ACCA/CAT - P5 - 查题吧

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budgeting approaches.<br>However, academic studies (e.g. Beyond Budgeting – Hope & Fraser) argue that the annual budget model may be<br>seen as (i) having a number of inherent weaknesses and (ii) acting as a barrier to the effective implementation of<br>alternative models for use in the accomplishment of strategic change.<br>Required:<br>(a) Identify and comment on FIVE inherent weaknesses of the annual budget model irrespective of the budgeting<br>approach that is applied. (8 marks)

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Section B – TWO questions ONLY to be attempted<br>Forion Electronics (Forion) manufactures a range of electronic goods. Its business has grown rapidly over the last ten years and is now complex and international. Forion manufactures over 100 different products, selling into 25 different countries. There is a supplier base of over 200 companies from which Forion sources. As the business has become more complex, the board has found it difficult to pull together all the information that they require in order to make decisions.<br>The current information systems are developed in-house and are based in the functional departments (such as purchasing, manufacturing, warehousing and delivery, selling and marketing). The organisation uses the financial system as a means of bringing together information for an overview of corporate performance.<br>There have been a number of examples of problems encountered with information in Forion:<br>– there are inefficiencies arising from ordering the wrong amount of subcomponents;<br>– there are often stock-outs or obsolescence of unsold goods in the warehouses, although the marketing department prepares good sales forecasts; and<br>– sometimes, there are insufficient delivery vehicles available to meet customer deadlines.<br>The board of Forion believes the problems arise from poor information sharing within the company. They are considering the purchase of an enterprise resource planning system (ERPS) to be the single information system for the whole organisation.<br>Also, Forion is planning to launch a smartphone. However, in order to make it competitive they need to have high-visibility, durable screens. As the cost of screen development is considerable, it has been decided to form. a strategic alliance with a well-known screen manufacturer to provide this key component for the new smartphone. Bon Accord Screens (BAS) has been chosen as the strategic ally, as they have a strong reputation for their quality of manufacturing and new product development. BAS has been trying to break into the smartphone market for several years.<br>The alliance agreement has stipulated three critical areas of performance for BAS’ supply to Forion:<br>1. quality of manufacturing, measured by fault rates of screens supplied being within agreed tolerances (so that they fit Forion’s phone-bodies);<br>2. time of delivery, measured by the number of times a shipment is more than one day overdue; and<br>3. the ability to provide technical upgrades to the screens as the market demands.<br>The service level agreement (SLA) will be based on these three points and there will be financial penalties built into the agreement if BAS fails to meet these.<br>Required:<br>(a) Discuss the integration of information systems in an ERPS and how the ERPS may impact on performance management issues at Forion. (10 marks)<br>(b) Evaluate, from Forion’s viewpoint, the usefulness of the three critical areas in the alliance agreement for measuring the performance of BAS. (8 marks)<br>(c) Evaluate the relative reliability of financial and non-financial data from internal and external sources in the context of the alliance between Forion and BAS. (7 marks)

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Culam Mining (Culam) is a mineral ore mining business in the country of Teeland. It owns and operates four mines. A mine takes on average two years to develop before it can produce ore and the revenue from the mine is split (25:75) between selling the ore under fixed price contracts over five years and selling on the spot market. The bulk of the business’s production is exported. A mine has an average working life of about 20 years before all the profitable ore is extracted. It then takes a year to decommission the site and return the land to a useable form. for agriculture or other developments.<br>Recently, one of Culam’s foreign competitors surprised the market by becoming insolvent as a result of paying too much to acquire a competitor when the selling price of their minerals dipped as the world economy went into recession. As a result, the chief executive officer (CEO) wanted to know if this was likely to happen to Culam. She had read about the Altman Z-score as a way of predicting corporate failure and had a business analyst prepare a report calculating the Z-score for Culam. The report is summarised below:<br>Analyst’s Report (extract)<br>The Altman Z-score model is:<br>Z = 1·2X1 + 1·4X2 + 3·3X3 + 0·6X4 + X5<br>Another quantitative model (Q-score model) has been produced by academics working at Teeland’s main university based on recent data from listed companies on the small Teeland stock exchange. It is:<br>Q = 1·4X1 + 3·3X3 + 0·5X4 + 1·1X5 + 1·7X6<br>Where for both models:<br>X1 is working capital/total assets;<br>X2 is retained earnings reserve/total assets;<br>X3 is profit before interest and tax/total assets;<br>X4 is market value of equity/total long-term debt (MVe/total long-term debt);<br>X5 is revenue/total assets; and<br>X6 is current assets/current liabilities.<br>Using the most recent figures from Culam’s financial statements (year ending September 2014), Culam’s Altman Z-score is 3·5 and its score from the other model (Q) is 3·1.<br>For both models, a score of more than 3 (for Z or Q) is considered safe and at below 1·8, the company is at risk of failure in the next two years.<br>The analyst had done what was asked and calculated the score but had not explained what it meant or what action should be taken as a result. Therefore, the CEO has turned to you to help her to make sense of this work and for advice about how to use the information and how Culam should proceed into the future.<br>Required:<br>(a) Evaluate both the result of the analyst’s calculations and the appropriateness of these two models for Culam. (10 marks)<br>(b) Explain the potential effects of a mine’s lifecycle on Culam’s Z-score and the company’s probability of failure. Note: You should ignore its effect on the Q-score. (7 marks)<br>(c) Give four detailed recommendations to reduce the probability of failure of Culam, providing suitable justifications for your advice. (8 marks)

