Order Custom Written Business Case Study Assignment

By December 24, 2017Academic Papers

Faculty of Business and Law

School of Economics, Finance & Accounting

Assignment Brief

Module Title:

Accounting for Business

Module Code:

289ACC

  

Assignment Number:

2

Assignment Title:

Business Case Study

Assignment Weighting:

50%

Release Date:

08/11/17

  

Submission Time and Place:

18:00 08/01/18 Online submission through Turnitin ONLY

Module Leader:

Richard Pennington

Assessment Information

This assignment is an individual assignment designed to assess the following learning outcomes:

2. Apply numeracy skills and qualitative judgment to aid financial decision making.

3. Understand apply and evaluate management accounting concepts and techniques in decision making.

Coursework Assignment

You have just started a new job as general manager of Pooma Sports Ltd a UK-based company whose principal activity is the distribution of sports clothing and equipment.

After discussions with a number of senior managers at Pooma Sports Ltd, you have concluded that the current budgeting system is not operating effectively and that the company does not employ a strategic planning process.

You have therefore carried out some background research on budgeting and strategic planning and have obtained the following documents (available on the module Moodle page).

Document 1 A journal article on the behavioural aspects of budgeting (Raghunandan, M., Ramgulam, N. and Raghunandan-Mohammed, K. (2012) ‘Examining the behavioural aspects of budgeting with particular emphasis on public sector/service budgets.’ International Journal of Business and Social Science 3, (14) 110-117)

Assignment Brief Template Page 1 of 15

Document 2 Income statements

The following income statements relate to Pooma Sports Ltd.

Year-ended 31/01/16 31/01/15 01/02/14 02/02/13 28//01/12 29//01/11 30/01/10

£000

£000 £000

£000

£000

£000 £000

Turnover 3,146 3,648 4,678 5,254 6,129 6,473 6,398 Cost of Sales -2,204 -2,402 -3,759 -3,657 -4,276 -3,957 -4,617

Gross Profit 942 1,246 919 1,597 1,853 2,516 1,781 -1,367 -1,344 -3,226 -2,736 -2,878 -2,678 -3,163

Operating

Expenses

Operating Profit
Net Interest -2

-425 -98 -2,038 -1,139 -1,025 -162 -1,384 Taxation 79 42 545 288 263 89 388

-425 -98 -2,038

-1,139

-1,025

-162 -1,382

Profit (Loss) before Tax

Profit (Loss) for Period

-346 -56 -1,493 -851 -762 -73 -996

The last seven years have been very difficult for the company, and it has survived through the support of its parent company, to whom it currently owes a total of £10,039,000. However, the company now intends to engage in a number of income generating, cost- saving and efficiency measures in order to improve its financial performance. Pooma Sports have recently embarked on a major sponsorship deal. Although this will increase costs in the short-term, management hope it will enhance awareness of the brand and increase sales and return the company to profitability in the longer term.

Assignment Brief Template Page 2 of 15

Document 3 New product line

Pooma Sports Ltd are considering introducing a new style of Rugby boot to the market. The boot has been developed and is ready to go into production. However, management need to decide whether to manufacture the boot in a new factory unit near their main premises in North West England or to outsource production to a partner company.

Information relevant to this decision is given in the following table:

Sales price (per pair)
Direct materials cost (per pair)
Direct labour cost (per pair)
Buy-in cost from outsourced manufacturer Fixed manufacturing overheads
Fixed administrative overheads
Fixed selling and distribution overheads Break-even point (pairs of boots)
Margin of safety at budgeted profit level

Unit sales required to achieve budgeted profit of £250,000 (pairs of boots)

£80.00 £20.00 £15.00

£0.00 £100,000 £50,000 £40,000 4,223 57%

9,778

£80.00 £0.00 £0.00

£50.00 £0 £50,000 £40,000 3,000 74%

11,334

Assignment Brief Template Page 3 of 15

In-house Outsourced manufacture manufacture

Document 4 Cash budget

Pooma Sports Ltd’s Finance Department has prepared the following cash budget and budgeted income statement for the first 6 months of 2018, a period in which the company is expected to return to profit.

