Do you think that this management approach of Strategic Thinking has the potential of creating a more unified management team or could it have the opposite affect?

What steps must the CEO take to bring everyone together?

Question 1

ERS Ltd is considering the launch of a new product after an extensive market research whose costs were K20, 000. The research cost is due for payment in a months’ time. Based on the research findings, as well as internal management accounting information relating to costs, the assistant accountant prepared the following forecasts for the product.

Year 1 2 3 4

Sales 180,000 200,000 160,000 120,000

Cost of sales. (115,000) (140,000) (110,000) (85,000)

Variable overheads. (27,000) (30,000) (24,000) (18,000)

Fixed overheads. (25,000) (25,000) (25,000) (25,000)

Market research cost expensed. (20,000)

Net profit/ (loss). (7,000) 5,000 1,000 (8,000)

The CEO pointed out that the product achieved profits in only two years of its four-year life and that over the four-year period as a whole, a net loss was expected. However, before a meeting that had been arranged to decide formally the future of the product, the following additional information became available:

• The new product will require the use of an existing machine. This machine was acquired some time back for K400,000 and has since been depreciated down value to a book value of K80,000. The machine can be sold for K70,000 immediately if the new product is not launched. If the product is launched, it will be sold at the end of the four-year period for K10,000.

• Additional working capital of K30,000 will be required immediately and will be needed over the four-year period. It will be released at the end of the period.

• The fixed overheads include a figure of K15,000 per year for depreciation of the machine and K5,000 per year for the re-allocation of existing overheads of the business. The company has a cost of capital of 10%. Ignore taxation.

Required:

a) Identify the relevant cash flows associated with the decision to launch the product and determine the net cash flows for years 1 to 4.

b) Calculate the Net present value (NPV) and the approximate internal rate of return (IRR) of the product and comment (with reasons) whether or not the product should be launched.

c) Outline the strengths the NPV over the IRR method as a basis for investment appraisal.

d) Briefly discuss how the firm’s investment decision influences its financing decisions.

The following selected transactions relate to investment activities of Ornamental Insulation Corporation during 2021. The company buys debt securities, intending to profit from short-term differences in price and maintaining them in an active trading portfolio. Ornamental’s fiscal year ends on December 31. No investments were held by Ornamental on December 31, 2020.

(Hint: Interest must be accrued.)

Required:
1. Prepare the appropriate journal entry for each transaction or event during 2021, as well as any adjusting entries necessary at year end.
2. Indicate any amounts that Ornamental Insulation would report in its 2021 income statement, 2021 statement of comprehensive income, and 12/31/2021 balance sheet as a result of these investments. Include totals for net income, comprehensive income, and retained earnings as a result of these investments.

I need help with requirement 2 2. Indicate any amounts that Ornamental Insulation would report in its 2021 income statement, 2021 statement of comprehensive income, and 12/31/2021 balance sheet as a result of these investments. Include totals for net income, comprehensive income, and retained earnings as a result of these investments.

Case Study (Part 2) – ACCT 3000 Semester 2, 2020
You are an Audit Senior on the AUDIO Health Limited (AUDIO) audit engagement for the financial year ending 30 June 2019. AUDIO specialises in the design and manufacture of implantable hearing aids and invests more than twice the industry average in research and development. While undertaking audit planning procedures you become aware of the following:
AUDIO has been developing its latest hearing implant, the X5, for a number of years. AUDIO has invested heavily in research and development of the X5 and has capitalised a significant amount in relation to the development phase of the product. Market studies and prototypes of the X5 have proved successful for bringing it to the market. In July 2018, AUDIO acquired two technologically advanced machines specifically designed for manufacturing the X5, at a cost of $15 million each. Production and sales of the X5 hearing implant commenced in October 2018, and demand for the product has been extremely high since its launch. AUDIO has sold large volumes of the product and further manufactured a large stockpile of the X5 in anticipation of on-going high demand, and a substantial number have already been implanted in patients.
There has recently been a sharp increase in incidences of the implant shutting down post-surgery, resulting in a number of patients commencing legal action against AUDIO for damages and prompting the company to initiate a recall. Initial investigations reveal that the defect is attributable to a design flaw. It is likely that the product in its current form cannot be sold. Management of AUDIO is confident that it will be possible to re-engineer the two machines acquired for the manufacturing of the X5 to enable production of its four other product lines and potentially for other products currently under development.
You have raised concerns with AUDIO’s audit committee on improving the competence and objectivity of the internal audit department. Currently, the internal audit department is made up of three recent graduates with no prior experience who periodically report the Audio’s Chief Executive Officer Dr. Dave Bautista.
Required:
Prepare a memorandum to the audit manager, outlining your risk assessment relating to AUDIO Limited. When making your risk assessment:
(a) Identify three (3) key account balances from the information provided that are subjected to an increase in audit risk. Briefly explain what factors increase the audit risk associated with the three (3) accounts identified. In your explanation, please mention the key assertion(s) at risk of material misstatement.
(b) Identify how the audit plan will be affected and recommend specific audit procedures to address the risks associated with each account identified.
(Please Note – Maximum Word Limit: 950 Words)

