Reference no: EM132995231

BUACC3714 Advanced Management Accounting

Company - "Coles Supermarket"

Part A: Assignment General Information Assignment Description / Requirements

• This is a group assignment, which must be completed in a group of 2 to 3 members. It is the students' responsibility to form/ join a group using the grouping facility in Moodle and to ensure that the group dynamics work. Please make sure that names and ID numbers of all group members are stated on the cover sheet of your submission.
• The assignment has three questions. The assignment requires development of a model using a spreadsheet and a word document. Both excel spreadsheet and word document must be submitted to the assignment submission link. Only one submission is required for each group.

Part B: Assignment Requirements Question 1. Transfer pricing

Armando Corporation consists of two manufacturing divisions: Crater Division and Dollar Division. The Crater Division manufactures and transfers partially processed components to the Dollar Division at a predetermined transfer price. It could also sell these components to outside buyers at $480 per unit in a perfectly competitive market.

The standard cost per unit in each division is as follows:

	Crater Division	Dollar Division
Direct material	$75	$160
Direct labour	$80	$110
Manufacturing overhead	$550*	$360**

*Manufacturing overhead is 60% variable and 40% fixed.
**Manufacturing overhead is 45% variable and 55% fixed.

The Dollar Division can sell the finished product to outsiders at $1,220 per unit.

Required:

a. What transfer price would you recommend if there was no outside market for the partially processed component and Crater Division had spare capacity?

Does it matter if Crater Division is identified as a cost centre or a profit centre? Explain your answer.

b. Assume that the head office has intervened to dictate the transfer price at standard absorption cost plus a 10% mark up. The Dollar Division has been approached with a special order for 500 components at $1,020 each. From the perspective of Armando Corporation as a whole, should the special order be accepted or rejected? Explain and show the supporting calculations.

c. Advise whether is desirable for the head office to dictate the transfer price? Explain your answer.

Question 2. Financial Performance Measures and Incentive Schemes

Essendon Pty Limited manufactures guidance systems for rockets that are used to launch commercial satellites. The company's Software Business Division reported the following data for the last year:

Sales revenue	$4,000,000
Sales returns	$220,000
Cost of goods sold	$2,400,000
Operating expenses	$1,100,000
Total assets at year-beginning	$3,800,000
Total assets at year-end	$3,980,000
Total current liabilities at year-beginning	$110,000
Total current liabilities at year-end	$122,000

The company's required rate of return is 9.25 percent. Additional information:
• The total assets at year-end include a piece of vacant land valued at $640,000. It is identified as a non-productive asset by the corporate management.
• The divisional manager manages all current liabilities.
• The use of average balances is recommended.

In an attempt to improve its return on investment (ROI), Essendon company is planning to:

• speed-up the collection of all account receivables by $70,000.
• write-off and discard $57,000 of obsolete inventory.
• sponsor a competition for teams of local universities' students to design and build small satellite with budget up to $120,000

Required:

a. Calculate the Software Business Division's return on investment (ROI) and residual income (RI). Discuss the results from your calculations.

Note: Textbook Chapter 13 "Learning objective 13.5-Measuring Profit and Invested capital" will be a good guide to define profit and invested capital in the ROI and RI calculations.

b. Explain should the above plans be adopted in order to improve its ROI for Software Business Division?

c. If profit and sales remain the same in the coming year, but the investment turnover increases to 1.32, calculate the new ROI?

Question 3. Examining and improving customer experience of your (selected) company using Google reviews.

Customers have always been a key concern for organisations. Satisfying customers is critical to achieving increased sales, market shares, and therefore the shareholder value. Customer experience is one of the four major perspectives of the Balanced Scorecard (BSC), which underlies a strategic performance measurement system. Online reviews are an effective and public information for companies to learn from their customer experience. Among other review platforms, Google reviews have become more popular for customer feedback and suggestion on a company's product and/or service. Reviews can be obtained by searching the business name in Google search engine or in Google Maps, which enables users to write and see customer reviews and rates on a scale of 1-5, including the following categories: 5 - "loved it", 4 - "liked it", 3 - "it was okay", 2 - "disliked it", and 1 - "hated it".

Required:

a. In your own words, briefly describe the background, core business(es) of your existing company or a selected company or a local business (manufacturer/service provider), and then discuss how important customer experience is for the performance of your selected company.

b. Using Google reviews on your selected business's product or service to analyse and improve customer experience. As a junior management accountant, you are required to write a professional report that outlines the proposed changes and includes arguments to improve the current customer satisfaction level. Your report must comprise the following tasks:
– Select a company/business (or your existing employer) which has at least 30 Google reviews, and register it in a link for the Selected Company Review in Moodle. Please note that:
• If the selected company has more than 100 reviews, download 100 reviews that randomly appear in the Google Maps.
• If the selected company has several branches/stores/locations, download available reviews for the headquarter only.
– Collect and store both rate and textual reviews in an Excel spreadsheet (see the Bosch- Google Review Example in Moodle for a typically formatted data table).

– Use both rates and textual reviews of customers to perform some analyses with bar chart and textual frequency (see the Bosch-Google Review Example in Moodle for frequency analysis formula and simple text-mining formula in Excel) to understand the relevance of core attributes of products and services with customer satisfaction and dissatisfaction. Please note that:
• The attributes of product and service depend on the nature of your selected business and may include staff, quality, value, innovation, design, warranty service, professionalism, responsiveness, location, etc. Read through each customer review to identify appropriate attribute(s).
• You are encouraged to perform more than the above required analysis tools.
– Outline main causes of customer dissatisfaction. Propose and explain some performance measures that address and continuously improve customer satisfaction. How can the proposed performance measures of customer satisfaction be linked to other perspectives of the company BSC? Make sure that the measures are tailored specifically to your selected business.
– Include relevant information, analysis, charts, and tables in your final report in addition to submitting the data spreadsheet for evidence.

Attachment:- Advanced Management Accounting.rar