(c) Discuss the practical problems that may be encountered in the implementation of an activity-based systemof product cost management. (5 marks)
(c) Discuss the practical problems that may be encountered in the implementation of an activity-based system
of product cost management. (5 marks)
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(c) Discuss the usefulness of the managerial grid in assessing the attributes of managers. (5 marks)
(d) Calculate the ex dividend share price predicted by the dividend growth model and discuss the company’sview that share price growth of at least 8% per year would result from expanding into the retail cameramarket. Assume a cost of equity capital of 11% per year. (6 marks)
2 (a) Discuss the nature of the financial objectives that may be set in a not-for-profit organisation such as a charityor a hospital. (8 marks)
(c) Discuss the difficulties that may be experienced by a small company which is seeking to obtain additionalfunding to finance an expansion of business operations. (8 marks)
(b) Assuming that the cost of equity and cost of debt do not alter, estimate the effect of the share repurchase on the company’s cost of capital and value. (5 marks)
(d) There is considerable evidence to suggest that as a result of implementation problems less than 50% of allacquisitions achieve their objectives and actually end up reducing shareholder value.Required:Provide Ken with a brief report on the most likely sources of integration problems and describe the keyperformance indicators he should use to measure progress towards acquisition objectives. (15 marks)
(d) Player tradingAnother proposal is for the club to sell its two valuable players, Aldo and Steel. It is thought that it will receive atotal of $16 million for both players. The players are to be offered for sale at the end of the current football seasonon 1 May 2007. (5 marks)Required:Discuss how the above proposals would be dealt with in the financial statements of Seejoy for the year ending31 December 2007, setting out their accounting treatment and appropriateness in helping the football club’scash flow problems.(Candidates do not need knowledge of the football finance sector to answer this question.)
5 Financial statements have seen an increasing move towards the use of fair values in accounting. Advocates of ‘fairvalue accounting’ believe that fair value is the most relevant measure for financial reporting whilst others believe thathistorical cost provides a more useful measure.Issues have been raised over the reliability and measurement of fair values, and over the nature of the current levelof disclosure in financial statements in this area.Required:(a) Discuss the problems associated with the reliability and measurement of fair values and the nature of anyadditional disclosures which may be required if fair value accounting is to be used exclusively in corporatereporting. (13 marks)
(b) Discuss the view that fair value is a more relevant measure to use in corporate reporting than historical cost.(12 marks)
(c) Critically discuss FOUR principal roles of non-executive directors and explain the potential tensions betweenthese roles that WM’s non-executive directors may experience in advising on the disclosure of theoverestimation of the mallerite reserve. (12 marks)
2 Chen Products produces four manufactured products: Products 1, 2, 3 and 4. The company’s risk committee recentlymet to discuss how the company might respond to a number of problems that have arisen with Product 2. After anumber of incidents in which Product 2 had failed whilst being used by customers, Chen Products had been presentedwith compensation claims from customers injured and inconvenienced by the product failure. It was decided that therisk committee should meet to discuss the options.When the discussion of Product 2 began, committee chairman Anne Ricardo reminded her colleagues that, apart fromthe compensation claims, Product 2 was a highly profitable product.Chen’s risk management committee comprised four non-executive directors who each had different backgrounds andareas of expertise. None of them had direct experience of Chen’s industry or products. It was noted that it wascommon for them to disagree among themselves as to how risks should be managed and that in some situations,each member proposed a quite different strategy to manage a given risk. This was the case when they discussedwhich risk management strategy to adopt with regard to Product 2.Required:(a) Describe the typical roles of a risk management committee. (6 marks)
(d) Discuss the main benefits that might accrue from the successful implementation of a Total QualityManagement programme by the management of the combined entity. (5 marks)
(b) Discuss ways in which the traditional budgeting process may be seen as a barrier to the achievement of theaims of EACH of the following models for the implementation of strategic change:(i) benchmarking;(ii) balanced scorecard; and(iii) activity-based models. (12 marks)
(c) Explain the term ‘target costing’ and how it may be applied by GWCC. Briefly discuss any potentiallimitations in its application. (8 marks)
(b) Briefly discuss how stakeholder groups (other than management and employees) may be rewarded for ‘good’performance. (4 marks)
(b) Explain how growth may be assessed, and critically discuss the advantages and issues that might arise as aresult of a decision by the directors of CSG to pursue the objective of growth. (8 marks)
(b) Identify and discuss the appropriateness of the cost drivers of any TWO expense values in EACH of levels (i)to (iii) above and ONE value that relates to level (iv).In addition, suggest a likely cause of the cost driver for any ONE value in EACH of levels (i) to (iii), andcomment on possible benefits from the identification of the cause of each cost driver. (10 marks)
(b) Using the unit cost information available and your calculations in (a), prepare a financial analysis of thedecision strategy which TOC may implement with regard to the manufacture of each product. (6 marks)
(c) Critically discuss the adoption of activity-based management (ABM) in companies such as TOC. (6 marks)
(c) Suggest ways in which each of the six problems chosen in (a) above may be overcome. (6 marks)
(iii) Identify and discuss an alternative strategy that may assist in improving the performance of CTC witheffect from 1 May 2009 (where only the products in (a) and (b) above are available for manufacture).(4 marks)
(c) Critically discuss the likely effectiveness of standard questionnaires sent to other auditors as a means ofobtaining information required. (5 marks)
(ii) Discuss TWO problems that may be faced in implementing quality control procedures in a small firm ofChartered Certified Accountants, and recommend how these problems may be overcome. (4 marks)
(d) (i) Discuss why it may not be possible to provide a high level of assurance over the stated key performanceindicators; and (4 marks)
3 (a) Discuss why the identification of related parties, and material related party transactions, can be difficult forauditors. (5 marks)
Which of the following problems may be encountered by using an oil having a viscosity higher than that specified for an operating hydraulic system?A.External seal leakageB.Hunting due to fast responseC.Hydraulic oil film breakdownD.Increased power consumption