Explain how return on investment (ROI) is calculated and how it can be decomposed into two financial measures.
> Oysters Away shucks and packs oysters and sells them wholesale to fine restaurants across the country. The income statement for last year follows: Pickers, shuckers and packers are employed on an hourly basis and can be laid off whenever necessary. Sal
> Explain the target costing cycle, and discuss the decision criteria used to determine whether a product will be manufactured using a target costing approach.
> Outline the relationship between the scope (levels) of costs and full cost accounting.
> Will organisational efforts towards sustainability result in reduced organisational profits?
> Why should the economic, environmental and cultural dimensions be managed in unison?
> Is sustainability achievable in all organisations regardless of their operating activities?
> Define the terms ‘sustainability’, ‘sustainability management’ and ‘sustainability management accounting’.
> Briefly comment on how legislation and societal expectations could influence the scope of sustainability management practice within organisations.
> What are some of the factors that managers should consider when implementing sustainability practices in their organisations?
> What are some of the sustainability-related considerations that managers should acknowledge when evaluating their organisation’s value chain?
> What key measures should be included in a sustainability balanced scorecard?
> What is the link between sustainability strategies and management accounting?
> Chocolate Creations is a shop located at Docklands in Melbourne. It makes and sells Specialty chocolates in a variety of flavours. Revenue and cost data for a recent week are as follows: All employees work standard shifts, regardless of how many chocol
> The use of RPE systems for the evaluation of individual managers has been abandoned by many organisations. Microsoft is one example. Given this can be conclude that RPE is no good?
> What is the role of rewards and incentives for executives in reducing agency costs?
> Describe agency costs and give several examples of them.
> How can target measures be used to promote either short-term or long-term performance?
> Describe the advantages and disadvantages of equity rewards.
> Discuss why an incentive package might include individual, divisional and corporate-level performance targets.
> What are the arguments for reward systems at the executive level to contain a longer-term component?
> Explain the difference between shares and share options.
> Explain why boards of directors will often employ independent remuneration consultants to assist in developing and assessing compensation plans.
> Why would a company restrict when a senior executive can exercise their share options?
> Refer to Paisley Insurance in comprehensive example 1 in chapter 12. In this example, an ABC and non-ABC version of the costs of servicing each type of account customer — residential and commercial — was determined. Required State some important qualit
> What role does the ASX Corporate Governance Council’s Corporate government principles and recommendations, and the Corporations Act have in executive remuneration?
> What are the advantages and disadvantages of having an individual’s remuneration linked to performance outcomes?
> Should a remuneration plan include a cash bonus or share options? Under which circumstances would either be appropriate?
> Describe two disclosures required by the Corporations Act with respect to executive remuneration.
> ‘Executives should only be compensated based upon the achievement of targets. They should not receive a fixed salary component’. Discuss.
> Identify why RPE would be used t the company level.
> Explain agency theory and how it relates to reward systems.
> Allied Trucking moves produce from farms to markets. Its managers decided to implement a balanced scorecard around the entity’s vision statement: 'We aim to be the industry leader in cost-effective and timely delivery of produce’. Provide two potential
> What potential problems could arise if the balanced scorecard was developed without a strategy map being available?
> How might a balanced scorecard be used?
> Suppose that Hyundai used target costing to decide whether to produce a new vehicle, such as a Hybrid SUV Vehicle. Required (a) Describe the steps Hyundai’s design team would have taken. (b) Explain why managers cannot easily predict demand for a new pr
> Describe the implementation process for the balanced scorecard.
> Identify the four generic perspectives for a balanced scorecard and explain how they are related.
> Outline the purpose of strategy maps.
> What is strategic decision making? What role does it play in the balanced scorecard?
> Differentiate between a lag indicator and a lead indicator. Provide two examples of each.
> Explain why demand might increase for relevant and useful information in the future. What professional skills will help you meet that need?
> (a) Pick two public companies, go to their websites and identify their major strategies. (b) Pick one of the companies from part (a) and go to the website of a competitor in the same industry. (For example, if you chose Coles, you might go to the website
> Suppose that a travel agency decided it would no longer compensate employees with sales commissions, but instead pay a salary with a bonus for high customer satisfaction ratings. What problems would you foresee from the agency’s financial perspective?
> Explain the differences between financial and non-financial performance measures and give two examples of each.
