An independent bus company on an island operates 15 routes and has 50 buses. Two routes take one hour for a journey round the island each; the remaining routes take 30 minutes for a return journey to various villages from a central hub in the main town. The journeys round the island run every half hour; the other journeys run every 2 hours. There are 30 drivers and 10 support staff. Overhead costs are composed of cost of support staff, cost of support activities, maintenance of buses and bus stations and driver costs other than those directly related to journey time. The bus company has been using an overhead cost rate based on cost per mile travelled. Where a route is shown to be loss-making, the company may claim a subsidy from the island’s government. The journeys round the island appear to be loss-making, while the journeys to and from the hub show a surplus. Overall, the company makes a profit. The government’s transport commissioner believes that the subsidy could be reduced if activity-based costing was to be applied in allocating overhead costs. You have been asked to advise the transport commissioner. Required: Write a note to the transport commissioner explaining: (a) The differences between activity-based costing and the present system of overhead costing. (b) How a change to activity-based costing might reduce the need for subsidy.
> 20. Which of the following is the best description of convergence of accounting in Europe? (a) From 2005, all accounting standards in the European Union are prepared by the European Commission. (b) From 2005, all listed companies in the European Union
> 16. A manufacturing company has carried out the following business transactions: • 500 kg of raw materials has been purchased for cash at a price of £3 per kg. • 300 kg of the raw materials has been put into production process. • 1 kg of raw material
> On 1 January Year 1, Company A purchased a bus costing £70,000. It was estimated to have a useful life of three years and a residual value of £4,000. It was sold for £8,000 on the last day of Year 3. On 1 January Year 1, Company B purchased a bus also co
> 6. Which of the following reflects the effect of the delivery of finished goods to customers on the accounting equation? (a) Assets decrease: ownership interest decreases (b) Assets decrease: ownership interest increases (c) Assets increase: ownership
> 6. Which of the following reflects the effects of a payment to creditors on the accounting equation? (a) Assets decrease: ownership interest decreases. (b) Assets decrease: ownership interest increases. (c) Assets increase: liabilities decrease. (d)
> 17. Which of the following statement is/are correct? (a) All pages of the annual report of a typical public company are heavily regulated by the company law. (b) The auditors are responsible for preparing a company’s annual financial statements. (c) T
> J Sainsbury plc: annual report of a service business We want to be a place where people love to work and shop. That means harnessing the talent, creativity and diversity of our colleagues to ensure that customers receive great service every time they sho
> Scope and quality of audits needs reform, say City chiefs Auditors have had their “heads in the sand” and must provide a far more rounded view of companies’ health than the current statutory “truth and fairness” opinions if they are to win back public tr
> Whitbread plc: main points from financial statements Extracts from the Annual Report Whitbread is the UK’s leading hospitality company We have built two of the UK’s most successful hospitality brands, Premier Inn and C
> The Financial Reporting Council (FRC) in the UK has set out an accounting standard for micro entities, which are the very smallest companies. Typically they have fewer than 10 employees. One permitted outline for a statement of financial position (balanc
> Oxfam Great Britain’s purpose is to help create lasting solutions to the injustice of poverty. As stated in its Memorandum of Association, the objects for which Oxfam is established for the public benefit are: • to prevent and relieve poverty and to prot
> Associated British Foods is a diversified international food, ingredients and retail group with sales of £13.4 billion, 130,000 employees and operations in 50 countries across Europe, southern Africa, the Americas, Asia and Australia. Business strategies
> The Bristol Port Company was formed in 1991 when entrepreneurs Terence Mordaunt and David Ord purchased the Port of Bristol from Bristol City Council. Since privatisation over £475 million has been invested to create a modern, thriving business offering
> Explain how the accounting equation spreadsheet of your answer to question B8.4 would alter if the building had been sold for £250,000. Data from Question B8.4: Angela’s Employment Agency sells the building for £285,000 on the final day of December Year
> More than half a million students have lived with us during our 25-year history and we continue to grow. In 2016, we opened five new properties which means we have the privilege of housing our largest ever number of students, 49,000. As the UKâ
