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Business Assignment Solution Sample Assignment

If a business was measuring % market share as a measure of performance, this is likely to be a measure of which perspective of the Balanced Scorecard (BSC)

Select one:

Customer Perspective Correct 

One of the biggest advantages of Competitor Benchmarking is which of the following?

It is very useful for identifying the possible strengths and weaknesses of competitors and itself by direct comparison investigations

Which of the following would be a LEAD indicator in the Balanced Scorecard (BSC) as a performance measure in the Financial Perspective

Number of new customer accounts and/or opened (in a bank)

If a service business had Sales = $2,000,000 and % profit of 31% and Invested Capital of $4,000,000 and a required rate of return (imputed interest rate) of 16%, what is the Residual Income for this business unit. Select from the following the correct RI amount AND whether the business unit is performing at an acceptable level.

NEGATIVE $20,000 - the unit performance is unacceptable because RI is less than ZERO

Calculate the ROI and select the correct answer if  a company has Sales = $1,000,000, Profit = 20% and Invested Capital of $800,000

ROI = (Profit/Sales) x (Sales / Invested Capital)

ROI = 20% x ($1,000,000/$800,000)

The correct answer is: 25%

If a business was measuring staff-turnover as a measure of performance, this is likely to be a measure of which perspective of the Balanced Scorecard (BSC)

Learning and Growth Perspective

If a business was measuring attendance of staff at essential training sessions as a measure of performance, this is likely to be a measure of which perspective of the Balanced Scorecard (BSC)

Learning and Growth Perspective

Calculate the ROI and select the correct answer if  a company has Sales = $1,000,000, Profit = $200,000 and Invested Capital of $800,000

ROI = Profit/Invested Capital

The correct answer is: 25%

When a business uses INTERNAL benchmarking it is measuring which of the following?

The correct answer is: Comparative performance of business units internal to an organization

Non-financial performance measures have which of the following sets of ADVANTAGES and DISADVANTAGES?

ADVANTAGE - More meaningful and communicate the link to strategic goals, DISADVANTAGE - May be more subjective and may not lead to better financial performance

Which of the following is the correct set of 1st ADVANTAGE of using ROI and 2nd DISADVANTAGE of using ROI to measure performance?

ADVANTAGE ROI is an objective financial measure and DISADVANTAGE may lead to GOAL CONGRUENCE issues as managers cut costs too far or fail to invest even when justified

If a business was measuring ROI as a measure of performance, this is likely to be a measure of which perspective of the Balanced Scorecard (BSC)

The correct answer is: Financial Perspective

Central to the establishment of a Balanced Scorecard should be which of the following?

A clear Vision, and defined Strategic and Organisational Goals

Financial performance measures have which of the following advantages?

Financial performance measures are easily calculated, considered objective and easily understood

If a service business had Sales = $2,000,000 and % profit of 31% and Invested Capital of $4,000,000 and a required rate of return (imputed interest rate) of 16%, what is the Residual Income for this business unit. Select from the following the correct RI amount AND whether the business unit is performing at an acceptable level.

NEGATIVE $20,000 - the unit performance is unacceptable because RI is less than ZERO

RI = PROFIT - Capital Charge

Capital Charge = (Invested Capital x Required Rate of Return)

If RI is > zero then acceptable

IF RI is < zero then unacceptable as it has not met the required rate of return on the capital employed in that business unit.

The correct answer is: NEGATIVE $20,000 - the unit performance is unacceptable because RI is less than ZERO

Measuring Market Share is (Choose one of the following)

Likely to be a LAG indicator of performance in the Customer Perspective of a Balanced Scorecard

This question requires that you match the description to the correct costing system

Overhead costs can only be finalised at end of job AND Customer has agreed to be charged based on ACTUAL cost

Actual Costing

To smooth costing of products, overhead is applied based on broad averaging of budgeted overheads for the year. Amount is calculated in advance and applied at that rate during the year

Normal Costing

Manufacturer of multiple complex products, large scale operation, many costs not volume (unit volume) driven, high level of indirect/overhead costs AND very competitive market for products produced. (HINT - See Chapter 6 - Week 5 work!!!!

Activity Based Costing

AASB requires that whichever costing system used, all costs of production (for a manufacturer) MUST be included in the product cost and kept as inventory until sold. What is this costing 'condition' for product costing called?

Absorption Costing

 A manufacturer has the following costs:

Manufacturing Costs

Variable Cost

$200

Fixed cost

$150

Sales and Admin Costs

Variable

$120

Fixed

$100

Calculate the mark-up percentage for each of the costs given below.