> Explain how EVA differs from residual income.
> Arnie’s Flowers is a small Mt Macedon florist shop. Arnie sells flowers for bouquets, and she also prepares and delivers flower arrangements. Required (a) Arnie is trying to decide how much to charge for a new type of rose that wholesales for $0.40 per
> Explain why the use of residual income for performance evaluation provides better incentives, in some ways, than ROI, but still causes managers to make some decisions that could be harmful to an organisation in the long run.
> Explain how residual income is calculated, and define required rate of return in your own words.
> Explain how and why the use of ROI for performance evaluation can cause managers to make decisions that could be harmful to an entity in the long run.
> A national company, Fast Print, decided to expand into several developing countries. The company has been managed under a centralised organisational form, but is considering changing to a decentralised form. List the advantages and disadvantages of makin
> Identify the four different types of responsibility centres and explain the general objectives of each.
> Explain why organisational form may vary if specific knowledge versus general knowledge is needed for decision making.
> At a recent management meeting at Skyward Industries, the Transport Division manager was heard to say “this transfer pricing is a waste of time – at the end of the year all the internal transactions are eliminated on consolidation in the financial report
> Why do you consider that taxation authorities require an international transfer price to be set based on an arm’s length transaction?
> 'Transfer pricing is a waste of an entity’s resources; it all gets eliminated on consolidation'. Discuss.
> Search online for two organisations that have used life cycle costing. Briefly comment on what you find in relation to this practice.
> Cost allocation has no impact on the transfer price set. Discuss.
> Describe as many different methods for setting transfer prices as you can.
> Suppose transfer prices are set at market prices and a manager who previously purchased internally begins to purchase externally. Explain what it means to say that the outsourcing decision might have been suboptimal.
> An organisation’s plant in Queensland manufactures a product that is shipped to a branch in Tasmania for sale. Does it make any difference which branch (each is a profit centre) is charged for the cost of transportation? Explain.
> Explain the differences between general and specific knowledge. Give an example of an industry where knowledge is quite general and an example of an industry that requires specific knowledge.
> Explain why a lean organisation would refuse to implement an absorption costing system?
> What is throughput costing? How is it linked to lean accounting?
> Should the lean thinking firm be concerned about the costs of quality activities? Describe by drawing on Deming’s 14 principles of management.
> Describe the four types of quality-related activities.
> Explain how the TOC fits within the lean thinking philosophy.
> Search online for two organisations that have used target costing. Briefly comment on what you find in relation to this practice.
> Outline the five steps in the theory of constraints? In many examples of the TOC in practice, idle capacity is generated. Why? Can this be a good thing?
> What is a just-in-time manufacturing system? Why would organisations choose to adopt it?
> Describe the behavioural and social controls in a lean manufacturing environment. How would they be different to in traditional (non-lean) organisations?
> Briefly comment on how a lean approach will impact on accounting practices?
> Based on your understanding of the TOC explain why conventional standard costed work in process inventories might hide problems, obscure interdependences and make it difficult to identify the real constraint in a system. Why might this conventional meth
> Proponents of TOC suggest that it is problematic to make decisions based entirely on resource consumption (this is, the ABC system) because there is no guarantee that the spending to supply resources will be fully aligned with the new levels of resource
> What is the lean thinking philosophy? Outline the five steps in the lean thinking model.
