducing prices, and maintain or increase profits at the same time.<\/p>\n
Document 5 \u2013 Capital investment appraisal<\/p>\n
The Bedroom Furniture profit centre is considering purchasing equipment to save costs and make the production process more efficient. There are two options.<\/p>\n
The Faststitch will further automate production processes for items that needs stitching such as mattresses. The Bondright will improve production processes and product quality for items requiring adhesives, such as bed frames and chests of drawers.<\/p>\n
The following information about the cash flows, profits and capital investment appraisal measures has been provided to you. The company\u2019s cost of capital is currently 6%.<\/p>\n
Faststitch<\/p>\n
Year<\/p>\n
Cash flow (\u00a3)<\/p>\n
6% Factors<\/p>\n
Present value (\u00a3)<\/p>\n
Depreciation (\u00a3)<\/p>\n
Profit (\u00a3)<\/p>\n
Cumulative cash flow (\u00a3)<\/p>\n
0<\/p>\n
(500,000)<\/p>\n
1.0000<\/p>\n
(500,000)<\/p>\n
(500,000)<\/p>\n
1<\/p>\n
160,000<\/p>\n
0.9434<\/p>\n
150,944<\/p>\n
(88,000)<\/p>\n
72,000<\/p>\n
(340,000)<\/p>\n
2<\/p>\n
140,000<\/p>\n
0.8900<\/p>\n
124,600<\/p>\n
(88,000)<\/p>\n
52,000<\/p>\n
(200,000)<\/p>\n
3<\/p>\n
125,000<\/p>\n
0.8396<\/p>\n
104,950<\/p>\n
(88,000)<\/p>\n
37,000<\/p>\n
(75,000)<\/p>\n
4<\/p>\n
105,000<\/p>\n
0.7921<\/p>\n
83,171<\/p>\n
(88,000)<\/p>\n
17,000<\/p>\n
30,000<\/p>\n
5<\/p>\n
90,000<\/p>\n
0.7473<\/p>\n
67,257<\/p>\n
(88,000)<\/p>\n
2,000<\/p>\n
120,000<\/p>\n
5*<\/p>\n
60,000<\/p>\n
0.7473<\/p>\n
44,838<\/p>\n
180,000<\/p>\n
NPV =<\/p>\n
75,760<\/p>\n
180,000<\/p>\n
Payback period<\/p>\n
3 years 9 months<\/p>\n
Accounting rate of return<\/p>\n
12.9%<\/p>\n
Internal rate of return 11.3%<\/p>\n
Bondright<\/p>\n
Year<\/p>\n
Cash flow (\u00a3)<\/p>\n
6% Factors<\/p>\n
Present value (\u00a3)<\/p>\n
Depreciation (\u00a3)<\/p>\n
Profit (\u00a3)<\/p>\n
Cumulative cash flow (\u00a3)<\/p>\n
0<\/p>\n
(700,000)<\/p>\n
1.0000<\/p>\n
(700,000)<\/p>\n
(700,000)<\/p>\n
1<\/p>\n
127,000<\/p>\n
0.9434<\/p>\n
119,812<\/p>\n
(123,000)<\/p>\n
4,000<\/p>\n
(573,000)<\/p>\n
2<\/p>\n
148,000<\/p>\n
0.8900<\/p>\n
131,720<\/p>\n
(123,000)<\/p>\n
25,000<\/p>\n
(425,000)<\/p>\n
3<\/p>\n
176,000<\/p>\n
0.8396<\/p>\n
147,770<\/p>\n
(123,000)<\/p>\n
53,000<\/p>\n
(249,000)<\/p>\n
4<\/p>\n
198,000<\/p>\n
0.7921<\/p>\n
156,836<\/p>\n
(123,000)<\/p>\n
75,000<\/p>\n
(51,000)<\/p>\n
5<\/p>\n
226,000<\/p>\n
0.7473<\/p>\n
168,890<\/p>\n
(123,000)<\/p>\n
103,000<\/p>\n
175,000<\/p>\n
5*<\/p>\n
85,000<\/p>\n
0.7473<\/p>\n
63,521<\/p>\n
260,000<\/p>\n
NPV =<\/p>\n
88,548<\/p>\n
260,000<\/p>\n
Payback period<\/p>\n
4 years 3 months<\/p>\n
Accounting rate of return<\/p>\n
13.2%<\/p>\n
Internal rate of return 9.7%<\/p>\n
*The second cash flow in year 5 for each option represents the sales proceeds on the disposal of the equipment at the end of its life (residual value).<\/p>\n
The Faststitch will not be fully effective until a number of new product lines requiring stitching have been introduced over the next few years, whereas the Bondright will reduce costs and improve efficiency on existing product lines.<\/p>\n
PS\u2019 lack of investment capital means that only one of the two pieces of equipment can be purchased in the near future, unless it goes to its parent, ABCD Plc.<\/p>\n
+ + + + + + + + +<\/p>\n
Document 6 \u2013 A journal article on budgeting and Beyond Budgeting (Rickards, R.C. (2006). \u2018Beyond Budgeting: Boon or Boondoggle?\u2019 Investment Management and Financial Innovations 3, (2) 62-76)<\/p>\n
Continued<\/p>\n
Assignment requirements<\/p>\n
You are required to write a report for the Board of Directors of Parker Seating Ltd (italicized words in brackets indicate the approximate word count for each section).<\/p>\n
The report should cover the following key areas:<\/p>\n
An executive summary outlining the key challenges that the company is facing and the main outcomes from the analysis work you have undertaken. (250-300 words).<\/p>\n
A discussion of the reasons for the differences between the net cash flows and the operating profit in the statements above (Document 4), and in particular why net cash flow remains negative when the company returns to profit at the end of the six-month period (350-400 words).<\/p>\n
A discussion of the break-even analysis of the proposed new sofa (Document 3) with particular emphasis on the following areas:<\/p>\n
An explanation of the different types of cost behaviour and why all fixed costs are in reality stepped fixed costs (90-110 words).<\/p>\n
A review of the risk and return offered by the two manufacturing options and a recommendation on which option Parker Seating Ltd should choose. You may find useful the concept of operating gearing (200-240 words).<\/p>\n