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(a) The senior management of Universal University (UU) intend to develop both quantitative and qualitative<br>measures of performance in relation to lecturing staff.<br>As part of UU’s mission to provide ‘quality education’ to its students, lecturers are encouraged to apply their skill and judgement in the creation, delivery and assessment aspects of the learning process.<br>Academic staff are organised on a departmental basis. Each department is expected to achieve and improve on targets in the achievement of its role. As part of their development both personally and as departmental members, staff are encouraged to participate fully in research publication, new course design and innovation in teaching and learning methods.<br>Academic staff have differing views on whether action on their part in pursuing aspects of such goals is<br>compatible with their personal goals.<br>Required:<br>Using the above scenario, discuss in relation to the lecturing staff within (UU) each of the following:<br>(i) The application of Agency Theory to staff, in their role as agents and provide examples of the<br>observability of their role in relation to outcomes and effort;<br>(ii) The application of Expectancy Theory with specific reference to the relationship between:<br>– strength of motivation to do (X);<br>– strength of preference for outcome (Y);<br>– expectation that doing (X) will result in (Y). (12 marks)<br>(b) ‘Hard Accountability’ is deemed to apply to lecturing staff in each of three specific areas as follows:<br>(i) accounting for the numbers;<br>(ii) ensuring the numbers are accounted for;<br>(iii) being held accountable for events and circumstances leading to the numbers.<br>Required:<br>Describe how each of the areas (b)(i) to (iii) may be applied at UU and critically evaluate this approach to<br>performance measurement in the context of the scenario described above. (8 marks)

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(b) ‘EAJ’, which commenced trading on 1 June 2003, is a business services group whose consultants implement<br>three types of application software packages designed to meet the accounting, distribution and manufacturing<br>requirements of its clients. Each consultant specialises in the implementation of one type of application software<br>i.e. accounting, distribution or manufacturing. EAJ does not sell application software packages. EAJ implements<br>application software packages but clients are responsible for purchasing the packages.<br>The following information relates to the year ended 31 May 2006.<br>(1) Each consultation, other than those detailed in notes (4) and (5), is charged at a rate of ￡700 per day for<br>new clients and ￡550 per day for existing clients. Consultants are budgeted to work for 240 days per year.<br>(2) The consultants are each paid a fixed annual salary of ￡50,000. In addition they receive a bonus of 40%<br>of the net value of the fee income generated in excess of budget minus the revenue foregone as a<br>consequence of undertaking remedial consultations (per notes 5 and 8) based on a ‘notional’ rate of ￡700<br>per consultant day. The bonus is shared equally among the consultants employed by EAJ on 31 May in the<br>year to which the bonus relates.<br>(3) Other operating expenses (excluding the salaries of the consultants) were budgeted at ￡3,600,000. The<br>actual amount incurred was ￡4,500,000.<br>(4) In an attempt to gain new business, consultants may undertake consultations on a ‘no-fee’ basis. Such<br>consultations are regarded as business development activity by the management of EAJ. Each of these<br>consultations is budgeted to take one consultant day.<br>(5) Consultants will sometimes undertake remedial consultations with new clients who experience problems<br>with regard to implementation. Remedial consultations are also provided on a non-chargeable, i.e. ‘no fee’<br>basis. Each of these consultations requires two consultant days.<br>(6) Since its formation EAJ has had a policy of maintaining staff at a level of 100 consultants on an ongoing<br>basis, irrespective of fluctuations in the level of demand.<br>Required:<br>Using the above information, analyse and discuss the performance of EAJ for the year ended 31 May 2006<br>under the following headings:<br>(i) Financial performance and competitiveness;<br>(ii) External effectiveness;<br>(iii) Internal efficiency. (15 marks)

