Question: List some typical goals and performance measures

> Chrystina and Diana own and manage Warm and Cosy, a roadside cafe located on a main highway on the way to the snowfields in the Victorian Alps. Warm and Cosy services the tourist traffic each year and, in addition, it supplies to the local community smal

> A company owned exclusively by residents in the New South Wales coastal community of Yamba is offered three projects for which the cash flows are as follows in thousands of dollars. The directors work on 12 per cent as their RRR. Assume all cash flows oc

> The directors of Summer and Rayne, a partnership of investors, have three independent investment projects before them for consideration. Each will cost $600 000 in the first instance. The net cash inflows in thousands of dollars each year of the projects

> Tracey has just started a new IT business and is thinking of leasing a new luxury car. She has her sights on a BMW coupe. A lease company offers her a deal which comprises a $35 200 payment on delivery of the vehicle, a $21100 payment at the end of year

> James Denning wants to buy a caravan rental business in the inner Melbourne suburb of Richmond. James spends $1 500 000 on the purchase of the business including caravans and further advertising and signage costs amount to $122 000. He thinks he can net

> Identify the three categories of environmental indicators as outlined by ISO 14031.

> Your friends have decided to organise a number of functions to raise funds for a trek to a Himalayan base camp. The functions planned are: a cinema night; a disco at the local hotel; and a trivia night. As you have some knowledge of accounting, they have

> Watson University offers an MBA program that is widely respected around the world. The tuition fee for the program always covered the costs of the program until a recent recession increased the sensitivity of students to the cost of tuition. The business

> In recent years, slow response times and frequent repairs have plagued Jetson Engineering’s computer system. The cause was a substantial increase in computer-aided design work that pushed the system beyond its intended capacity. Roberta Wilson, the produ

> Blue Hills Hospital is a major hospital that serves 11 small rural communities within a 40-kilometre radius. The hospital offers all the medical and surgical services of a typical small hospital. It has a staff of 12 full-time doctors and 16 part-time vi

> Talk2Me Communications manufactures headsets to make phones hands free. In 2020, the entity produced 30 000 units, of which 24 000 were sold. The following costs were recorded for 2020. Direct material ………………………………. $1 200 000 Direct labour …………………………………

> Willow and Glen is a public accounting entity that offers auditing and tax services to local small entities. The partners are in dispute over who contributes the greater amount to the entity’s profit. The area of contention is the alloc

> Overseas Adventures is a travel agency with 20 offices located throughout Australia. Caleb Thomas, the managing director, recently attended an accounting seminar on cost allocation. During a coffee break, he was overheard making the following comment to

> Zigbee & Associates is a local legal entity employing six solicitors, four paralegals and six administrative staff. The entity has a costing system that assigns costs to clients. There are two departments — legal support and commerc

> Suppose that Willow Daycare provides two different services — full-time childcare for preschoolers and after-school care for older children. The director would like to estimate an annual cost per child in each of the daycare programs, ignoring any facili

> The Top Taste Cheesecake Company supplies cheesecakes to three large supermarket chains throughout Australia. Management have become concerned about the rising costs associated with the processing and dispatch of orders. An activity analysis of the indir

> List the advantages and disadvantages of ROI, RI and EVA.

> The accountants at French Scents decide to increase the price of a scent called Summer by 10 per cent, from $6 per bottle to $6.60. The accountants for French Scents expect the 10 per cent price increase to reduce unit sales by 20 per cent. Current sales

> An improvement to the process in a children’s shirt factory will cost $1.2 million, but will result in net cost savings of $380 000 annually for the next ten years. Required (a) If funds are worth 12 per cent, what is the NPV for the investment? (b) If

> Emerald Ltd is considering a new machine which will reduce net cash inflow by $38 000 in the current year, but increase net cash inflow by $9000, $14 000, $18 000, $22 000, $26 000 and $26 000 in the following six years. Required (a) If Emerald’s cost o

> A small industrial machine costs $136 000 and is expected to earn annual net cash inflows of $58 200, $52 600, $49 500 and $42 100, before it wears out sufficiently to be unreliable and must be sold for an estimated $16 300. Required (a) If funds earn 1

