(b) Using the unit cost information available and your calculations in (a), prepare a financial analysis of the
decision strategy which TOC may implement with regard to the manufacture of each product. (6 marks)
第1题:
(b) Prepare a consolidated statement of financial position of the Ribby Group at 31 May 2008 in accordance
with International Financial Reporting Standards. (35 marks)
第2题:
(b) Comment (with relevant calculations) on the performance of the business of Quicklink Ltd and Celer
Transport during the year ended 31 May 2005 and, insofar as the information permits, its projected
performance for the year ending 31 May 2006. Your answer should specifically consider:
(i) Revenue generation per vehicle
(ii) Vehicle utilisation and delivery mix
(iii) Service quality. (14 marks)
difference will reduce in the year ending 31 May 2006 due to the projected growth in sales volumes of the Celer Transport
business. The average mail/parcels delivery of mail/parcels per vehicle of the Quicklink Ltd part of the business is budgeted
at 12,764 which is still 30·91% higher than that of the Celer Transport business.
As far as specialist activities are concerned, Quicklink Ltd is budgeted to generate average revenues per vehicle amounting to
£374,850 whilst Celer Transport is budgeted to earn an average of £122,727 from each of the vehicles engaged in delivery
of processed food. It is noticeable that all contracts with major food producers were renewed on 1 June 2005 and it would
appear that there were no increases in the annual value of the contracts with major food producers. This might have been
the result of a strategic decision by the management of the combined entity in order to secure the future of this part of the
business which had been built up previously by the management of Celer Transport.
Each vehicle owned by Quicklink Ltd and Celer Transport is in use for 340 days during each year, which based on a
365 day year would give an in use % of 93%. This appears acceptable given the need for routine maintenance and repairs
due to wear and tear.
During the year ended 31 May 2005 the number of on-time deliveries of mail and parcel and industrial machinery deliveries
were 99·5% and 100% respectively. This compares with ratios of 82% and 97% in respect of mail and parcel and processed
food deliveries made by Celer Transport. In this critical area it is worth noting that Quicklink Ltd achieved their higher on-time
delivery target of 99% in respect of each activity whereas Celer Transport were unable to do so. Moreover, it is worth noting
that Celer Transport missed their target time for delivery of food products on 975 occasions throughout the year 31 May 2005
and this might well cause a high level of customer dissatisfaction and even result in lost business.
It is interesting to note that whilst the businesses operate in the same industry they have a rather different delivery mix in
terms of same day/next day demands by clients. Same day deliveries only comprise 20% of the business of Quicklink Ltd
whereas they comprise 75% of the business of Celer Transport. This may explain why the delivery performance of Celer
Transport with regard to mail and parcel deliveries was not as good as that of Quicklink Ltd.
The fact that 120 items of mail and 25 parcels were lost by the Celer Transport business is most disturbing and could prove
damaging as the safe delivery of such items is the very substance of the business and would almost certainly have resulted
in a loss of customer goodwill. This is an issue which must be addressed as a matter of urgency.
The introduction of the call management system by Quicklink Ltd on 1 June 2004 is now proving its worth with 99% of calls
answered within the target time of 20 seconds. This compares favourably with the Celer Transport business in which only
90% of a much smaller volume of calls were answered within a longer target time of 30 seconds. Future performance in this
area will improve if the call management system is applied to the Celer Transport business. In particular, it is likely that the
number of abandoned calls will be reduced and enhance the ‘image’ of the Celer Transport business.
第3题:
(b) Using the information contained in Appendix 1.1, discuss the financial performance of HLP and MAS,
incorporating details of the following in your discussion:
(i) Overall client fees (total and per consultation)
(ii) Advisory protection scheme consultation ‘utilisation levels’ for both property and commercial clients
(iii) Cost/expense levels. (10 marks)
(ii) As far as annual agreements relating to property work are concerned, HLP had a take up rate of 82·5% whereas MAS
had a take up rate of only 50%. Therefore, HLP has ‘lost out’ to competitor MAS in relative financial terms as regards
the ‘take-up’ of consultations relating to property work. This is because both HLP and MAS received an annual fee from
each property client irrespective of the number of consultations given. MAS should therefore have had a better profit
margin from this area of business than HLP. However, the extent to which HLP has ‘lost out’ cannot be quantified since
we would need to know the variable costs per consultation and this detail is not available. What we do know is that
HLP earned actual revenue per effective consultation amounting to £90·90 whereas the budgeted revenue per
consultation amounted to £100. MAS earned £120 per effective consultation.