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4 Diverse Holdings Plc has five wholly-owned subsidiary companies. These are:<br>(i) Organic Foods Ltd (OFL) which is involved in the production and sale of organically grown fruit and vegetables.<br>OFL has built up a very good reputation as a supplier of quality produce.<br>(ii) Haul-Trans Ltd (HTL) which was acquired on 1 December 2005 and is involved in transporting a range of<br>products on behalf of third parties.<br>(iii) Kitchen Appliances Ltd (KAL) which is involved in the manufacture and sale of small, manually-operated kitchen<br>appliances. KAL has recently suffered from squeezed margins as a consequence of competition from low cost<br>imports.<br>(iv) Paper Supplies Ltd (PSL) which manufactures and sells a narrow range of stationery products to two distributors.<br>(v) Office Products Ltd (OPL) which manufactures and sells computer workstations with unique design features<br>which are highly regarded by health and safety experts.<br>The management accountant of Diverse Holdings Plc has gathered the following actual and forecast information<br>relating to the five subsidiaries:<br>Required:<br>(a) Identify and comment on FOUR advantages that may be gained as a result of the adoption of a formal system<br>of strategic planning. (4 marks)

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4 The Dental Health Partnership was established in 1992 and provides dentistry and other related services to the<br>population of Blaintopia, a country in which the public health service is partially funded by the Government.<br>Additional information relating to the Dental Health Partnership for the year ended 31 May 2005 is as follows:<br>(1) The partnership was open for five days per week during 48 weeks of the year.<br>(2) Each dentist treated 20 patients per day. The maximum number of patients that could have been treated by a<br>dentist on any working day was 24 patients.<br>(3) (i) The partnership received a payment from the government each time any patient was consulted as shown in<br>the following table:<br>Required:<br>(a) Prepare a summary Profit and Loss Account of the Dental Health Partnership for the year ended<br>31 May 2005 and calculate the percentage of maximum capacity that was required to be utilised in order<br>to break even in the year ended 31 May 2005. (12 marks)

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2 The Superior Software House (SSH) commenced trading on 1 December 2002 in the country of Bonlandia. SSH<br>develops bespoke software packages on behalf of clients. When requested to do so, SSH also provides training to<br>clients’ staff in the use of these software packages. On 1 December 2006, the directors of SSH established a similar<br>semi-autonomous operation in Karendia. All software packages are produced in Bonlandia and transferred to Karendia<br>at cost plus attributable overheads i.e. there is no mark-up on the software packages transferred from Bonlandia to<br>Karendia.<br>Karendia is a country in which the structure of industry has changed during recent years. There has been a major<br>shift from traditional manufacturing businesses to service orientated businesses which place a far greater emphasis<br>upon the use of business software.<br>The operational managers in both Bonlandia and Karendia have no control over company policies in respect of<br>acquisitions and financing.<br>The operational manager of Bonlandia receives a bonus of 40% of his basic salary for meeting all client delivery<br>deadlines in respect of Karendia. At a recent meeting he instructed his staff to ‘install client software by the due date<br>and we’ll worry about fixing any software problems after it’s been installed. After all, we always fix software problems<br>eventually’. He also stated that ‘it is of vital importance that we grow our revenues in Karendia as quickly as possible.<br>Our clients in Karendia might complain but they have spent a lot of money on our software products and will not be<br>able to go to any of our competitors once we have installed our software as all their businesses would suffer huge<br>disruption’.<br>Financial data (all stated on an actual basis) in respect of the two divisions for the two years ended 30 November<br>2007 and 2008 are shown on the next page:<br>Required:<br>(a) Assess the financial performance of SSH and its operations in Bonlandia and Karendia during the years<br>ended 30 November 2007 and 2008.<br>Note: you should highlight additional information that would be required in order to provide a more<br>comprehensive assessment of the financial performance of each operation. (14 marks)

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3 The Specialist Clothing Company Ltd (SCC Ltd) is a manufacturer of a wide range of clothing. Its operations are<br>organised into five divisions which are as follows:<br>(i) Fashion<br>(ii) Industrial<br>(iii) Leisure<br>(iv) Children<br>(v) Footwear<br>The Fashion division manufactures a narrow range of high quality clothing which is sold to a leading retail store which<br>has branches in every major city in its country of operation. The products have very short life cycles.<br>The Industrial division manufactures a wide range of clothing which has been designed for use in industrial<br>environments. In an attempt to increase sales volumes, SCC Ltd introduced the sale of these products via mail order<br>with effect from 1 June 2005.<br>The Leisure division manufactures a narrow range of clothing designed for outdoor pursuits such as mountaineering<br>and sky diving, which it markets under its own, well-established ‘Elite’ brand label.<br>The Children division manufactures a range of school and casual wear which is sold to leading retail stores.<br>The Footwear division manufactures a narrow range of footwear.<br>The management accountant of SCC Ltd has gathered the following actual and forecast information relating to the five<br>divisions:<br>Required:<br>(a) Use the Boston Consulting Group matrix in order to assess the competitive position of SCC Ltd. (10 marks)

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