(Hint: Remember and use the following cost-plus formulas)

Sell price = Cost x (1 + Mark-up%) OR

Sell price = Cost + (Cost x Mark-up%)

The business uses Full cost as the cost base with 15% markup

$655.50

The business uses total variable cost as the cost base with 10% markup

$352.00

The business uses Variable cost of manufacture as the cost base with 60% markup

$320

The business uses Absorption cost as the cost base with 35% markup

$472/50

When used to reduce costs in a business, Business Process Engineering (BPR) is known for which of the following?

Evaluate business processes then radically overhaul these to achieve cost efficiencies

If a business used an effective RESPONSIBILITY ACCOUNTING SYSTEM and wanted to measure the performance of a COST CENTRE unit manager, then which of the following should be included in the performance report?

Only those costs for which the manager has CONTROL

When used to reduce costs in a business, Activity Based Management (ABM) is known for which of the following?

Find and make continual incremental cost improvements

One ADVANTAGE , and one CRITICISM of the Standard Cost System is (Choose the correct answer from the listed choices below)

ADVANTAGE - Standard cost variances are easy calculate and understand BUT CRITICISM - Standard Cost variances are often too late to action

If a company's budgeted annual overheads were $1300000 and using Direct Labour Hours (DLH) as the cost driver they budgeted for 20000 hours to be worked. Calculate the Budgeted Manufacturing Overhead Rate, then answer the following question:

If the Actual Overheads were $1250000 and the Actual DLHs worked were 20500, then what was the difference between the amount of overhead calculated and applied during the year and the actual overheads?

-82500

A business is evaluating their suppliers and has decided to use the 'Supplier Performance Index' (SPI) method. Which of the following is the correct formula for the SPI?

SPI = Total activity cost for supplier / Total purchase cost with that supplier

For each of the following scenarios, select the most correct pricing strategy or method from the list given

A business has just developed a new product for which it has a registered trade mark and numerous patents. It believes there will be very high initial demand for the product because it is so unique.

Price skimming

A company makes a generic range of wood screws. There are many other competitors and all products have the same features.

Cost plus pricing

A business wants to introduce an ice tea beverage to the market however realises there are already many competitors in the market. Unless they can create some additional perceived value in their product.

Penetration pricing

For each of the following, match the correct Ethical Principle (based on the FIVE ethical principles for Professional Accountants listed in APES110)

Note it is possible that one item is NOT related to any ethical principle (hint - no more than one!) and you may select NOT AN ETHICAL ISSUE as a valid answer.

An accountant recommends a particular company as a supplier to his or her boss without advising them that the manager of that business is a close personal friend or relative

INTEGRITY

A PUBLIC ACCOUNTANT is aware that new provisions for the taxation of trust distributions are coming into effect however because they are very busy, does not have time to attend training seminars or read up on the new laws. The accountant prepares the accounts without taking into account the new laws and the client is unfavourably taxed due to errors in their accounts.

DUE CARE AND COMPETENCE

The MANAGING PARTNER at a PUBLIC ACCOUNTANT finds that the internal controls of a public company have not been enforced and errors in the accounts make it likely that the Financial Accounts will not be a true and fair representation of the client's circumstances. The Accountant decides NOT to issue a qualified audit report and signs off that all is in order.

PROFESSIONAL BEHAVIOUR

A PUBLIC ACCOUNTANT is found to have colluded (private agreement) with a client to misrepresent their accounts to overstate expenses on a large scale to reduce the client's tax bill in order to retain the business. (The client indicated that they would find another accountant if they did not agree.)

INTEGRITY 

An accountant is very proud of his or her work and tells their friends at a social gathering about the details of the work and the outcomes they have just completed.

CONFIDENTIALITY

An accountant emphasizes the qualitative advantages of a proposal in a report so that the outcome is better for a close associate within the business even though the qualitative (accounting numbers) appear not to favour the proposal.

OBJECTIVITY

An accountant has spent a lot of time preparing a client's accounts and the billing to the client is much higher than the previous year. The client queries the bill.

NOT AN ETHICAL ISSUE

A PUBLIC ACCOUNTANT has a new client that he has completed tax returns for over a number of years. The client now wants this accountant to prepare and audit the accounts of the client's superannuation fund. The accountant is not overly experienced in superannuation but figures it cannot be too hard and accepts the job.

DUE CARE AND COMPETENCE

A company budgeted its overhead (or indirect) costs for the next year at $1337794 and using the cost driver of Direct Labour Hours (DLH) it budgeted to use 19900 DLH. (Use these amounts to calculate the Budgeted Manufacturing Overhead Rate.)

If the Actual Overheads for the year were $1230158 and the Actual DLH worked was 20941, then calculate the difference between the amount of overhead applied and the actual overhead and select your answer from the following choices: (Note over or under overhead is NOT shown, only the amount)

=(1230158-(1337794/19900)*20941

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