The same picture emerges from annual agreements relating to commercial work. HLP had a budgeted take up rate of
50%, however the actual take up rate during the period was 90%. MAS had an actual take up rate of 50%. The actual
revenue per effective consultation earned by HLP amounted to £167 whereas the budgeted revenue per consultation
amounted to £300. MAS earned £250 per effective consultation.
There could possibly be an upside to this situation for HLP in that it might be the case that the uptake of 90% of
consultations without further charge by clients holding annual agreements in respect of commercial work might be
indicative of a high level of customer satisfaction. It could on the other hand be indicative of a mindset which says ‘I
have already paid for these consultations therefore I am going to request them’.
(iii) Budgeted and actual salaries in HLP were £50,000 per annum, per advisor. Two additional advisors were employed
during the year in order to provide consultations in respect of commercial work. MAS paid a salary of £60,000 to each
advisor which is 20% higher than the salary of £50,000 paid to each advisor by HLP. Perhaps this is indicative that
the advisors employed by MAS are more experienced and/or better qualified than those employed by HLP.
HLP paid indemnity insurance of £250,000 which is £150,000 (150%) more than the amount of £100,000 paid by
MAS. This excess cost may well have arisen as a consequence of successful claims against HLP for negligence in
undertaking commercial work. It would be interesting to know whether HLP had been the subject of any successful
claims for negligent work during recent years as premiums invariably reflect the claims history of a business. Rather
worrying is the fact that HLP was subject to three such claims during the year ended 31 May 2007.
Significant subcontract costs were incurred by HLP during the year probably in an attempt to satisfy demand and retain
the goodwill of its clients. HLP incurred subcontract costs in respect of commercial properties which totalled £144,000.
These consultations earned revenue amounting to (320 x £150) = £48,000, hence a loss of £96,000 was incurred
in this area of the business.
HLP also paid £300,000 for 600 subcontract consultations in respect of litigation work. These consultations earned
revenue amounting to (600 x £250) = £150,000, hence a loss of £150,000 was incurred in this area of the business.
In contrast, MAS paid £7,000 for 20 subcontract consultations in respect of commercial work and an identical amount
for 20 subcontract consultations in respect of litigation work. These consultations earned revenue amounting to
20 x (£150 + £200) =£7,000. Therefore, a loss of only £7,000 was incurred in respect of subcontract consultations
by MAS.
Other operating expenses were budgeted at 53·0% of sales revenue. The actual level incurred was 40·7% of sales
revenue. The fixed/variable split of such costs is not given but it may well be the case that the fall in this percentage is
due to good cost control by HLP. However, it might simply be the case that the original budget was flawed. Competitor
MAS would appear to have a slightly superior cost structure to that of HLP since its other operating expenses amounted
to 38·4% of sales revenue. Further information is required in order to draw firmer conclusions regarding cost control
within both businesses.
第4题:
(b) The marketing director of CTC has suggested the introduction of a new toy ‘Nellie the Elephant’ for which the
following estimated information is available:
1. Sales volumes and selling prices per unit
Year ending, 31 May 2009 2010 2011
Sales units (000) 80 180 100
Selling price per unit ($) 50 50 50
2. Nellie will generate a contribution to sales ratio of 50% throughout the three year period.
3. Product specific fixed overheads during the year ending 31 May 2009 are estimated to be $1·6 million. It
is anticipated that these fixed overheads would decrease by 10% per annum during each of the years ending
31 May 2010 and 31 May 2011.
4. Capital investment amounting to $3·9 million would be required in June 2008. The investment would have
no residual value at 31 May 2011.
5. Additional working capital of $500,000 would be required in June 2008. A further $200,000 would be
required on 31 May 2009. These amounts would be recovered in full at the end of the three year period.
6. The cost of capital is expected to be 12% per annum.
Assume all cash flows (other than where stated) arise at the end of the year.
Required:
(i) Determine whether the new product is viable purely on financial grounds. (4 marks)
第5题:
(b) Explain by reference to Hira Ltd’s loss position why it may be beneficial for it not to claim any capital
allowances for the year ending 31 March 2007. Support your explanation with relevant calculations.