> Higgins Ltd is considering the purchase of one out of two acceptable pieces of equipment. Each design is expected to have individual advantages. Required (a) What additional financial information does the board need in order to make a decision? (b) Woul

> An inner city amateur theatre company, Theatre Empire, is planning on performing a new take on two Shakespearean plays, Hamlet and Macbeth, at an old Brisbane theatre in the inner-city suburb of South Bank. The producers of the theatre plan on alternatin

> The Flametree Company has two independent projects it could invest in. The financial operations manager has completed some analysis and presented the information to the board. The board has asked you for advice. The entity uses a PP criterion of not acce

> What is the difference between the profitability and liquidity of an investment?

> What is the difference between return and capital growth on an investment? Illustrate with an example of an investment in a new warehouse.

> Discuss three environmental concerns that could impact on a business manufacturing custom-made dining tables.

> Describe economic value added (EVA).

> List and describe three factors that must be considered with an investment in an overseas airline.

> If a six-year project has an NPV of $400 000 with a 8 per cent discount rate, will the NPV be higher or lower with a 12 per cent discount rate?

> Explain what is meant by positive and negative NPV.

> What are the NPVs for the two machines in exercise 12.16 if Lavender Plantations has an RRR of 10 per cent? Demonstrate your answer using the discount table in appendix 12A at the end of this chapter. In exercise 12.16 Lavender Plantations Pty Ltd is co

> What are the PPs for each of the machines in the Lavender Plantations exercise 12.16? What are the risks associated with these investment analyses? In exercise 12.16 Lavender Plantations Pty Ltd is contemplating acquiring a new machine to be used for a

> Lavender Plantations Pty Ltd is contemplating acquiring a new machine to be used for a relatively short period until its new factory is built with computerised equipment installed. Two machines are being investigated as follows. Calculate the ARR of eac

> Given the analyses you have completed in exercises 12.13 and 12.14, which of the two contracts would you recommend? Why? In exercise 12.13 Acacia Constructions is offered two contracts on the same day for building a new retirement village and a new libr

> Acacia Constructions (from exercise 12.13) recovers its project investment by straight-line methods so that the $5 million is recovered by the end of each project. Assuming profits are also booked in a straight-line fashion, what is the PP for each contr

> Acacia Constructions is offered two contracts on the same day for building a new retirement village and a new library complex, respectively. The contracts promise total profits of $6 million and $9 million extending over four years and five years, respec

> What impact does taxation have on investment decisions?

> List the formulas for the three basic financial performance indicators to measure divisional performance.

> Compare the calculation of the ARR with the NPV. What advantages does the NPV have compared with the ARR?

> How does inflation impact on the setting of discount rates?

> Define the term ‘discount rate’ and explain how entities set their rates.

> Discuss the factors that would lead to an investment being selected with a shorter PP.

> What factors are taken into consideration in determining an appropriate ARR?

> Define the ARR. What are the two components of the investment that must be known in order to perform this calculation?

> What factors must be taken into consideration in determining the discount rate used in investment decisions?

> What is the difference between risk and return in finance?

> Eloise Tan, a student, recently received a digital SLR camera for her 18th birthday. Over the summer months she has been busy experimenting with the lenses and taking photos of Brisbane attractions such as the Brisbane River, the Gabba, Southbank, Suncor

> Chang De Silva Ltd, an Australian entity, is offered three projects for which the cash flows are as follows in thousands of dollars. The directors work on 14 per cent as their required rate of return (RRR). Assume all cash flows occur at the end of the r

> (a) Discuss the advantages and disadvantages of both the ARR and the PP. (b) Examine the practical issues in making capital investment decisions. (c) Distinguish between the net present value (NPV) of an investment and its future value (FV). Provide an e

> What is the balanced scorecard framework?

> Why measure organisational performance?