> At our core, we are a successful branded soft drinks business, building a diverse and differentiated portfolio of great tasting brands that people love. We make it our business to understand what our consumers want. Whether it’s our iconic IRN-BRU, launc
> The case study shows a typical announcement of budget plans where management accounting is helpful but must be read in conjunction with short-term requirements and longer term strategic plans. Read the case now but only attempt the discussion points afte
> Plymouth-based super yacht company Princess Yachts has almost doubled its order book this year as it embarks on a £100m investment program. The company said that orders following the Cannes Yachting Festival reached a record £640m – 85pc higher than at t
> How much should I charge for my cakes? I have read that a good way to price cakes is to charge for the cost of ingredients times 2 (or 3). We firmly believe that the ‘ingredients times 2 or 3’ method of pricing is arbitrary and not rooted in any kind of
> Whirlpool said Monday it swung to a profit in the fourth quarter driven by higher prices and sales in North America, though the appliance maker’s 2019 outlook disappointed investors. Stronger prices for its products and fixed cost reduction boosted Whirl
> The purpose as ever of this annual road haulage cost movement report is to assist members and their customers to understand trends in the industry. It reflects cost movements, reasons for changes, and makes predictions. Every firm has different costs and
> Chartered Institute of Management Accounting (CIMA) What is management accounting? Management accounting is the sourcing, analysis, communication and use of decision-relevant financial and non-financial information to generate and preserve value for orga
> Unless it can reduce inventory and working capital, dividends may be at risk Everyone likes a bargain, particularly investors. Hennes & Mauritz, Sweden’s purveyor of Scandi fashions worldwide, offers value on the high street. Unfortunately, fears of “pea
> Our business model is designed to generate long-term sustainable value. We focus on mission-critical and highly engineered equipment with intensive aftermarket care and comprehensive global support. This model creates positive outcomes for our customers
> Angela’s Employment Agency sells the building for £285,000 on the final day of December Year 3. Record the transactions and events of Year 3 in an accounting equation spreadsheet. Assume depreciation is calculated in full for Year 3.
> The following extracts show the different ways in which three companies report their operating profit margins (operating profit as a percentage of sales). This ratio is an indicator of the performance of the business, or segments of the business. It prov
> Thames Water is one of ten regional licensed and regulated companies providing water and wastewater services in England and Wales. With 15 million customers we serve about 25% of the population of England and Wales. Dividends The Companyâ€
> We are a global energy company with wide reach across the world’s energy system. We have operations in Europe, North and South America, Australasia, Asia and Africa. Decommissioning Liabilities for decommissioning costs are recognized when the group has
> We use our cost advantage and number one and number two network positions in strong markets to deliver low fares and operational efficiency on point-to-point routes, with our people making the difference by offering friendly service for our customers. S
> Ocado Group plc: reporting inventory Established in 2000 and listed on the London Stock Exchange in July 2010, Ocado is the world’s largest dedicated online grocery retailer, with over 580,000 active customers. Our objective is to provi
> Investment by UK companies has fallen for three consecutive quarters, in a decline that highlights how uncertainty about Brexit is prompting consumers and businesses to tighten their belts. Business investment was 2.2 per cent lower in the third quarter
> Domino’s Pizza International Franchising Inc. (‘DPIF’) is the owner of the Domino’s brand across the globe. We have two Master Franchise Agreements in place with DPIF, which gives us exclusive rights to the markets in the UK, the Republic of Ireland, Swi
> Mulberry is a vertically integrated luxury brand which was founded in 1971 in Somerset. The Group designs, develops, manufactures, markets and sells products under the Mulberry brand name. The Group has over 1,400 employees (full time equivalents), the m
> The following information has been gathered from the accounting records of Jonathan’s Hair Stylists. Using the accounting equation, calculate (a) the amount of ownership interest at 30 September Year 8; (b) the amount of net profit fo
> Read the dialogue between David and Leona. What errors can occur in reporting the amount of ‘inventories’ (stocks) in financial statements?