A discussion of the original and proposed costing methods above (Document 5) with particular emphasis on the following areas:<\/p>\n
A critical appraisal of the reasons for the choice of apportionment bases used in both the original and proposed costing methods (200-250 words);<\/p>\n
A critical appraisal of the Sales Director\u2019s view that the proposed costing method is superior because it reduces the overheads chargeable to the Dining and Bedroom Furniture profit centres (100-150 words).<\/p>\n
A critical appraisal of the results of the capital investment appraisal of the Faststitch and Bondright (Document 6) with particular emphasis on the following areas:<\/p>\n
A discussion of the reasons for the apparent conflicts between the investment advice provided by each method and the say these conflicts might be resolved (300-350 words);<\/p>\n
A discussion of the risks and returns presented by each option and a recommendation as to which option should be chosen, given the shortage of investment capital available to the company (125-175 words).<\/p>\n
A critical discussion of the budgeting, including the Beyond Budgeting model focusing on the benefits it could bring to Parker Seating Ltd and the challenges they would face if they decided to introduce it (Document 6) (325-425 words).<\/p>\n
GUIDELINES TO THIS ASSIGNMENT<\/p>\n
Criteria for Assessment<\/p>\n
This assignment will summatively assess learning outcome 3.<\/p>\n
Analyse various techniques used in performance strategies. <\/p>\n
Assessment Criteria <\/p>\n
Marks will be awarded according to the following criteria:<\/p>\n
10%<\/p>\n
An executive summary outlining the key challenges that the company is facing and the main outcomes from your analysis work.<\/p>\n
20%<\/p>\n
A discussion of the reasons for the differences between the net cash flows and the operating profit in the statements provided and any matters arising.<\/p>\n
15%<\/p>\n
A discussion of break-even analysis in the context of the proposed new sofa.<\/p>\n
15%<\/p>\n
A discussion of the original and proposed costing methods.<\/p>\n
20%<\/p>\n
A critical appraisal of the methods and the results of the capital investment appraisal of Faststitch and Bondright<\/p>\n
15%<\/p>\n
A critical discussion of the Beyond Budgeting model, its benefits and challenges.<\/p>\n
5%<\/p>\n
Referencing, spelling and language used.<\/p>\n
Word Count<\/p>\n
The word count is approximately 2,250 (see guidance below on word count for each section). There will be a penalty of a deduction of 10% of the mark (after internal moderation) for work exceeding the word limit by 10% or more. The word limit includes quotations, but excludes any lists of contents and references.<\/p>\n
How to submit your assessment<\/p>\n
The assessment must be submitted by 18:00:00 on 03\/12\/21. No paper copies are required. You can access the submission link through the module web.<\/p>\n
Your coursework will be given a zero mark if you do not submit a copy through Turnitin. Please take care to ensure that you have fully submitted your work. <\/p>\n
All work submitted after the submission deadline without a valid and approved reason (see below) will be given a mark of zero. <\/p>\n
The University wants you to do your best. However, we know that sometimes events happen which mean that you can\u2019t submit your coursework by the deadline \u2013 these events should be beyond your control.\u00a0 If this happens, you can apply for an extension to your deadline for up to two weeks, or if you need longer, you can apply for a deferral, which takes you to the next assessment period (for example, to the resit period following the main Assessment Boards). You must apply before the deadline. You will find information about the process and what is or is not considered to be an event beyond your control at https:\/\/share.coventry.ac.uk\/students\/Registry\/Pages\/Deferrals-and-Extension.aspx<\/p>\n
Students MUST keep a copy and\/or an electronic file of their assignment.<\/p>\n
Checks will be made on your work using anti-plagiarism software and approved plagiarism checking websites.<\/p>\n
Plagiarism<\/p>\n
As part of your study you will be involved in carrying out research and using this when writing up your coursework. It is important that you correctly acknowledge someone else\u2019s writing, thoughts or ideas and that you do not attempt to pass this off as your own work. Doing so is known as plagiarism. It is not acceptable to copy from another source without acknowledging that it is someone else\u2019s writing or thinking.\u00a0This includes using paraphrasing as well as direct quotations. You are expected to correctly cite and reference the works of others. The Centre for Academic Writing provides documents to help you\u00a0get this right.\u00a0If you are unsure, please visit\u00a0www.coventry.ac.uk\/caw. You can also check your understanding of academic conduct by completing the Good Academic Practice quiz available on Aula.<\/p>\n