(6 marks)
第6题:
(c) Explanatory notes, together with relevant supporting calculations, in connection with the loan. (8 marks)
Additional marks will be awarded for the appropriateness of the format and presentation of the schedules, the
effectiveness with which the information is communicated and the extent to which the schedules are structured in
a logical manner. (3 marks)
Notes: – you should assume that the tax rates and allowances for the tax year 2006/07 and for the financial year
to 31 March 2007 apply throughout the question.
– you should ignore value added tax (VAT).
第7题:
(b) State, with reasons, the principal additional information that should be made available for your review of
Robson Construction Co. (8 marks)
第8题:
(b) Seymour offers health-related information services through a wholly-owned subsidiary, Aragon Co. Goodwill of
$1·8 million recognised on the purchase of Aragon in October 2004 is not amortised but included at cost in the
consolidated balance sheet. At 30 September 2006 Seymour’s investment in Aragon is shown at cost,
$4·5 million, in its separate financial statements.
Aragon’s draft financial statements for the year ended 30 September 2006 show a loss before taxation of
$0·6 million (2005 – $0·5 million loss) and total assets of $4·9 million (2005 – $5·7 million). The notes to
Aragon’s financial statements disclose that they have been prepared on a going concern basis that assumes that
Seymour will continue to provide financial support. (7 marks)
Required:
For each of the above issues:
(i) comment on the matters that you should consider; and
(ii) state the audit evidence that you should expect to find,
in undertaking your review of the audit working papers and financial statements of Seymour Co for the year ended
30 September 2006.
NOTE: The mark allocation is shown against each of the three issues.
第9题:
A manufacturing company, Man Co, has two divisions: Division L and Division M. Both divisions make a single standardised product. Division L makes component L, which is supplied to both Division M and external customers.
Division M makes product M using one unit of component L and other materials. It then sells the completed
product M to external customers. To date, Division M has always bought component L from Division L.
The following information is available:
Division L charges the same price for component L to both Division M and external customers. However, it does not incur the selling and distribution costs when transferring internally.
Division M has just been approached by a new supplier who has offered to supply it with component L for $37 per unit. Prior to this offer, the cheapest price which Division M could have bought component L for from outside the group was $42 per unit.
It is head office policy to let the divisions operate autonomously without interference at all.
Required:
(a) Calculate the incremental profit/(loss) per component for the group if Division M accepts the new supplier’s
offer and recommend how many components Division L should sell to Division M if group profits are to be
maximised. (3 marks)
(b) Using the quantities calculated in (a) and the current transfer price, calculate the total annual profits of each division and the group as a whole. (6 marks)
(c) Discuss the problems which will arise if the transfer price remains unchanged and advise the divisions on a suitable alternative transfer price for component L. (6 marks)
第10题:
Which statement most accurately describes the account planning service component in the prepare phase for Cisco Unified Communications()
第11题:
You design a Business Intelligence (BI) solution by using SQL Server 2008. You plan to design the report strategy for a new report project that will be used by a financial application. The application uses five calculations that are implemented in Microsoft .NET Framework 3.5 assemblies. The assemblies are written in the C# language and use the static methods. You need to ensure that the calculations can be used by the expressions in all reports. You also need to ensure consistency within the reports by using the least amount of development effort. What should you do?()
第12题:
Add a reference to the assemblies in the Report Properties References tab.
Write the calculation logic used by the calculations by using T-SQL functions.
Write the code of the calculation logic into the Report Properties Custom Code tab.
Write the calculation logic in each report by using the mathematical functions available natively to SQL Server 2008 Reporting Services (SSRS).
第13题:
(b) Using the TARA framework, construct four possible strategies for managing the risk presented by Product 2.
Your answer should describe each strategy and explain how each might be applied in the case.
(10 marks)
第14题:
(ii) Recommend which of the refrigeration systems should be purchased. You should state your reasons
which must be supported by relevant calculations. (3 marks)
第15题:
(c) Suggest ways in which each of the six problems chosen in (a) above may be overcome. (6 marks)
第16题:
(iii) Identify and discuss an alternative strategy that may assist in improving the performance of CTC with
effect from 1 May 2009 (where only the products in (a) and (b) above are available for manufacture).
(4 marks)
第17题:
(iii) The effect of the restructuring on the group’s ability to recover directly and non-directly attributable input
tax. (6 marks)
You are required to prepare calculations in respect of part (ii) only of this part of this question.
