Case study on aluminum cylinders

Alum Tubes Ltd (ATL) manufactures aluminium cylinders that are used in a variety of products, such as scuba diving equipment, oxy welding equipment, and fire extinguishers. The company’s executives have been moving towards sustainable practices. A rewards system is being trailed to encourage cost savings, to motivate efficiency, and to support ATL its current progress through the Efficiency phase of sustainability.
The board (including the CEO) has decided to embrace sustainable practices and once ATL has achieved the successful implementation of the Efficiency sustainability phase, the goal is for it to move from this Efficiency phase to the Strategic Proactive phase of sustainability. To provide senior management’s support for this change in focus, they have changed the mission statement to the following:
To provide an intergeneration commitment to its stakeholders through the adoption of Sustainable strategies within its value chain
Information about Trial process
There are four teams in the plant, and each team has been given three quarterly cost-saving performance targets for (1) manufacturing cycle time, (2) material usage and (3) production output. Two of the work teams are organised sequentially, that is, the output of Team Scuba Assembly becomes the input for Team Scuba Finishing. There are two other finishing teams; Team Oxy Finishing and Team Fire Finishing both providing the finishing manufacturing process for their product independently of the other teams. However, Team Scuba Finishing, Team Oxy Finishing, and Team Fire Finishing do share some equipment.
The CEO made the decision not to include Team Fire Finishing in the trial cost efficiency performance-related pay scheme. The reason for this omission of Team Fire Finishing was due to it just introducing some new production technology and therefore management believes the team is facing a steep learning curve at present with this new technology and the lack of knowledge and experience would make it difficult for Team Fire Finishing to achieve any cost efficiency performance targets at this stage.
The trial cost-saving rewards system
In late 2016, ATL introduced a cost-saving performance-related pay system for January to the December 2017 year as a trial in their smallest manufacturing plant in Salisbury (a suburb of Brisbane). Each team was considered to be an eco-efficient cost centre. Employees will receive bonuses, based on their team meeting or exceeding the team’s cost savings performance targets.
A bonus pool of $30,000 has been set aside each quarter. This bonus is to be shared only among each of the participating teams that achieve their targets for the quarter and shared equally among the members of these successful teams. Teams not meeting their quarterly targets will not share any of the $30,000 in the bonus for that quarter.
The employees are excited by the new scheme. They can only gain by such a system.
Assessment of trial cost-saving rewards system
In early 2017, you have just been employed as the management accounting at ATL.
You were recently present during the following discussion about the success of the new evaluations/rewards process between Samantha Smart, a member of Team Scuba Finishing, Milton Friedman the production manager, who is responsible for all teams and production processes.

Samantha: We are now 4 weeks into the second quarter since starting the trial cost efficiency reward system that was introduced in 2017, and it is just not working. Team Scuba Assembly is sabotaging our performance. How can we meet our cost-saving performance targets when Team Scuba Assembly gives us faulty product to process? They have skimped on material, so it takes us much longer to complete our part of the manufacturing process.
This is made worse when the purchasing department orders our material far too late, so we have to wait around for deliveries.
Also, someone has been leaving the calibrator machine in such a mess, so we waste valuable time resetting the gauges before we can use it. I am sure it is a member of Team Oxy Finishing. The system is not fair. The other two teams shared in the bonus in the first quarter because they reach their targets and we did not, and it is not our fault! This quarter, I can see the same happening and the other two teams only sharing the second quarter’s bonus!
Milton: I appreciate your comments, I have just had to deal with a delegation from Team Fire Finishing who is upset because they cannot share in the cost-saving performance bonuses.
After the meeting, you discover that only the three production teams (Team Scuba Assembly, Team Scuba Finishing, Team Oxy Finishing) are evaluated on their cost-saving performance-related pay system. The purchasing department is still evaluated on a price variance analysis. The performance evaluation and reward systems are the same for other support departments.
At this initial testing stage, only three of the four work teams will participate in the scheme. If this system works well, it will be introduced into all of the company’s plants in Australia and Overseas.
After discussion with different teams and reviewing the trial cost efficiency reward system used for this cost-saving evaluation of the efficiency strategy of ATL, you believed the current rewards system would encourage teams to work in silos and not consider the overall (holistic) plan of ATL.
Additional Information
You decide that ATL must get this right for a number of reasons. You therefore plan:
? to demonstrate the disadvantages of the trial rewards evaluation process and the advantages of using activity-based management (ABM) techniques as part of the evaluation process.
? to use this conversation above between Samantha and Milton to highlight the disadvantages of the trial rewards evaluation process and advantages from using ABM and relevant associated measures.
? to introduce to senior staff the need to adopt a Life-Cycle Assessment of the products to reflect the proposed change of focus to a Strategic Proactive phase of sustainability.
? to implement this rewards system into the Malaysian subsidiary for the 1 January 2018 to 31 December 2018 operating year. You will need ATL to consider societal values because the rewards system may need to be modified for different stakeholders (employees or suppliers) in different countries.