> CEO remuneration packages have courted much controversy. These packages are normally divided into a base salary and incentive payments. The incentive payments are usually aligned with the financial performance of the company, and are made up of bonuses a

> Beginning with the June 28, 2007 issue, Rolling Stone magazine became the first mass-marketed magazine to print on carbon-neutral paper. The special June issue of the magazine included a series of features devoted to the climate change issue, including a

> Fit Solutions is a provider of personal exercise equipment. One division of Fit Solutions produces a product called Fab Abs, a specialised piece of equipment that exercises the abdominal region. Most of the components for the Fab Abs are sourced from var

> Enviro Solutions Pty Ltd operates three divisions that supply products and services relating to water. The two older divisions produce and supply water hardware such as pumps, pipes and tanks. The new division is a service division. It supplies consultan

> ‘Information management is an essential component of an environmental and social performance measurement system.’ Discuss whether you agree with this statement.

> For each of the scenarios below, indicate the effect (increase, decrease or no effect) it would have on ROI, RI, profit margin and asset turnover. (a) Equipment is sold for $20 000. It is currently valued on the books at $25 000 and was originally acquir

> Refer to the information supplied in problem 14.41. The management of Pineapple Plantations Pty Ltd have come across a further investment opportunity. They do not want to develop a separate division, so one of the existing divisions would need to take re

> What are the three purposes of preparing divisional performance reports?

> Suggest indicators that could be used to assess an improvement in efficiency in each of the following areas. (a) Reducing the amount of energy used in production of goods and services. (b) Reducing the material intensity of the production of goods and se

> Susan is a divisional manager with the Generator Company. Her performance report shows a positive divisional margin, but a loss for the year. Susan has complained to the CEO about the common costs that were charged to her division and she has questioned

> Global Enterprises is a division of an international conglomerate. The following information relates to its performance. Target profit margin …………………………………………….. 12% Target asset turnover ………………………………….. 1.34 times Charge for capital …………………………………………………

> Pineapple Plantations Pty Ltd is located on the Sunshine Coast in Queensland and manufactures sustainable, pineapple-based products for three different markets. The business has grown from a backyard hobby for the owner, Dave Geitz, to quite a large manu

> You have been assigned a consulting job with a medium-sized agricultural company that specializes in supplying seedlings to nurseries. The entity is divided into divisions based on geographical location. Currently the management of each division are eval

> You work for a fruit and vegetable manufacturer that has three divisions: juice, canned and fresh. Rewarding performance has been on the agenda for the last few management meetings and it has been proposed that the company would benefit from creating an

> The statement of financial position and the statement of profit or loss for Lavender Plantations Pty Ltd are presented below. LAVENDER PLANTATIONS PTY LTD Statement of financial position as at 31 December 2021 Current assets Cash on hand â€&br

> The four perspectives of the balanced scorecard are internal operations, innovation and improvement, financial and customer. A list of goals and measures is presented below. Match each goal with one of the four perspectives, then match each measure with

> Information for the three divisions of the Hampton Corporation follows. Required Assuming that the tax rate is 30 per cent, calculate the EVA for each division.

> Critique the two approaches to incorporating environmental and social performance in the balanced scorecard.

> What are the terms used interchangeably for a business unit? What is the responsibility of the manager of the business unit?

> Refer to the company you selected in exercise 14.33 and investigate the environmental and social information it provides. This may be in its annual report, in its CSR report or on its website. What are the company’s environmental and social concerns? How

> Select a company in your region and search its website for its mission statement. Investigate the information on the website to discover what factors drive the company’s success and any related information about its overall performance. Further review it

> The data below have missing values. Determine the missing values indicated by the letters (a) to (i).

> A family business has built a chain of coffee shops. The basic underlying principles of the chain, which has helped it to grow, are cost effectiveness, quality of service and product innovation. Determine two performance measures for each of these succes

> One common objective is quality. Listed below are businesses that regard quality as a strategic objective. For each business, list two performance measures that could help capture the strategic objective of quality. (a) A bus company (b) A day care centr

> For each of the five perspectives of the balanced scorecard, list two possible objectives, a measure and a driver. Arrange your answer as follows.