> Assume that fee income and costs are the same in Year 2 as in Year 1. Record the transactions and events of Year 2 in an accounting equation spreadsheet. Prepare the statement of financial position (balance sheet) at the end of Year 2 and the income stat
> Weston plc produced the following draft statement of financial position (balance sheet) as on 1 May Year 4. During June, the following transactions and events occurred: 1. The company bought stock costing £66,000 from its suppliers on 2 mon
> You are the recently appointed financial controller of Motorway Catering Supplies Ltd (MCS) that has successfully operated motorway service stations for many years. It has been given the opportunity by the Transport Construction Group (TCG), the builders
> The board of directors of Kirkside Glassware Ltd is considering the following proposed investment projects: It is estimated that each product will provide benefits in terms of reduced cash outflows, measured over the coming five years. The outlays and ca
> Binding Machines Ltd sells wire-loop binding machines to printing units. The company has three separate departments: Department A: sells new machines Department B: sells second-hand machines Department C: repairs machines for external customers and ov
> You are the management accountant at the head office of a company which owns retail shoe shops throughout the country. The shops are grouped into areas, each having an area manager. Goods for sale are bought through a central purchasing scheme administer
> Write an essay of approximately 500 to 750 words on the topic: ‘It is questionable whether variance reporting is a useful tool of management’.
> As a further development of that answer, it is possible to link the cash flow to the gross profit using the changes in working capital. Attempt now to set out a calculation that links cash flow to gross profit in this way. In the world of business, it is
> Holyrood Products Ltd makes cassette recorders. The management accountant has produced the following summary of the company’s trading in the year ended 30 June Year 3: The following additional information is available: (a) Works and adm
> Woollens Ltd manufactures high-quality sweaters. At present, the company sells direct to retail stores, but sales through those outlets have been declining due to overseas competition − the profit last year was only £160,00
> Super toys Ltd is the sole manufacturer in Scotland of the Super-robot toy. The current level of production and sales is 40,000 toys per annum. The selling price of each Super robot is £20. The contribution from each toy is 20 per cent of the selling pri
> Which components are currently covered by an audit report of the type illustrated? Discuss the problems and potential benefits of having an audit opinion covering all categories of financial information.
> A company is able to sell four products and is planning its production mix for the next period. Estimated costs, sales and production data are as follows: Required (a) Based on the foregoing information, show the most profitable production mix under each
> A small business manufactures two products. Product A is a high-volume product of relatively low sales value and Product B is a low-volume product of relatively high sales value. Product A results from an automated process where the labour input is from
> Florence Ltd is a manufacturing company with a financial year ending on 31 December Year 1. The company manufactures wooden storage units for schools and colleges, each job being planned to meet a customer’s specific order. A predetermined overhead rate
> Oldham Ltd is a small manufacturing company producing a variety of pumps for the oil industry. It operates from one factory that is geographically separated from its head office. The components for the pumps are assembled in the assembling department; th
> Timberchair Company produces custom-made chairs to suit individual customer requirements. The company’s main material is timber. It also uses glue and nails. The company has a small buying department that purchases timber from around the world. It also h
> You have been asked for advice by the owner of a small business who has previously estimated overhead costs as a percentage of direct labor cost. This method has produced quite reasonable results because the products have all been of similar sales value
> In a general engineering works the following routine has been followed for several years to arrive at an estimate of the price for a contract. The process of estimating is started by referring to a job cost card for some previous similar job and evaluat
> In a school, the head of the history unit is responsible for cost control. The finance office has produced the following statement of costs for the history unit cost centre. State which of them are controllable and which of them are non-controllable cost
> Complete the following table of cost classification for a shop selling bicycles:
> Explain why users require all the information and not merely the primary financial statements with notes to the accounts.
> Tots Ltd manufactures babies’ play suits for sale to retail stores. All play suits are of the same design. There are two departments: the cutting department and the machining department. You are asked to classify the costs listed below under the headings
> Supermarket checkout operators are paid a weekly wage plus overtime at an hourly rate. One operator has recently resigned from work. The supermarket manager has been asked whether the direct costs of the supermarket operation could be maintained within t
> The following information has been extracted from the financial statements of Casings Ltd. Income statement (profit and loss account) extract for the year to 31 December Year 2 Statement of changes in equity Equity holders’ funds at sta
> Consider the following: Statements of financial position (balance sheets) at 31 December Further information 1. The dividend paid during Year 2 was £25m. The retained earnings increased by £77m profit of the period and decreased
> Carry out a trend analysis on Safe and Sure plc, using the historical summary set out in Appendix I. Write a short report on the key features emerging from the trends.