Note: – You should assume that the corporation tax rates and allowances for the financial year 2006 apply
throughout this question.
(iii) The effect of the restructuring on the group’s ability to recover its input tax
Prior to the restructuring
Rapier Ltd and Switch Ltd make wholly standard rated supplies and are in a position to recover all of their input tax
other than that which is specifically blocked. Dirk Ltd and Flick Ltd are unable to register for VAT as they do not make
taxable supplies. Accordingly, they cannot recover any of their input tax.
Following the restructuring
Rapier Ltd will be carrying on four separate trades, two of which involve the making of exempt supplies such that it will
be a partially exempt trader. Its recoverable input tax will be calculated as follows.
– Input tax in respect of inputs wholly attributable to taxable supplies is recoverable.
– Input tax in respect of inputs wholly attributable to exempt supplies cannot be recovered (subject to the de minimis
limits below).
– A proportion of the company’s residual input tax, i.e. input tax in respect of inputs which cannot be directly
attributed to particular supplies, is recoverable. The proportion is taxable supplies (VAT exclusive) divided by total
supplies (VAT exclusive). This proportion is rounded up to the nearest whole percentage where total residual input
tax is no more than £400,000 per quarter.
The balance of the residual input tax cannot be recovered (subject to the de minimis limits below).
– If the de minimis limits are satisfied, Rapier Ltd will be able to recover all of its input tax (other than that which is
specifically blocked) including that which relates to exempt supplies. The de minimis limits are satisfied where the
irrecoverable input tax:
– is less than or equal to £625 per month on average; and
– is less than or equal to 50% of total input tax.
The impact of the restructuring on the group’s ability to recover its input tax will depend on the level of supplies made
by the different businesses and the amounts of input tax involved. The restructuring could result in the group being able
to recover all of its input tax (if the de minimis limits are satisfied). Alternatively the amount of irrecoverable input tax
may be more or less than the amounts which cannot be recovered by Dirk Ltd and Flick Ltd under the existing group
structure.
第18题:
(b) Using the information provided, state the financial statement risks arising and justify an appropriate audit
approach for Indigo Co for the year ending 31 December 2005. (14 marks)
第19题:
(b) A sale of industrial equipment to Deakin Co in May 2005 resulted in a loss on disposal of $0·3 million that has
been separately disclosed on the face of the income statement. The equipment cost $1·2 million when it was
purchased in April 1996 and was being depreciated on a straight-line basis over 20 years. (6 marks)
Required:
For each of the above issues:
(i) comment on the matters that you should consider; and
(ii) state the audit evidence that you should expect to find,
in undertaking your review of the audit working papers and financial statements of Keffler Co for the year ended
31 March 2006.
NOTE: The mark allocation is shown against each of the three issues.
第20题:
In relation to the law of contract, distinguish between and explain the effect of:
(a) a term and a mere representation; (3 marks)
(b) express and implied terms, paying particular regard to the circumstances under which terms may be implied in contracts. (7 marks)
This question requires candidates to consider the law relating to terms in contracts. It specifically requires the candidates to distinguish between terms and mere representations and then to establish the difference between express and implied terms in contracts.
(a) As the parties to a contract will be bound to perform. any promise they have contracted to undertake, it is important to distinguish between such statements that will be considered part of the contract, i.e. terms, and those other pre-contractual statements which are not considered to be part of the contract, i.e. mere representations. The reason for distinguishing between them is that there are different legal remedies available if either statement turns out to be incorrect.
A representation is a statement that induces a contract but does not become a term of the contract. In practice it is sometimes difficult to distinguish between the two, but in attempting to do so the courts will focus on when the statement was made in relation to the eventual contract, the importance of the statement in relation to the contract and whether or not the party making the statement had specialist knowledge on which the other party relied (Oscar Chess v Williams (1957) and Dick
Bentley v Arnold Smith Motors (1965)).
(b) Express terms are statements actually made by one of the parties with the intention that they become part of the contract and
thus binding and enforceable through court action if necessary. It is this intention that distinguishes the contractual term from
the mere representation, which, although it may induce the contractual agreement, does not become a term of the contract.
Failure to comply with the former gives rise to an action for breach of contract, whilst failure to comply with the latter only gives rise to an action for misrepresentation.