> In the past, drug makers have been reluctant to invest in cures for diseases in developing countries such as Africa and South America. Most people in these countries cannot afford to pay for treatments, and managers have typically invested in other long-
> Many countries provide motivation for entities to produce environmental accounting reports. For example, 17 countries - United Kingdom, Denmark, Netherlands, Belgium, France and Germany among others - participate in the European Environmental Reporting A
> While she was watching operations at a food processing plant, a consultant noticed a large amount of soup on the floor under a filling machine. An operator washed this soup away each day. When asked about the loss of soup, the production manager replied
> Cougar Toys is a toy wholesaler supplying to a range of different customers. With concerns about sources of profi tability from these different customers, Cougar has embarked on a relatively simple customer analysis exercise. In the fi rst instance, cust
> A dilemma that individuals face is whether to be truthful when it appears that a project is over budget. Being over budget typically means that actual costs exceed budgeted costs or that a planned timeline will not be met. People often delay reporting an
> The Australian government has contracted with alternative energy industry organisations to develop new energy technologies. These contracts are sometimes based on cost. Because these organisations are also developing technologies for non-government entit
> Green and Greener Co., a law firm specialising in environmental litigation, had the following costs last year: The following costs were included in overhead: The entity recently improved its ability to document and trace costs to individual cases. Re
> When activity-based costing was first developed, consultants sometimes promoted it for inappropriate uses. Many consulting services focused on using ABC information for short-term decisions such as pricing and product emphasis. Yet in the early stages of
> To reduce costs and focus on core competencies, many entities are increasingly outsourcing manufacturing activities to vendors in countries having low labour costs such as China, India, Thailand, Indonesia and Mexico. Certain activists claim that this pr
> Brewster House is a not-for-profit shelter for the homeless. Lately funding has decreased, but the demand for overnight shelter has increased. In cold weather, clients are turned away because the shelter is full. The director believes that the current ca
> Refer to comprehensive example 3 and search online for more details about these disasters. Could a performance measurement system be useful in mitigating disasters such as these? Is there any way management accounting could provide useful early warning s
> In October 2015, Statistics New Zealand published the first comprehensive and independent report on the state of the country’s environment. This provided information on five ‘domains’ — air, atmosphere and climate, fresh water, land, and marine. The repo
> Matahari Ltd manufactures and installs renewable energy systems. It has four divisions in Australia: Wind, Thermal Solar, Photo Voltaic (PV) and Installation. The company was listed on the Australian Stock Exchange in 2013. The CEO, William Smith, believ
> In the early 1980s, Bernard Hancock built a small brewery on his 150-acre property in the Macedon Ranges. The brewery, named Mountain Mist Brewery, was designed with ales in mind and Bernard introduced a number of cutting edge and innovative technologies
> Duncans sells doughnuts. Data for a recent week are as follows: The manager estimates that if she were to increase the price of cones from $1.75 to $1.93 each, weekly volume would be cut to 850 cones due to competition from other nearby ice cream shops
> Regal Foods is a multi-divisional company operating in a range of locations around the globe. Its product-based divisions are: Ice Cream and Associated Dairy Products, Confectionery, Nutrition, and Prepared Food. Regal has total sales in excess of $10 bi
> Hailey’s Hair Products has two criteria upon which its reward system is based: (1) rewarding executives for performance and (2) adding to shareholder value. At present, the remuneration package for executives consists of a base salary, annual bonus an
> Fitness Forever International sells personal exercise equipment both within Australia and internationally. One division of Fitness Forever produces a product called Absaway, which is a specialised piece of equipment that focuses on exercising the abdomin
> You are on the board of a computer software company that has three distinct divisions: home networks, small business systems and ERP systems. In a bid to encourage higher performance, it has been proposed that the company would benefit from creating a re
> Whistlestop Adventure has grown from a one-man operation into a large, soon to be listed, adventure clothing and equipment company. For much of its four-year history, Whistlestop has used one company-wide incentive plan that all employees and managers pa
> The Dancing Goat is the name Logan Jones chose for his café. The origins of the name came from a 1600s fable of a young goat herder watching his goats dance after they ate red coffee beans. Logan wanted his customers to have the same pleasant ‘dancing’ e
> Synergy Ltd’s incentive plan is based on a shared bonus pool. Return on investment (ROI) is used as the main performance metric and is calculated as: Operating profit before tax ÷ Assets at gross book value Receipt of the incentive is dependent on the a
> Brian Henshall, Foundation Emeritus Professor of Management at The University of Auckland, suggests a number of potential performance measures that could be used to monitor performance for the country of New Zealand. Henshall recommends that the measures
> Frieda’s Fizz brews specialty soft drinks, including root beer and other flavours. Its vision is 'To proudly produce and sell extraordinarily smooth, rich, and delicious soft drinks to satisfy kids of all ages.' The entity has a reputation for high quali
> A large supermarket has used a balanced scorecard for several years. The store’s vision is to provide customers with low-cost goods and a high-quality shopping experience. The entity’s strategy has been to focus on red
> Hector Gonzales runs the Floral Art Company, which supplies floral arrangements to three large supermarket chains throughout Australia. Management has become concerned about the rising costs associated with the processing and dispatch of orders. An activ
