Questions and Answers of Advanced Accounting

lnkco manufactures printing inks. The company employs 150 people, of whom 120 are productt0 The ink market is extremely competitive and, with a 20 per cent market share, lnkco has the third largest
Windsor General Hospital is a major hospital treating both private and public patients. It is a not for profit organization and its main sources of revenue are patient billing, state government
Pegasus Technology Ltd (PTL) has two divisions: Adelaide and Sydney. Sydney currently sells a diode reducer to manufacturers of aircraft navigation systems for $2325 per unit. Variable costs amount
Sandstone Industrial Resources Company (SIPC) has several divisions. However, only two are involved in the internal transfer of products. The Mining Division refines a material called toldine, which
Discuss the benefits and costs of decentralization?
Dragoon has two manufacturing divisions:• Costa Division• Margarita Division.The Costa Division produces electric motors, 20 per cent of which are sold to the Margarita of Dragoon. The remainder
Rabbid Industries Ltd consists of three decentralized divisions: Brentwood Division, Crater Division and Dollar Division. The managing director of Rabbid Industries has given the managers of the
Easy Living Industries manufactures carpets, furniture and cushions in three separate divisions, the company's profit statement is presented below:Additional information regarding Easy Living
How might a move to a shared services operation for payroll and accounts payable change the responsibilities of the manager who formerly managed those operations within a division?
Explain how the formation of self-managed work teams might impact on responsibility accounting?
When developing financial performance reports in a decentralized organization, a contribution margin format may be used. Explain the advantages of using this format for performance evaluation of
Explain why it is useful to focus on the two component ratios of the ROI calculation. rather than on the ROI ratio itself.
What is meant by value under VBM? Describe the four drivers of VBM.
In your own words, outline strategies that managers might use to maximise economic value added that are not in the best interests of an organisation.
Explain the difference between the imputed interest charge used in the calculation of residual income and the WACC used to calculate EVA®.
Explain why many companies link achievement of performance targets to employee remuneration.
Outline the differences between extrinsic and intrinsic motivation, and explain how organisations can encourage intrinsic motivation.
The 'Peal life' suggests that senior executive salaries have risen considerably over time. What do Herzberg's theory of motivation and expectancy theory suggest about using large salary packages to
What is a share option? Is the inclusion of share options in remuneration packages likely to lead to intrinsic or extrinsic motivation? Explain your answer.
Describe the difference between a gain sharing scheme and a team-based incentive scheme.
In the 'Peal life', the use of profit sharing and employee share ownership in incentive schemes is explained. Use expectancy theory to explain how such schemes can be motivational.
What are the advantages and disadvantages of basing individual incentives on company-wide performance?
Explain how return on investment and residual income can be used as part of a responsibility accounting system.
Explain the advantages of providing more frequent and more timely incentives as part of an employee reward system.
Zap is a retailer that specialises in electrical goods. It is a division of a large retail company, data relate to the most recent year of
The following data relate to Metalla Manufacturing Company for the past year:Sales revenue...............................................$9,000,000Cost of goods
Assume that you have just been employed at Southern Coast Wealth Foods as an assistant and you are concerned with the high level of reliance on PCI to evaluate and compare the performance of the
Oatley Fabrics Company has two retail divisions, which reported the following results for last year:Furnishing DivisionDressmaking
The onstt.t0 Construction Company is a real estate developer and building contractor. The company has two sources of long-term capital: debt and equity. The cost of issuing debt is the after-tax cost
Describe the actions that could be taken by the managers in the Business Studies Textbook division of a publishing company to improve the division's ROI. (Assume the division is responsible for
Grant Lawson has just been appointed as the new financial controller of Safety Chemicals Ltd, which has three separate divisions Industrial Chemicals, Paints, and Household Chemicals. During his
Fletcher Industries manufactures a range of household products. Roger Wilkie is head of the Hardware Division and he has just experienced a terrible nine months. 'If it could go wrong it did. Sales
Lamington Industries has manufactured prefabricated houses for aver 20 years. The houses are constructed in sections to be assembled on customers' lots. Lamington expanded into the pre-cut housing
Electromart is a retailer of electrical products and has four divisions. At the end of each year the four divisional managers are evaluated and bonuses are awarded based on PCI. Last year, the
Honiara Ltd made a capital investment of $100,000 in new equipment for its Sandman Division two years ago. The analysis at that time indicated that the equipment would save $35,000 in operating
Fun Time Company (FTC), a subsidiary of New Age Industries, manufactures go-carts, water skis and motorised scooters. With the increasing popularity of electronic arcade games, New Age has been
Angler Fisheries operates a chain of budget seafood restaurants, as well as its own fishing fleet, which operates off the south coast of Australia. Angler is structured into three divisions: the
Outline some of the steps that can be taken to minimise the negative behavioural effects of ROI.
