20 dangerous goods brought by passengers and their classifications
In: Economics
If goods A and B are complements, an increase in the price of A will result in
In: Economics
What are territorial collective goods, and what is their effect?
In: Economics
chapter 11 Assignment #2
Place the correct term to the right of the description
Goods that have become attached to real estate
An interest in personal property or fixtures that secures the performance of some obligation
The person or company that holds the security interest
The property subject to a security interest
Contract in which the debtor gives a security interest to the secured party
When the debtor fails to pay money that is due
When the secured party takes the collateral because the debtor has defaulted
A series of steps the secured party must take to protect its rights in the collateral against people other than the debtor
A document filed by the secured party to give the general public notice that it has a security interest in the collateral.
In: Operations Management
This question comes from the chapter of consumer behaviour in economics.
In: Economics
What is the Convention on Contracts for the International Sale of Goods?
In: Economics
a.Suppose there are two goods, that the prices are given, and that there is a consumer with a certain income. Show in a diagram it is possible to split the effect of price fall on good 1 into income- and substitution effects. Assume that the good is a normal good.
b.If the good had been an inferior good, what would have been different in the graph?
c.If the good had been a Giffen good, what would have beedifferent?
In: Economics
Internal Control : Performance Measures
Essex Engineering
Topic: Performance measures,
Essex is an industrial company with three divisions. Both the Midland Division and the North Division are long established. Senior managers are concerned that these divisions have a high percentage of products that are near the end of their product life-cycle. Forecast sales increases over the next 5 years is expected to be in the region of 4-5% per annum.
The East Division was acquired in 1999 and senior managers are optimistic that this division has very good growth potential. Most of the senior managers at this division have experience of working at the other divisions.
Since 1999 the head office has ranked all divisions according to return on investment (ROI) and residual income (RI). All managers believe that the rankings are important for future promotions and career development.
A small number of other performance measures are also used by managers. These include
|
1. |
Non-productive time: Non-productive direct labour hours (percentage of total hours paid). Non-productive time includes time wasted as a result of production delays or material shortages. |
|
2. |
Customers: Customer complaints (percentage of total number of customers) |
|
3. |
Lead time: Time from order to delivery |
These performance measures were agreed by all managers in 1999. At the time it was thought that managers should focus on only a small number of measures.
2002
The managers at the divisions provided the following information for the head office.
Selected data from the budgeted Management Accounts to 31 December 2002
|
Midland Division |
Northern Division |
East Division |
|
|
$ |
$ | ||
|
Sales |
1,580,000 |
1,560,000 |
1,112,000 |
|
Cost data |
|||
|
Controllable cost of goods sold |
650,000 |
620,000 |
380,000 |
|
Non -controllable cost of goods sold |
116,000 |
115,000 |
100,000 |
|
Controllable Selling general & Administrative overheads |
370,000 |
400,000 |
370,000 |
|
Non-controllable Selling general & Administrative overheads |
250,000 |
250,000 |
162,000 |
|
Total costs |
1,386,000 |
1,385,000 |
1,012,000 |
|
Capital employed |
|||
|
Total investment |
1,400,000 |
1,440,000 |
850,000 |
|
Controllable investment |
1,200,000 |
1,111,000 |
800,000 |
|
Sales growth 2003 |
4.80% |
5.20% |
28.00% |
|
Sales growth 2004 |
4.30% |
5.10% |
37.00% |
|
1,580,000 |
1,560,000 |
1,112,000 |
Other measures
|
Midland Division |
Northern Division |
East Division |
||
|
Non-productive time: Non-productive direct labour hours (percentage of total hours paid). |
2001 |
4% |
4% |
6% |
|
2002 |
4.1% |
3.8% |
7.5% |
|
|
Customer complaints (percentage of total number of customers) |
2001 |
1% |
1.2% |
5% |
|
2002 |
1.1% |
1.1% |
6% |
|
|
Lead time: Time from order to delivery |
2001 |
10 days |
9 days |
15 days |
|
2002 |
11 days |
9 days |
18 days |
The head office has estimated that the group cost of capital is 10%
Ranking divisions in 2000
In 2000 the data on controllable and non-controllable costs and investments will be used to rank divisions.