Requirements:
Develop a sustainability business case for the board of directors (including the CEO) who are not accountants. Your business case must provide a suggestion for ATL to implement successfully the Efficiency phase of sustainability and to move to the Strategic Proactive phase of sustainability.
Incorporate the following requirements into your plan [separate your plan into four sections with an appropriate name (e.g., “Changes to the trial system” the heading for requirements 1 and 2); “Proposed cost-saving performance measures” for requirement 3, “Strategy, Vision and Organisational Culture” for requirement 4, and “Modification to accommodate Societal Values” for requirement 5]:
1. What features of the trial cost saving is performance-related pay system causing problems? Support your answer with an explanation.

2. Are the ‘team-based” cost-saving performance measures appropriate for assessing performance and awarding bonuses? Explain your answer.

3. Discuss other (more holistic) cost saving performance measures throughout ALT and other forms of incentive schemes and the performance target measures that may be more suitable for the company.

4. In your sustainability business plan about the Efficiency phase of sustainability and to move to the Strategic Proactive phase of sustainability to the board include
a) the development of new strategies for all four types of strategies (enterprise strategy level, corporate strategy level, business strategy level, and functional strategy level) and one example of appropriate measures you would suggest for each strategy level within the newly redesigned performance measurement system.

b) the communicate the drivers and benefits of environmental sustainability throughout the organisation to create a shared vision as well as to embed the sustainability culture into ATL.

5. The need to accommodate for Societal Values, particularly for the implementation of the proposed rewards system into ATL’s Malaysian subsidiary for the 1 January 2018 to 31 December 2018. The following should be included in your business plan:

a) Describe the modification/s that are needed to the new performance evaluation and reward scheme as well as the employees’ involvement (direct and through communication) in the Strategy, Vision and Organisational Culture.

b) Explain why these modifications will be needed for the successful implementation of the Efficiency phase of sustainability and to move to the Strategic Proactive phase of sustainability to enable it to be successful in other countries. Specifically, how will differences in some societal values for Australia and Malaysia impact upon your business case (in 4 above).

c) How (i.e., what changes) do you suggest in the development of a sustainability culture for employees and value chain stakeholders in Malaysia compared to Australia to overcome these differences.

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Case study on Family Maintenance Enforcement

Your manufacturing organization has a semi-monthly payroll, paying on the 15^th and last day of each month. Your organization pays employees in British Columbia.
On the June 15^th pay date of the current year the following deductions occurred. Using the Current Year calendar in the course material, explain when each payment must be received by the issuer or administrator:

• Family Maintenance Enforcement
• Union Dues (collective agreement states payment due three business days after pay date)
• Registered Defined Contribution Pension Plan (employer matches employee contributions)
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Case study on statement of profit or loss

George and Val set up a company together to trade as decorators. George owns a three-yearold van, which he puts into the company instead of cash for share capital. Val puts in €2000 in cash and they agree the van is worth €2000. They have no premises as such. Materials are stored in their home garage or left in the van. In the first month of business the following transactions take place:
(a) They get an order worth €600 to decorate a small flat. The customer pays €300 in advance.(b) They buy materials worth €125 on credit from Cork Building Merchants which are used in this job.(c) When the job is finished the customer pays a further €100 but says they will have to wait another month for the balance of €200.(d) They get an order to decorate a large house for €120O plus materials. They buy €27O of materials on credit from the same builders’ merchants.(e) At the end of the month they have done 80 per cent of the work on the house painting order and they pay themselves €5OO each as salary. Required: Prepare a spreadsheet to show the transactions and then draw up a statement of profit or loss the month and a statement of financial position as at the end of the month.
Prepare a spreadsheet to show the transactions and then draw up a statement of profit or loss the month and a statement of financial position as at the end of the month.