Such express statements may be made by word of mouth or in writing as long as they are sufficiently clear for them to be enforceable. Thus in Scammel v Ouston (1941) Ouston had ordered a van from the claimant on the understanding that the balance of the purchase price was to be paid ‘on hire purchase terms over two years’. When Scammel failed to deliver the van Ouston sued for breach of contract without success, the court holding that the supposed terms of the contract were too
uncertain to be enforceable. There was no doubt that Ouston wanted the van on hire purchase but his difficulty was that
Scammel operated a range of hire purchase terms and the precise conditions of his proposed hire purchase agreement were
never sufficiently determined.
Implied terms, however, are not actually stated or expressly included in the contract, but are introduced into the contract by implication. In other words the exact meaning and thus the terms of the contract are inferred from its context. Implied terms can be divided into three types.
Terms implied by statute
In this instance a particular piece of legislation states that certain terms have to be taken as constituting part of an agreement, even where the contractual agreement between the parties is itself silent as to that particular provision. For example, under s.5 of the Partnership Act 1890, every member of an ordinary partnership has the implied power to bind the partnership in a contract within its usual sphere of business. That particular implied power can be removed or reduced by the partnership agreement and any such removal or reduction of authority would be effective as long as the other party was aware of it. Some implied terms, however, are completely prescriptive and cannot be removed.
Terms implied by custom or usage
An agreement may be subject to terms that are customarily found in such contracts within a particular market, trade or locality. Once again this is the case even where it is not actually specified by the parties. For example, in Hutton v Warren (1836), it was held that customary usage permitted a farm tenant to claim an allowance for seed and labour on quitting his tenancy. It should be noted, however, that custom cannot override the express terms of an agreement (Les Affreteurs Reunnis SA v Walford (1919)).
Terms implied by the courts Generally, it is a matter for the parties concerned to decide the terms of a contract, but on occasion the court will presume that the parties intended to include a term which is not expressly stated. They will do so where it is necessary to give business efficacy to the contract.
Whether a term may be implied can be decided on the basis of the officious bystander test. Imagine two parties, A and B, negotiating a contract, when a third party, C, interrupts to suggest a particular provision. A and B reply that that particular term is understood. In just such a way, the court will decide that a term should be implied into a contract.
In The Moorcock (1889), the appellants, owners of a wharf, contracted with the respondents to permit them to discharge their ship at the wharf. It was apparent to both parties that when the tide was out the ship would rest on the riverbed. When the tide was out, the ship sustained damage by settling on a ridge. It was held that there was an implied warranty in the contract that the place of anchorage should be safe for the ship. As a consequence, the ship owner was entitled to damages for breach of that term.
Alternatively the courts will imply certain terms into unspecific contracts where the parties have not reduced the general agreement into specific details. Thus in contracts of employment the courts have asserted the existence of implied terms to impose duties on both employers and employees, although such implied terms can be overridden by express contractual provision to the contrary.
第21题:
JJG Co is planning to raise $15 million of new finance for a major expansion of existing business and is considering a rights issue, a placing or an issue of bonds. The corporate objectives of JJG Co, as stated in its Annual Report, are to maximise the wealth of its shareholders and to achieve continuous growth in earnings per share. Recent financial information on JJG Co is as follows:
Required:
(a) Evaluate the financial performance of JJG Co, and analyse and discuss the extent to which the company has achieved its stated corporate objectives of:
(i) maximising the wealth of its shareholders;
(ii) achieving continuous growth in earnings per share.
Note: up to 7 marks are available for financial analysis.(12 marks)
(b) If the new finance is raised via a rights issue at $7·50 per share and the major expansion of business has
not yet begun, calculate and comment on the effect of the rights issue on:
(i) the share price of JJG Co;
(ii) the earnings per share of the company; and
(iii) the debt/equity ratio. (6 marks)
(c) Analyse and discuss the relative merits of a rights issue, a placing and an issue of bonds as ways of raising the finance for the expansion. (7 marks)
第22题:
WebSphere Commerce Accelerator will be used to create a product. The product has 6 variations determined by attributes Size, which has three values and Color, which has two values. What is the PREFERRED method to create the product and its SKUs using the Product Management tool?()
第23题:
It performs a detailed financial analysis, including current phone network costs, training, and return of investment.
It researches unique challenges and conducts competitive analysis to determine a vertical approach and strategy.
It identifies the key players, high-level solution requirements, timelines, and scope of the opportunity.
It provides the partner with information regarding customer acceptance of the new solution.