Questions
Question 1
Based on the data provided comment on the relative financial performance of the two divisions and discuss how the ranking of the divisions changes if controllable and non-controllable costs and capital employed are analysed. (provide the calculation to prove your standpoint)
Question 2
Evaluate the choice of performance measures for the 3 divisions
Question 3
Identify and evaluate the difficulties faced by managers when measuring capital employed for a division.
Question 4
Discuss how using ROI can result in managers making poor investment decisions.
ROI has some built in biases that can lead managers to make poor decisions. First, ROI requires that all costs and benefits be stated in dollars. Because it is usually easier to quantify costs than benefits, ROI measurements can be biased in a way that gives undue weight to costs. Second, ROI focuses on benefits that can be predicted. It also tends to emphasize short run benefits over long run benefits. This biases ROI calculations to weigh short term costs and benefits more heavily than long term costs and benefits.
Question 5
Discuss the particular problems multinational companies have when evaluating the performance of divisions.
In: Accounting
The following budgeted income statement has been prepared for XY company for the months of January to April 2020
Jan Feb Mar April
Le000 Le000 Le000 Le000
Sales 60.0 50.0 70.0 60.0
Costs of production 50.0 55.0 32.5 50.0
(increase)/decrease in inventory (5.0) (17.5) 20.0 (5.0)
Cost of sales 45.0 37.5 52.5 45.0
Gross Profit 15.0 12.5 17.5 15.0
Administration and selling overhead (8.0) (7.5) (8.5) (8.0)
7.0 5.0 9.0 7.0
Additional information:
40% of the production cost relates to direct materials.
Materials are bought in the month prior to the month in which they
are used. Purchases are paid for one month after purchase.
30% of the production cost relates to direct labour which is paid
for when it is used.
The remainder of the production cost is produced overhead.
Le 5,000 per month is a fixed cost which includes Le 30,000
depreciations. Fixed production overhead costs are paid for when
incurred.
The remaining overhead is variable. The variable production
overhead is paid 40% in the month of usage and the balance, one
month later. Unpaid variable production overhead at the beginning
of January is Le 90,000.
The administration and selling costs are paid quarterly in advance
on 1st January, 1st April,1st July, and 1st October. The amount
payable is Le 15,000 per quarter.
All sales are on credit. 20% of receivables are expected to be paid
in the month of sale and 80% in the month following. Unpaid trade
receivables at the beginning of January were Le 44,000.
The Company intends to purchase equipment costing Le 30,000 in
February which will be payable in March.
The bank balance on 1st January 2020 is expected to be Le 5,000
overdrawn.
You are required to prepare the cash budget for the first quarter
of 2020.
In: Finance
Bradley Cooper operates a distributor business which he started in 2009. The business is doing well, so he is contemplating expansion for the upcoming year 2012, to meet the orders of a large customer recently received. He wants to make sure that he does not foul up with this order and has asked you to prepare his budget for the next year which should include the new customer's orders. This will help him to see if he will have sufficient cash or will need to negotiate an overdraft facility or a loan with his bankers, since he wants to maintain a cash balance of at least $15,000 at all times. He has supplied you with the following information:
1. His opening balance at January 1, 2012 is expected to be $14,000.
2. 80% of all sales are made for cash, and the other 20% collected in the following month.
3. Sales revenue are projected as: December 2011 $14,000; Jan 2012 $37,000; Feb 2012 $41,000, March 2012 $31,000.
4. Purchases are paid for the month following purchase. It is expected that $8,250 will be owing to suppliers at December 31, 2011.
5. John purchases are 55% of total monthly sales.
6. Salaries for two new staff members will be $4,800 per month as of January 1, 2012.
7. Rent is $3,600 per quarter payable January, April, July and October.
8. Electricity costs approximate to $1,650 per month.
9. Drawings for John's living expenses will be $2,750 per month.
10. John will deliver to the new customer so will purchase a used pick-up in January, 2012 from his father for $30,000. Petrol will cost $3,000 per month
Required:
a) Prepare Bradley's cash budget for the first quarter of 2012.
b) What advice would you offer to Bradley?
In: Accounting