> A segment of Canine Holdings reports sales of $280 000 and a profit of $60 000. The data below also relate to this segment of Canine Holdings. Total assets ………………….………………………… $650 000 Accumulated depreciation ……………….………. $150 000 Net assets book value ……

> A division has profit of $20 250, sales of $247 500 and an investment base of $112 500. If the required charge for capital is 20 per cent, determine the: (a) Profit margin (b) Asset turnover (c) Return on investment (d) Relationship between the three mea

> A division reports divisional margin/profit of $180 000, residual income of $36 000 and investment for the period of $1 440 000. What is the minimum return being required by management?

> For each of the following stakeholder groups, give an example of an eco-efficiency indicator. (a) Shareholders (b) Government (c) Top management (d) Site management (e) Project management (f) Divisional management (g) Product management

> Discuss the four types of responsibility centres.

> The following data relate to the Chinese Division of Hangzhou Incorporated. Sales …………………………………………………… $360 000 Direct variable costs ……………………………... $120 000 Direct fixed costs …………………………………… $80 000 Average invested capital ………………………. $400 000 Required

> You have been presented with a proposal to invest $200 000 into a company (using $100 000 of borrowed funds). In the first year of operations, the net operating profit after tax is expected to be approximately $46 000 in total. No shift in debt or equity

> Feather Pillows Ltd has three divisions: Hard, Medium and Soft. Corporate expenses of $72 000 are allocated to divisions based on sales. Data for the current quarter are as follows. Required Prepare a division performance report using a format similar t

> A division of a global multinational company reports sales of $1 075 000, variable costs of $500 000, traceable fixed costs of $387 500, allocated regional common costs of $75 000 and allocated corporate costs of $37 500. Prepare a divisional performance

> Discuss the basic principles in choosing non-financial performance indicators.

> Outline the advantages and disadvantages in using non-financial performance indicators.

> JB Hi-Fi Ltd’s focus is on creating shareholder value. In its 2018 preliminary final report, the company states that the cornerstone of its success is its ability to consistently offer everyday low prices through economies of scale, hig

> Which of the following entities do you think would have the greatest proportion of working capital held as accounts receivable? Why? (a) Local butcher (b) Hardware store (c) Stallholder at a weekend market selling handicrafts

> Which of the following entities do you think would have the greatest proportion of working capital held as cash? Why? (a) Local butcher (b) Hardware store (c) Stallholder at a weekend market selling handicrafts

> Differentiate between working capital and net working capital. Provide examples of both current asset and current liability accounts that would be taken into consideration to determine net working capital for a bakery.

> Pozible is a crowdfunding site for creative, community and passion projects. Go to the website at www.pozible.com. Required (a) What are the benefits of joining a crowdfunding community like Pozible? (b) How much money has been raised in pledges? (c) Ch

> Plush Cruiser Ltd builds luxury houseboats. The entity needs funds for expansion. It could take out a fixed-rate or variable-rate business loan over, say, 25 years. An alternative is issuing new shares to investors in the form of a rights issue. Explain

> Base Company buys in sand, gravel, cement powder and steel reinforcement. These raw materials cost about $15 million most years. Base Company has recently enjoyed a surge in sales after it liberalised its credit policies. The result of the change in cred

> Katelyn Ltd arranges a 91-day commercial bill: 91 days because the 90th day was a Sunday. The face value is $200 000 and Katelyn receives $197 010. What is the yield?

> Outline the reason for implementing a team-based reward structure and the disadvantages in doing so.

> JB Hi-Fi Ltd’s 2018 statement of financial position provides the following data. In 2018, JB Hi Fi Ltd earned record revenue (increased by 35.3 per cent) and the EPS (earnings per share) increased by 31.5 per cent. JB Hi-Fi Ltdâ&

> Rosedale Ltd is a listed company with 30 million shares issued. It wants to raise more capital by means of a rights issue. The current market price is $6 and the subscription price is $5. The rights will be issued on the basis of 1:5. How much will Rosed

> Advantage Tennis Coaching (ATC) in Brisbane offers coaching for junior, elite and mature tennis players. Nicholas Cash, the sole proprietor, has identified that the business cycle will be seasonal, with most activities in the spring and summer months. As