Question: Many countries provide motivation for entities to
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 Awards program. In Japan, the Global Sustainability Forum and the National Association for the Promotion of Environmental Conservation have given Environmental Report Awards since 1997. In addition, Toyo Keizai and the Green Reporting Forum have given a Green Reporting Award since 1998. These awards encourage organisations to take responsibility for environmental conditions that affect the wellbeing of society as a whole. Visy Industries in Australia (refer to self-study problem 1) has also been recognised by similar Australian sustainability awards programs.
You are required to conduct research about corporate environmental disclosures. Choose one company located in Japan and a competitor located in Australia. Go to each company’s website and search for information about its environmental policies and procedures.
Also conduct research to find governmental guidelines for environmental accounting. Go to the website of the Environmental Protection Authority in your state or territory (for example, www.epa.vic.gov.au; www.epa.sa.gov.au) and search for information about environmental or sustainability accounting. Now perform a similar search on the website of Japan’s Ministry of the Environment (www.env.go.jp/en/). Skim through the information that you find on each website.
In its Environmental Accounting Guidelines, Japan’s Ministry of the Environment identified the following environmental conservation cost categories:
Required
(a) Is environmental accounting an ethical issue? Why?
(b) Which company provides the easiest-to-find and most understandable information about environmental policies and procedures? Explain.
(c) Discuss a company’s responsibilities for reporting environmental information to various stakeholders, including shareholders, managers, employees, other companies, government regulators, product customers and the general public.
(d) If one company provides better reporting than a competitor of its environmental behaviour, policies, and procedures, does that mean the company is more environmentally responsible than its competitor? Why?
(e) What factors are likely to affect an entity’s willingness to publish an environmental accounting report?
(f) Discuss possible reasons why the governments of different countries place different degrees of emphasis on environmental accounting reports.
(g) Discuss ways in which ABC systems could be used to capture information for environmental accounting reports.
(h) Discuss ways in which the process of preparing and publishing an environmental accounting report is likely to help a company reduce its environmental costs.
(i) Should all governments require companies to publish environmental accounting reports? What values did you use to arrive at your conclusion?
Transcribed Image Text:
> 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.
> Explain how return on investment (ROI) is calculated and how it can be decomposed into two financial measures.
> 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-
> 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
> Mark Hopper owns Dane Champions, a dog kennel that raises champion Great Danes for showing and breeding. His vision is to be the best-known breeder of Great Danes globally. His strategy is to breed and sell dogs from outstanding lineage from the standpoi
> 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
> Quantum Computers produces and sells laptop computers. The entity is currently deciding whether to continue concentrating on the laptop computer market or to expand by entering the highly competitive computer desktop workstation market. Most of the manag
> Squeezers Juice and Tea Company manufactures organic juices and chai teas that are sold at whole foods stores. Several of its products have been featured in movies because the company’s products are popular with celebrities. The owners and employees valu
> Refer to the information in problem 19.25. Dyggur Equipment wants to offer weekend servicing of heavy equipment. None of its competitors offer this service, and management believes this service will bring in new business and help retain current customers
> Dyggur Equipment manufactures and sells heavy equipment used in construction and mining. Customers are contractors who want reliable equipment at a low cost. The entity’s strategy is to provide reliable products at a price lower than its competitors. Man
> Curry House owns a number of stores that sell fast food. As part of its compensation packages, Curry House provides employees with bonuses based on customer satisfaction surveys. Recent analysis of the data shows a positive correlation between survey rat
> Sunshop Books is a multi-divisional book company that listed on the stock exchange about three years ago. Like many in the industry, Sunshop started out in the 1980s as a single-site suburban bookstore. Company CEO Lewis Negus has been in the role for th
> The ATCO Company purchased the Dexter Company three years ago. Prior to the acquisition, Dexter manufactured and sold plastic products to a wide variety of customers. Since becoming a division of ATCO, Dexter only manufactures plastic components for prod
> Strong Welding Equipment Company produces and sells welding equipment nationally and internationally. Following is information about two divisions in US dollars. Required (a) Calculate each division’s ROI. (b) Calculate each division
> Explain why not-for-profit entities do not always set prices so that their operating costs are recovered.
> Identify three products for which target costing and kaizen costing could be used. Identify three products for which target costing and kaizen costing would be inappropriate.
> Soft Mats produces exercise mats for use in fitness centres. Production capacity is 40 000 mats per year. Due to a chain of fitness centres closing, Soft Mats now has spare capacity of 4000 mats per year. An international hotel chain, Mini Break, has rec
> The management of Kayla Industries have been aggressive in trying to build market share. The price was set at $5 per unit, well below the existing market price. Variable costs were $4.50 per unit and annual fixed costs in the first year were $600 000. R
> Tartan Company is a single-product entity and provides the summary data shown below relating to its product for 2020. Selling price per unit……………………………………………………………….. $ 50 Variable manufacturing costs …………………………………………………….. 24 Annual fixed manufacturing
> Magic Dusters has also identified that another ingredient, Delta D (500 litres required), will also be used in the special order for Stay Clean Ltd (see problem 10.47). Unlike Alpha A, Delta D is currently used in normal production for Magic Dusters. The
> Magic Dusters is considering a special order from Stay Clean Ltd for a special cleaning product for windows. One ingredient required for the product is Alpha A, which Magic Dusters has in its inventory. Magic Dusters’ current products do not use Alpha A;
> Lavender Plantations Pty Ltd manufactures three lavender-based products, candles, soaps and detergents. On average 75 000 candles, 50 000 soaps and 125 000 detergents are sold. Next year, the company has a restricted advertising budget of $40 000, which
> Coffee House sells specialist coffee drinks from a rented cart on the beachside on the Sunshine Coast. Provided below is a summarised version of its statement of profit or loss for July 2019. The costs of beverages and napkins are classified as variable
> Waffle House sells ice-cream cones in a variety of flavours. Financial data for a recent week are shown below. Revenue (2000 cones @ $2.00) …………………. $4 000 Cost of ingredients ………………………………………. 1 200 Rent ……………………………………………………………… 700 Store attendant ……………
> Lavender Plantations Pty Ltd manufactures and sells candles, soaps and detergents, and distributes them to stores located in Australia and New Zealand. The normal selling price per carton of candles is $25; the variable cost of a carton of candles is $15
> Briefly outline some of the key qualitative risk considerations with respect to outsourcing decisions.
> Explain the meaning of the term ‘fixed cost’ and give five examples of fixed costs.
> ‘If an entity has the objective of profit maximisation, break-even analysis is not necessary.’ Discuss this assertion.
> The following information has been extracted from the financial statements of Vivid, a social media company. Revenue is generated through advertising on the social media platform, where the number of ‘clicks’ is the dr
> Advantage Tennis Coaching (ATC) has been engaged to provide tennis coaching services to students at a local private girls’ college. ATC has put forward a proposal to the University of Queensland’s School of Human Movem
> Mansfield Ltd has recently expanded its production facility to satisfy a new customer order that will start in six months. As a consequence, it has the opportunity to make use of the spare capacity for the next six months. Financial information on the cu