> Prepare a full ratio analysis and commentary for Craigielaw. Assume that a share price of 160 pence is applicable at both year-end dates. Industry average ratios for both Year 7 and Year 6 are as follows:
> The summarised version of the Year 7 accounts of Worldchem plc is shown below along with comparative figures for the previous year. Most of the notes in the accounts, which give further details about nearly every item, are omitted here. Required: (a) C
> Carry out a ratio analysis of Safe and Sure plc, using the financial statements set out in Appendix I (at the end of this book) and applying the method of analysis set out in section 13.6. Making a comparison of Year 7 with Year 6, write a short commenta
> The following table sets out business transactions and events for Chris Brown Ltd. Required: (a) Using the accounting equation spreadsheet provided, record the effect of each transaction and events of Chris Brown Ltd for its first year of trading. (b)
> The following is a list of assets, liabilities and ownership interest of D. James Ltd on 1 January Year 5 when the company began to trade. The company has an issued share capital of 100,000 £1 ordinary shares. The following transactions were
> The following list of transactions relates to the business of Electrical Retailers during the month of November. Required: (a) Make entries in a spreadsheet for the above transactions. (b) Using the information you have entered in the spreadsheet, prepa
> Suggest six non-financial performance measures for a company which offers contract gardening services to companies which have landscaped sites surrounding their offices. Give reasons for your choice.
> As a result of organizational cost-cutting, new-hire orientation is cut short to a few days. Describe how this will affect retention.
> Organizations use different selection devices to recruit new employees. Are all methods equally good for all jobs?
> In Malaysia, certain industries like IT and customer services, are increasingly dependent on specialist human resource providers as a common source of trained manpower. Companies like the US-based ManpowerGroup provide professional HRM services to client
> Can a labor union help prevent employees from being unfairly terminated?
> What are the main challenges facing organizational designs today?
> How could a job-sharing arrangement be made effective? What would a job sharer need to do to make the arrangement work?
> There is evidence that an organization’s size will affect its structure. The larger the number of employees, the more mechanistic the organization will tend to become. Can this problem be overcome?
> In terms of organizational designs, what is a simple structure?
> Why is structure important? Why does an organization need a clear structure? Are there any other reasons for organizational structures beyond the formal arrangement of jobs, roles, and responsibilities?
> Discuss why you think an organization might be keen to increase its managers’ span of control.
> Internet sales comprise about 20 percent of all retail sales in the UK, with a record of £1.9 billion in online sales in December 2018. And for advancements in online sales, December 7, 2016, is a special delivery day for the country. On this day, one Am
> Contrast mechanistic and organic organizations.
> Organizational design has traditionally had a chain of command. How does a chain of command work?
> Do you think a person can be taught to be an entrepreneur? Why or why not?
> Why do you think many entrepreneurs find it hard to step aside and let others manage their business?
> Would a good manager be a good entrepreneur? Discuss.
> How many options are there for a new entrepreneur to start up their business venture?
> What do you think would be the hardest thing about being an entrepreneur? What do you think would be the most fun?
> Are there any disadvantages to be a first-mover? Provide examples.
> Creating a competitive advantage over rivals is advantageous, but it’s only a matter of time before they catch up, or changes in the industry nullifies the advantage. How does an organization sustain its competitive advantage?
> Describe the role of competitive advantage and how Porter’s competitive strategies help an organization develop competitive advantage.
> Founded in 1919, Tesco has grown from a market-stall in the East End of London into the largest supermarket in the UK by market share, and one of the largest globally in just under a century. In 2018–19, Tesco boasted group sales of £56.9 billion. At the
> In how many ways can managers create a competitive advantage so that they can compete against their industry rivals?
> Explain how managers can use a BCG Matrix to manage strategies by analyzing a corporate portfolio.
> There are three different types of corporate strategies. Do you think all corporate strategies revolve around growth? Why?
> Distinguish between an organization’s external opportunities and its threats.
> Why is strategic management important to managers?
> Hyundai’s Global Command and Control Center (GCCC) have cameras strategically placed across its centres to monitor assembly lines. This helps identify problems and respond quickly. What drives Hyundai to plan this way?
> Setting organizational goals is an important step in planning. What are the approaches to setting organizational goals? Which do you consider the best?
> What is the fastest-growing area of environmental scanning? What does it provide to an organization?
> Outline the five steps required for setting goals in an organization. Explain how they work.