Key terms: Strategic Alliances, Build-Borrow-or-buy Framework, Cost Leadership, Focus Cost Leadership, Blue-Ocean Strategy

Your business is a tech company that sells new tech to 3 markets: U.S., Europe and Asia. Using the 5 key terms above explain in detail how you would apply these concepts in your business strategy? And how can you use these concepts in developing a strategy in your future workplaces?

You are a consultant that is in the last round of proposals to become the sole strategic adviser to the CEO of a top 5 global manufacturer of doors & windows. The firm already sells and has a local presence in the 100 top ranked countries by GDP. You and the other finalists have been asked to address potential Foreign Direct Investment in a non Top 100 GDP country. The CEO is seeking for a new high growth market (even if it comes with some business risk) and is asking you to select it.

In your post, please provide your country selection(India) and the primary reason(s) why you selected it. Also briefly address how the organization would mitigate one or two major risks associated with FDI.

Which of the following companies permits shareholder groups holding at least 3% of the company’s stock to directly nominate candidate for its board?

1. GE.

2. Yahoo.

3. Uber.

4. Snap Inc.

Which of the following statements is INCORRECT?

1. Unlimited liability makes it difficult for proprietorship to raise large amount of capital.

2. Chairman of the board often serves as a firm’s CEO.

3. Sarbanes-Oxley Act (SOX) emphasizes that CEO and CFO are not required to certify annual report because the firm has already hired the accounting firm to certify all of its financial statements, including annual reports.

4. The higher expected cash flows and the lower perceived risk, the higher stock price would be.

5. When a stock’s price is equal to its intrinsic value, the stock in in equilibrium.

Considering Remote Data Acquisition

The CEO of MegaCorp comes to see you on the advice of the CIO who was impressed with your previous assistance to the organization. He and the other senior managers have been considering consolidation of all IT management activities either by moving them in-house at their corporate location or by outsourcing them to Berbee. He would like you to explain to him how these centralized staff would be capable of conducting investigations at the other sites that would not have local support and what the potential issues might be for those who have to conduct these remote investigations. Discuss what advice you would offer the CEO in terms of the pros and cons of centralizing staffing and the risks and benefits associated with remote data acquisition.

Big Inc. is considering Two Projects X and Y, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The CEO believes the IRR is the best selection criterion, while the CFO advocates other methods.

4. What are the MIRR’s? Discuss the importance of the MIRR method over IRR.

5. If these projects are mutually exclusive which should be selected and why? If they are in depended which project(s) should be selected and why?

6. Discuss your results of the methods used above and make a recommendation on the projects to the CEO using the different methods?

2 - Marie is the CEO of Minox Ltee, a small machine shop, that does business with several large auto manufacturers. Several years ago, a competitor's CEO asked Marie whether Minox would like to create a trade relationship to discuss common business issues like marketing practices and pricing. Marie said that she was not interested. Shortly thereafter, Marie heard that a trade association was created among 3 of her main competitors. Recently, she has noticed these competitor's products are always priced the same and she wonders if she should report this to the Competition Bureau. A - What Competition Act issues does this scenario raise? B - Should Marie report this incident ? Why or why not ? 15 marks

SUBJECT IS BUSINESS LAW.