Cash budget

Opening balance

RECEIPTS:

Cash sales

Credit sales

Total receipts

PAYMENTS:

Cash purchases

Credit purchases

Operating expenses

Fixed overheads

Production labour
Administration
labour -35

Jan £000

100

91 206 297

-30

-496 -199 -99

Budgeted income
statement
Sales 303

Feb Mar £000 £000

-99 -276

95 103 212 223

307 326

-32 -35

-90 -96 -225 -203 -40 -40 -63 -69

-34 -33

-484 -475 -177 -150 -276 -426

Feb Mar £000 £000

318 343 -182 -196

136 147

-203 -182 -50 -50

-34 -33

-286 -265

-150 -118

Apr May £000 £000

-426 -546

113 127 240 264 354 391

-39 -44 -105 -117 -182 -164

-40 -40 -76 -88

-32 -31 -474 -485 -120 -94 -546 -640

Apr May £000 £000

378 423 -216 -242

162 181

-164 -148 -50 -50

-32 -31

-246 -229

-84 -47

Jun £000

-640

152 296

448

-55 -136 -148 -40 -106

-30

-514 -66 -705

Jun £000

508 -290

218

-133 -50

-30

-213

5

-81 -250 -40 -60

Total payments: Net cash flow Closing balance

Cost of sales Gross profit

Operating expenses Fixed overheads

-173 130

-225 -50

Jan £000

Administration
labour -35

Total expenses -310

Operating profit -180

The following information is relevant to the cash budget:

  1. Credit customers are allowed one month’s credit on sales;

  2. Credit suppliers allow one month credit on raw materials purchases;

  3. Production labour is included in the cost of sales in the budgeted income statement.

    Assignment Brief Template Page 4 of 15

The following information from the budgeted Statement of Financial Position is also available.

Trade receivables Trade payables Finished goods inventory

Raw materials inventory

Jan £000

212 90

49 19

Feb £000

223 96

57 21

Mar £000

240 105

67 23

Apr £000

264 117

80 26

May £000

296 133

97 30

Jun £000

355 164

129 38

Assignment Brief Template Page 5 of 15

Document 5 Full (absorption) costing

Pooma Sports Ltd’s product costing team have provided you with the following information on the current method used to charge overhead costs to products. The table shows each overhead cost and the apportioned and reapportioned costs by cost centre together with the apportionment bases used.

Department

Direct materials (£) Direct labour (£) Direct costs Overheads

Indirect labour (direct labour)
Rent (floor area) Machine insurance (machine value) Heating (floor area) Machine power (machine hours) Machine depreciation (machine value)

Total apportioned overhead costs Re-apportion maintenance (machine hours)

Re-apportion administration (employees)
Total re-apportioned overhead costs
Total re-apportioned overhead costs Machine hours Overhead absorption rate per machine hour (£)

Sports Shoes

Sports Clothing

Sports Equipment

875,000

437,500

1,312,500

201,072 270,406

58,121 54,081

42,857

69,746

696,283

9,602 5,566

711,452

711,452 16,271

43.73

Mainte nance

0 0 0

0 20,831

3,914 4,166

0 4,697 33,608

-33,608 0

0

Admini Total stration

0 2,611,000 0 1,305,500 0 3,916,500

0 600,000 16,024 800,000

0 100,000 3,205 160,000

0 150,000

0 120,000

19,229 1,930,000

0 0 -19,229 0

0 1,930,000

686,000 1,050,000

343,000 525,000

1,029,000 1,575,000

157,641 241,287 220,330 272,409

15,068 22,896 44,066 54,482

56,250 50,893

18,082 27,476

511,438 669,442

12,603 11,403 7,084 6,578

531,125 687,423

531,125 687,423 21,356 19,322

24.87 35.58

Assignment Brief Template Page 6 of 15

The costing team have been reviewing the overhead costing methodology and have prepared the following proposal for a revised costing method.