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Case study on Master in Business Administration

University of the Immaculate Conception Master in Business Administration Program BA 205 – Management Accounting and Control Mid-Term Examination 1. Using the following data, find the missing items. Total assets, beginning of year . . . . . . . . . . . . . . . . . . . . . . P1,050 Total assets, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . P1,200 Total liabilities, beginning of year . . . . . . . . . . . . . . . . . . . . . P 630 Total owners’ equity, end of year . . . . . . . . . . . . . . . . . . . . . P 480 Net income for year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P 164 Additional capital invested during year . . . . . . . . . . . . . . . . . P 50 Contributed capital, beginning of the year . . . . . . . . . . . . . . P 200 a. Total owners’ equity at the beginning of the year. b. Total liabilities at the end of the year. c. Retained earnings at the beginning of the year. d. End-of-the-year retained earnings. e. Dividends declared during the year. 2. Seneca Company has two products with the following information: Engine Race Rebuilds Cars Total Annual revenue P1,200,000 P1,400,000 P2,600,000 Material costs 400,000 P 600,000 P1,000,000 Labor costs 250,000 150,000 P 400,000 Number of receipts 8,000 2,000 Number of batches 425 75 The business also has overhead costs as follows: Cost pool Cost in pool Cost driver__________ Receiving P300,000 number of receipts Material moves 275,000 number of batches Administrative 225,000 labor cost Total P800,000 a. Allocate the overhead costs to the segments based on material costs. b. Determine the income of each segment. c. Allocate the overhead costs to the segments using ABC. d. Determine the income of each segment under ABC. 3. Parsons Company incurred P475,000 in overhead costs making 40,000 units in August. It made 30,000 units and incurred P447,000 in overhead costs in September. a. Compute the variable component of overhead cost. b. Find the fixed factor of overhead cost. 4. Eleva Company has sales of P350,000, variable costs of P200,000, and fixed costs of P125,000. Eleva has an effective tax rate of 40%. a. Compute the break-even point. b. Compute Eleva’s sales needed to earn a P75,000 after-tax profit. c. Compute the sales Eleva would need to earn a 15% after-tax return on sales. 5. Superior Company manufactures a single product. It keeps its inventory of finished goods at twice the coming month’s budgeted sales and inventory of raw materials at 150% of the coming month’s budgeted production. Each unit of product requires five pounds of materials, which cost P3 per pound. The sales budget is, in units: May, 10,000; June, 12,400; July, 12,600; August, 13,200. a. Compute budgeted production for June. b. Compute budgeted production for July. c. Compute budgeted material purchases for June in pounds and in pesos. 6. Hicks Company has the following sales projections for 20X4: January P160,000 March 175,000 May 195,000 February 168,000 April 180,000 June 190,000 Hicks collects 30% of its sales in the month of sale, 45% in the month following the sale, and 24% in the second month following the sale. Records show that sales were P160,000 in November and P168,000 in December 20X3. a. Prepare a schedule of cash receipts and determine the total cash receipts for the first three months of 20X4. b. What would be the accounts receivable balance (net of bad debts) on March 31, 20X4? 7. The data below relate to a product of Salois Company. Standard costs: Materials, 2 pounds at P6 per pound P12 per unit Labor, 3 hours at P15 per hour P45 per unit Variable overhead at P8 per labor hour P24 per unit Budgeted fixed production costs P140,000 per year Budgeted production for the year 4,000 units Actual results were: Production 3,700 units Material purchases, 8,000 pounds P 46,400 Labor, 10,360 hours P160,580 Variable overhead incurred P 84,700 Fixed overhead incurred P137,500 Material used in production 7,300 pounds For each variance, determine the amount and indicate whether each is favorable or unfavorable: a. Material price variance. b. Material use variance. c. Direct labor rate variance. d. Direct labor efficiency variance. e. Variable overhead budget variance. f. Variable overhead efficiency variance. g. Fixed overhead budget variance.

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Case study on financial statements

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 Case study on profit in business

Revenues

First Month of Operations: 10,000 units sold at $10 per unit.