Moodle includes a plagiarism detection system and assessors are experienced enough to recognise plagiarism when it occurs. Copying another student\u2019s work, using previous work of your own or copying large sections from a book or the internet are examples of plagiarism and carry serious consequences. Please familiarise yourself with\u00a0the CU Harvard Reference Style (on Moodle) and use it correctly to avoid a case of plagiarism or cheating being brought. Again, if you are unsure, please contact the Centre for Academic Writing, a Progress Coach or a member of the course team.<\/p>\n
Return of Marked Work<\/p>\n
You can expect to have marked work returned to you within 15 working days. If for any reason there is a delay you will be kept informed. Marks and feedback will be provided online. Marks will have been internally moderated only, and will therefore be provisional; your mark will be formally agreed later in the year once the external examiner has completed his\/her review. <\/p>\n
Detailed Assessment Criteria<\/p>\n
10%<\/p>\n
An executive summary outlining the key challenges that the company is facing and the main outcomes from the analysis.<\/p>\n
Effectively summarises all elements of the assignment.<\/p>\n
7-10%<\/p>\n
Summarises the elements of the assignment but lacking somewhat in credibility or completeness. <\/p>\n
4-6%<\/p>\n
Falling short of a good summary in terms of credibility, completeness or both.<\/p>\n
1%<\/p>\n
20%<\/p>\n
A discussion of the reasons for the differences between the net cash flows and the operating profit in the statements provided.<\/p>\n
Effectively covers all the elements of the task with good reference to the module textbook.<\/p>\n
14-20%<\/p>\n
Covers most elements of the task with reasonable reference to the module textbook.<\/p>\n
8-13%<\/p>\n
Partially covers one of the elements of the task with some reference to the module textbook.<\/p>\n
1-7%<\/p>\n
15%<\/p>\n
A discussion of the break-even analysis of the proposed new sofa.<\/p>\n
Effectively covers all the elements of the task with good reference to the module textbook and maybe other sources.<\/p>\n
10-15%<\/p>\n
Covers most elements of the task with reasonable reference to sources.<\/p>\n
7-9%<\/p>\n
Effectively covers 1of the elements of the task or partially covers 2 of the elements of the task with some reference to the module textbook.<\/p>\n
1-6%<\/p>\n
15%<\/p>\n
A discussion of the original and proposed costing methods.<\/p>\n
Effectively covers all elements of the task with good reference to sources, including the module textbook.<\/p>\n
11-15%<\/p>\n
Effectively covers most of the elements of the task or partially covers both of the elements of the task with reasonable reference to the module textbook.<\/p>\n
6-10%<\/p>\n
Somewhat covering the task or failing to be properly evidenced.<\/p>\n
1-5%<\/p>\n
20%<\/p>\n
A critical appraisal of the results of the capital investment appraisal of the Superstitcher and Bondright<\/p>\n
Effectively covers all elements of the task with good reference to sources, including the module textbook.<\/p>\n
13-20%<\/p>\n
Effectively covers one of the elements of the task or partially covers both of the elements of the task with reasonable reference to the module textbook.<\/p>\n
8-12%<\/p>\n
Falling short of covering all elements of the task and\/or making inadequate use of sources.<\/p>\n
1-7%<\/p>\n
15%<\/p>\n
A critical discussion on the context of this company of budgeting and the Beyond Budgeting model, its benefits and challenges.<\/p>\n
Effectively covers the nature of the budgeting task, the Beyond Budgeting model, its benefits and challenges with good reference to the article provided plus at least one more article and the module textbook.<\/p>\n
11-15%<\/p>\n
Helping readers somewhat to understand the budgeting task and the Beyond Budgeting model.<\/p>\n
6-10%<\/p>\n
Falling short of helping readers well to understand the budgeting task and the Beyond Budgeting model.<\/p>\n
1-5%<\/p>\n
5%<\/p>\n
Referencing, spelling and language used.<\/p>\n
Referencing complies with current Coventry University standards (Harvard or APA 7). Spelling accurate. Language is appropriate and persuasive.<\/p>\n
4-5%<\/p>\n
Two out of the three requirements above are achieved.<\/p>\n
2-3%<\/p>\n
One out of the three requirements above are achieved.<\/p>\n
1%<\/p>\n
Assignment Brief Template<\/p>\n
Page 10 of 15<\/p>\n","protected":false},"excerpt":{"rendered":"
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