Department

Direct materials (£) Direct labour (£) Direct costs Overheads

Indirect labour (employees)
Rent (employees) Machine insurance (machine hours) Heating (employees) Machine power (machine hours) Machine depreciation (machine hours)
Total apportioned overhead costs Re-apportion maintenance (machine value)

Re-apportion administration (floor area)
Total re-apportioned overhead costs
Total re-apportioned overhead costs Machine hours Overhead absorption rate per machine hour (£)

Sports Shoes

686,000

343,000

1,029,000

140,000 220,330

37,500 37,333

56,250

45,000

536,414

23,131 48,511

608,056

608,056 21,356

28.47

Sports Clothing

1,050,000 525,000 1,575,000

130,000 272,409

33,929 34,667

50,893

40,714

562,611

35,147 59,977

657,735

657,735 19,322

34.04

Sports Equipment

875,000

437,500

1,312,500

110,000 270,406

28,571 29,333

42,857

34,286

515,453

89,220 59,536

664,209

664,209 16,271

40.82

Mainte Admini nance stration

0 0 0 0 0 0

100,000 120,000 20,831 16,024

0 0 26,667 32,000

0 0

0 0

147,498 168,024

-147,498 0 0 -168,024

0 0

Total

2,611,000 1,305,500 3,916,500

600,000 800,000

100,000 160,000

150,000

120,000

1,930,000

0 0

1,930,000

The Sales Director has expressed the view that this new method is superior because it reduces the overheads chargeable to the Sports Clothing and Sports Equipment profit centres, both of which have struggled to increase sales and make profits over the past few years. The reduction in overhead costs charged to these departments will help them to increase sales, by reducing prices, and maintain or increase profits at the same time.

Assignment Brief Template Page 7 of 15

Document 6 Capital investment appraisal

The Sports Equipment department is considering purchasing a new piece of equipment to help save costs and make the production process more efficient.

There are two options for the new piece of equipment. The Superstitcher will further automate production processes for equipment that needs stitching such as footballs and baseball mitts. The Gluemaster will improve production processes and product quality for items requiring adhesive, such as tennis and squash balls.

The following information about the cash flows, profits and capital investment appraisal measures has been provided to you. The company’s cost of capital is currently 5%.

Superstitcher

Cash flow Year (£)

  1. 0  -1,000,000

  2. 1  70,000

  3. 2  140,000

  4. 3  238,000

  5. 4  350,000

  6. 5  490,000

5* 112,000

5%
Factors value (£)

1.0000 -1,000,000 0.9524 66,668 0.9070 126,980 0.8638 205,584 0.8227 287,945 0.7835 383,915 0.7835 87,752 NPV = 158,844

Depreciation (£)

-200,000 -200,000 -200,000 -200,000 -200,000

Cumulative cash flow (£)

-1,000,000 -930,000 -790,000 -552,000 -202,000

288,000 400,000

Cumulative cash flow (£)

-1,300,000 -812,500 -406,250

-48,750 113,750 195,000 325,000

Payback period
Accounting rate of return
14.0%

Internal rate of return

Gluemaster

Cash flow Year (£)

  1. 0  -1,300,000

  2. 1  487,500

  3. 2  406,250

  4. 3  357,500

  5. 4  162,500

  6. 5  81,250

5* 130,000

4 years 5 months 9.1%

5%
Factors value (£)

1.0000 -1,300,000 0.9524 464,295 0.9070 368,469 0.8638 308,809 0.8227 133,689 0.7835 63,659 0.7835 101,855 NPV = 140,775

Depreciation (£)

-260,000 -260,000 -260,000 -260,000 -260,000

3 years 4 months Accounting rate of return 9.0%

Payback period
Internal rate of return
9.6%

Present

Profit (£)

-130,000 -60,000 38,000 150,000 290,000 112,000 400,000

Profit (£)

227,500 146,250 97,500 -97,500 -178,750 130,000 325,000

Present

Assignment Brief Template Page 8 of 15

*The second cash flow in year 5 for each option represents the sales proceeds on the disposal of the equipment at the end of its life (residual value).

The Superstitcher will not be fully effective until a number of new product lines requiring stitching have been introduced over the next few years, whereas the Gluemaster will reduce costs and improve efficiency on existing product lines.

Only one of the two pieces of equipment can be purchased in the near future due to a lack of investment capital.