Second Month of Operations: 20,000 units sold. The first 10,000 at $10 per unit, and the second 10,000 at $8 per unit.

ThirdMonth of Operations: 40,000units sold at $6 per unit.

Cash Flow characteristics: Goods are shipped at the end of the month are paid to the Company atthe end of the following month by the customer.

Cost of Goods Soldis made up of three components:

?Direct Materials – -$2 per unit

?Direct Labor—$3per unit, renegotiated to $2 in the third month with new pricing

?Fixed Machinery andMfg.machinery and space rental costs—$10,000 per month, $15,000 with new labor price in month 3

?Cash flow characteristics: Mfg. is outsourced to a different organization and all costs are paidthe next month followingthe month they are produced – i.e. paid thenext monthafter the monththey are received.

OperatingExpenses: the remainder of the company’s expenses includes the following:

Salaries for office staff and the Owner are fixedat $120,000per year or $10,000 per month. $50,000 of the total goes to the owner

Advertising is a fixed rate contract with an internet services firm which provides the company with secure servers, web analytics and Search Engine Optimization services for $3000 per month.

Office Rental is a fixed yearly rental contract for the administrative offices which costs the company $4500 per month.

Insurance is a fixed rate contract for insurance on the plant property and equipment is $1000 per month.

Cash flow characteristics: All operating expenses are paid during the month that they are incurred.

Ownership and Taxation: The Company is owned by a single individual who is paid a salary of $50,000 per year. The following tax rates are in affect for the purposes of calculating tax on taxable income:

Corporate Tax Rate: 30%

Individual Tax Rate: 40%

Dividend Tax Rate: 15%

Appendix Continued:

Calculate for the Third Month:

?Current Assets $369,500

?Current Liabilities $175,000

?Current Ratio2.11

?Owners’ Equity$194,500

Cost of Goods Sold $175,000

Gross Profit Margin65,000

Calculate Breakeven the first month at a sales price of $10 per unit: answer is 5700 units 28,500/5 = 5700

Breakeven

Income Statement

Revenues?? 57,000

?Direct Materials 11,400

?Direct Labor 17,100

?Machinery Rent 10,000

Cost of Goods Sold 38,500

? Salary?? 10,000

? Advertising?? 3000

? Office Rental? 4500

? Insurance?? 1000

?Operating Expenses? 18,500

?Net Pre-tax Profit? 0

Complete the ratios indicated on the worksheet and calculate for the first month – how much profit wouldGlak Love make if it sold 5710 units during its first month of operations.

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 Case study on financial position

Listed below in random order are the items to be included in the balance sheet of Deep River Lodge at December 31, 2011: Equipment. . . . . . . . . . . . . . . . . $ 9,000 Buildings . . . . . . . . . . . . . . . . $430,000 Land . . . . . . . . . . . . . . . . . . . . . 140,000 Capital Stock. . . . . . . . . . . . . ? Accounts Payable. . . . . . . . . . . 27,400 Cash . . . . . . . . . . . . . . . . . . . 9,100 Accounts Receivable . . . . . . . . 3,300 Furnishings . . . . . . . . . . . . . . 22,600 Salaries Payable . . . . . . . . . . . 13,200 Notes Payable. . . . . . . . . . . . 217,000 Interest Payable . . . . . . . . . . . . 4,000 Retained Earnings . . . . . . . . 202,400 Instructions a. Prepare a balance sheet at December 31, 2011. Include a proper heading and organize your balance sheet similar to the illustrations shown in Chapter 2. (After “Buildings,” you may list the remaining assets in any order.) You will need to compute the amount to be shown for Capital Stock. b. Assume that no payment is due on the notes payable until 2013. Does this balance sheet indicate that the company is in a strong financial position as of December 31, 2011? Explain briefly.

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Work Breakdown Structure

One approach to managing IT Portfolios and projects is to deploy and IT Governance Strategy. IT Governance generally has become very significant in recent years. Since the majority of business data lies within business applications, IT plays a major role in improving corporate governance practices. Management needs to be aware of IT’s strategy and implementations to support potential opportunities and help prevent IT-related risks. There is also a growing focus on IT costs and a realization that management commitment is necessary within IT activities.

Assignment

Develop a work breakdown structure Gantt chart using a project application for an IT Governance deployment project.

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