Salt Water Ltd is a large and successful manufacturer of engines. The company consists of two divisions the Automotive Engine Division and the Outboard Motor Division. Salt Water has recently
Provide two examples of situations where the use of ROI can lead to decisions which may harm the future competitiveness of a company.
Can the residual income measure eliminate all of the disadvantages associated with ROI? Explain your answer.
Does it matter how invested capital and profit are defined for the purpose of the ROI calculation? Explain your answer.
Explain why it is considered important to distinguish between performance of a business unit manager and performance of a business unit. Provide two examples to illustrate your answer.
Explain why traditional financial performance measures may not be sufficient to manage an organizational?
Contrast the likely differences between the balanced scorecards of a profit seeking company and a non for profit organization?
Explain the purpose of a strategy map and how it relates to a balanced scorecard?
Distinguish between lag and lead indicators. Provide two examples of each to illustrate your answer?
Outline some of the reasons why the implementation of a balanced scorecard may not be a success?
Explain why the effective management of non-financial performance may not always flow through to improved financial performance?
Explain why improved product quality and improved time-to-market may not necessarily flow through to higher profits?
What is a Du Pont chart? How can it help in managing performance?
Describe the ways in which continuous improvement can be built into a performance measurement system? Illustrate your answer with an example.
What role can management accountants play in bench marking?
Explain the advantages non-financial performance measures offer for managing resources end creating value, compared with financial measures?
Describe the advantages and limitations of the four types of benchmarking?
The Corporate Caterers Ltd specializes in catering for office parties. Over the past six months, business has started to pick up, particularly as the number of 'employee farewell' parties has
For each of the following businesses select two performance measures that could be used to support the competitive strategy of superior product/service quality. Make sure that your measures are
Luigi's Pizzas is a chain of pizza stores. Pizzas are made fresh in-store, and then delivered to customers by a fleet of drivers. The senior management team has identified the strategic priorities
Identify specific lag and lead indicators that may be used in each of the following three businesses to measure: (1) Quality. (2) Innovation. a. A sporting goods manufacturer b. An airline c. A law
The 'Real life on page 623 explains how IAG develops its balanced scorecard. A table is provided that includes the five perspectives, the objectives and some performance measures.Required:1. Use each
St Andrews Bank is currently redesigning its performance measurement system. Up until now it has relied heavily on monthly cost variance reports to control the costs in each bank branch but would now
Provide four examples of non-financial performance measures that could be used to measure performance of an international aid organization like World Vision or Oxfam?