Assignment Brief Template Page 9 of 15

Assignment requirements

You are required to write a report for the Board of Directors of Pooma Sports Ltd (italicized words in brackets indicate the approximate word count for each section).

The report should cover the following key areas:

  1. An executive summary outlining the key challenges that the company is facing and the main outcomes from the analysis work you have under taken so far (250-300 words).

  2. A discussion of the need for budgets and strategic planning focusing on whether budgets are actually needed or should be dispensed with (Document 1) (225-275 words).

  3. A discussion of the break-even analysis of the proposed new Rugby boot (Document 3) with particular emphasis on the following areas :

    a. An explanation of the different types of cost behaviour and why all fixed costs are in reality stepped fixed costs (90-110 words).

    b. A review of the risk and return offered by the two manufacturing options with reference to the concept of operating gearing and a recommendation on which option Pooma Sports Ltd should choose (210-240 words).

  4. A discussion of the reasons for the differences between the net cash flows and the operating profit in the statements above (Document 4), and in particular why net cash flow remains negative when the company returns to profit at the end of the six-month period (325-375 words).

  5. A discussion of the original and proposed costing methods above (Document 5) with particular emphasis on the following areas:

    1. A critical appraisal of the reasons for the choice of apportionment bases used in both the original and proposed costing methods (275-325 words);

    2. A critical appraisal of the Sales Director’s view that the proposed costing method is superior because it reduces the overheads chargeable to the Sports Clothing and Sports Equipment cost centres (180-210 words).

  6. A critical appraisal of the results of the capital investment appraisal of the Superstitcher and Gluemaster (Document 6) with particular emphasis on the following areas:

a. A discussion of the reasons for the apparent conflicts between the investment advice provided by each method (375-425 words);

Assignment Brief Template Page 10 of 15

b. A discussion of the risk and return presented by each option and a recommendation as to which option should be chosen, given the lack of investment capital available to the company (170-200 words).

Assignment Brief Template Page 11 of 15

GUIDELINES TO THIS ASSIGNMENT
Criteria for Assessment
This assignment will summatively assess learning outcome 3.

3. Analyse various techniques used in performance strategies.

Assessment Criteria

Marks will be awarded according to the following criteria:

5%

An executive summary outlining the key challenges that the company is facing and the main outcomes from the analysis work you have undertaken so far.

20%

A discussion of the need for budgets and strategic planning.

20%

A discussion of the break-even analysis of the proposed new Rugby boot.

20%

A discussion of the reasons for the differences between the net cash flows and the operating profit in the statements provided.

15%

A discussion of the original and proposed costing methods.

15%

A critical appraisal of the results of the capital investment appraisal of the Superstitcher and Gluemaster

5%

Referencing, spelling and language used.

Word Count

The word count is between 2,000 and 2,250 (see guidance above on word count for each section). There will be a penalty of a deduction of 10% of the mark (after internal moderation) for work exceeding the word limit by 10% or more. The word limit includes quotations, but excludes the reference list.

How to submit your assessment
The assessment must be submitted by 16.00:00 on 08/01/18. No paper copies are required.

You can access the submission link through the module web.

  •   Your coursework will be given a zero mark if you do not submit a copy through Turnitin. Please take care to ensure that you have fully submitted your work.

  •   All work submitted after the submission deadline without a valid and approved reason (see below) will be given a mark of zero.

    Assignment Brief Template Page 12 of 15

The University wants you to do your best. However we know that sometimes events happen which mean that you can’t submit your coursework by the deadline these events should be beyond your control. If this happens, you can apply for an extension to your deadline for up to two weeks, or if you need longer, you can apply for a deferral,

which takes you to the next assessment period (for example, to the resit period following the main Assessment Boards). You must apply before the deadline. You will find information about the process and what is or is not considered to be an event beyond your control at https://share.coventry.ac.uk/students/Registry/Pages/Deferrals-and- Extension.aspx

Students MUST keep a copy and/or an electronic file of their assignment.
Checks will be made on your work using anti-plagiarism software and approved

plagiarism checking websites.

Plagiarism

As part of your study you will be involved in carrying out research and using this when writing up your coursework. It is important that you correctly acknowledge someone else’s writing, thoughts or ideas and that you do not attempt to pass this off as your own work. Doing so is known as plagiarism. It is not acceptable to copy from another source without acknowledging that it is someone else’s writing or thinking. This includes using paraphrasing as well as direct quotations. You are expected to correctly cite and reference the works of others. The Centre for Academic Writing provides documents to help you get this right. If you are unsure, please visit www.coventry.ac.uk/caw. You can also check your understanding of academic conduct by completing the Good Academic Practice quiz available on Moodle.

Moodle includes a plagiarism detection system and assessors are experienced enough to recognise plagiarism when it occurs. Copying another student’s work, using previous work of your own or copying large sections from a book or the internet are examples of plagiarism and carry serious consequences. Please familiarise yourself withthe CU Harvard Reference Style (on Moodle) and use it correctly to avoid a case of plagiarism or cheating being brought. Again, if you are unsure, please contact the Centre for Academic Writing, your Academic Personal Tutor or a member of the course team.

Return of Marked Work

You can expect to have marked work returned to you within 10 working days. If for any reason there is a delay you will be kept informed. Marks and feedback will be provided online. Marks will have been internally moderated only, and will therefore be provisional; your mark will be formally agreed later in the year once the external examiner has completed his/her review.

Assignment Brief Template Page 13 of 15

Detailed Assessment Criteria

5%

An executive summary outlining the key challenges that the company is facing and the main outcomes from the analysis work you have undertaken so far.

Effectively summarises all the other five elements of the assignment.

4-5%

Effectively summarises 3-4 of the other five elements of the assignment or partially summarises all the other five elements of the assignment.

2-3%

Effectively summarises 1-2 of the other five elements of the assignment or partially summarises 2-4 of the other five elements of the assignment.

1%

20%

A discussion of the need for budgets and strategic planning.

Effectively covers all 3 of the elements of the task with good reference to the article provided plus at least one more article and the module textbook.

14-20%

Effectively covers 2 of the elements of the task or partially covers all 3 of the elements of the task with reasonable reference to the article provided and the module textbook.

8-13%

Effectively covers 1 of the elements of the task or partially covers 2 of the elements of the task with some reference to the article provided and the module textbook.

1-12%

20%

A discussion of the break-even analysis of the proposed new Rugby boot.

Effectively covers all 3 of the elements of the task with good reference to the module textbook.

14-20%

Effectively covers 2 of the elements of the task or partially covers all 3 of the elements of the task with reasonable reference to the module textbook.

8-13%

Effectively covers 1of the elements of the task or partially covers 2 of the elements of the task with some reference to the module textbook.

1-12%

20%

A discussion of the reasons for the differences between the net cash flows and the operating profit in the statements provided.

Effectively covers both of the elements of the task with good reference to the module textbook.

14-20%

Effectively covers one of the elements of the task or partially covers both of the elements of the task with reasonable reference to the module textbook.

8-13%

Partially covers one of the elements of the task with some reference to the module textbook.

1-12%

Assignment Brief Template Page 14 of 15

 

15%

A discussion of the original and proposed costing methods.

Effectively covers both of the elements of the task with good reference to the module textbook.

11-15%

Effectively covers one of the elements of the task or partially covers both of the elements of the task with reasonable reference to the module textbook.

6-10%

Partially covers one of the elements of the task with some reference to the module textbook.

1-5%

15%

A critical appraisal of the results of the capital investment appraisal of the Superstitcher and Gluemaster

Effectively covers both of the elements of the task with good reference to the module textbook.

11-15%

Effectively covers one of the elements of the task or partially covers both of the elements of the task with reasonable reference to the module textbook.

6-10%

Partially covers one of the elements of the task with some reference to the module textbook.

1-5%

5%

Referencing, spelling and language used.

Referencing is Harvard compliant. Spelling accurate. Language is appropriate and persuasive.

4-5%

Two out of the three requirements above are achieved.

2-3%

One out of the three requirements above are achieved.

1%

Assignment Brief Template Page 15 of 15