Zippy Cola is a multinational soft drink manufacturer. The Australian plant, located at Deveton in Victoria is currently attempting to improve its performance through benchmarking activities. The
Joe Evans is a line supervisor in the Paint Shop of the Auckland Car Company (ACC). The ACC manufactures cars for the domestic and export markets. Jim Kent is the manager of the Finishing Department,
Revor Mowers Ltd manufactures lawnmowers and grass-slashers. The manufacturing plant has three production departments: Metalwork, Mechanical Work and Assembly. The company uses monthly standard
Your best friend, Jason Bell, has just graduated from university and started his first job as a trainee accountant in a medium-sized manufacturing company. One of the first things that he notices is
Visit the website of a major airline to find information about the airline's mission, objectives, strategic priorities, organizational structure and operations.Required:1. Outline the airline's
Search the internet to find the website of a not-for-profit organization.Required:1. Outline the long-term goals of the organization and define the groups of stakeholders or clients for the
The Department of Social Welfare (DSW) is a state government department that provides support and counselling services to several groups in the community: the elderly, the unemployed children at
Fancy Flowers is an online florist that delivers flowers and related goods to offices and homes. It has been operating successfully for the past two years. However, competition is becoming more
Monoclean Ltd is a multinational company that manufactures and markets household cleaners in a batch process-manufacturing environment, and ABC is used to allocate overhead to production. Recently
Refer to Case 14.43.Janice examined the performance-related pay system used to reward the managing directors, and has prepared a report that recommends three changes• Add a more long-run emphasis
Describe the meanings of cycle time, setup time and machine downtime. Which competitive strategies might these measures support?
Explain why an over-reliance on non-financial measures can be problematic?
Wow does a balanced scorecard relate to an SPMS? Explain your answer
Describe the Kaplan and Norton balanced scorecard approach to performance measurement?
Describe how responsibility accounting principles apply to a balanced scorecard system?
Explain why simplified production processes and effective preventative maintenance are important features of a JIT production management system.
Briefly explain the reasons why a manufacturer may adopt JIT purchasing and JIT production management.
The Real life highlights the risks to manufacturers of requiring suppliers to provide inventory on a just-in-time basis. In your own words, explain the advantages and disadvantages ix suppliers if
What are the advantages for an organisation of creating an effective CPM system?
Explain how customer groups may be determined. In your answer, select a company with which you are familiar and identify the type of customer groups that might be relevant to its needs
Outline the three levels of customer-driven activities and provide two examples for each level.
Review the list of activities associated with low-cost and high-cost customers in Exhibit 15.10. Select a company with which you are familiar and explain which activities would most likely apply to
Explain why some organisations consider it important to measure customer retention and customer acquisition.
Choose a particular industry and explain why time is important as a source of customer value within that industry.
Explain the meaning of customer response time and its four components. Are these measures relevant to a service firm? Illustrate your answer with an example.
Explain the meaning of supply chain and provide an example to illustrate your answer. Your example should focus on a particular industry and involve at least one answer customer.
Explain the major differences between backflush costing and traditional costing.
Motor vehicle manufacturers are renowned for creating close relationships with their suppliers, and have committed significant resources to developing their supplier programs. These supplier programs
Classify the following supplier-related activities as either unit level, order level, or supplier level: 1. Extra machine set-ups due to late receipt of material from supplier. 2. Additional
Cascade of Poses (COP) is a business that specialises in the delivery of arrangements of roses. Cascade of Poses uses six main suppliers of roses, and has worked hard over the past two years to
Monitor Ltd uses 1680 tonnes of a chemical each year in its manufacturing processes. Monthly demand for the chemical fluctuates between 110 and 160 tonnes. The lead time for each order is one month,
Jackson Sausages Pty Ltd is a medium-sized company that produces gourmet beef and, chicken sausage for a highly competitive market. Jackson's sausages are sold to major supermarket chains, as well as
Customer profitability analysis Using activity-based analysis, you have just prepared a customer profitability report for the sales manager that shows some customer groups are profitable but other
Swish Designs specialises in designing commercial office space in Auckland. The CEO, Ralph Polo has reviewed the financial results and has noticed that operating profits were below budget. He also
The 'Real life' on page 655 explains the changes in the Tasmanian wool supply chain outline the likely benefits to individual members of the improvements in that supply chain as well as benefits for
Sweety Tea (ST) manufactures a range of designer T-shirts, which it produces to order for major department stores. On to March the sales department at ST received an order from retail company, Legend
Jacaranda Builders is undertaking an analysis of supplier costs in order to evaluate the relative costs and performance of each supplier. They have isolated a range of activities that are consumed by
Fabulous Enterprises manufactures modular kitchens and bathrooms and the Managing Director. Alfred Jones, is concerned that the total number of suppliers has increased from 20 to 60 over the past

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