Task
You are required to complete all questions, in the same sequence as listed below, and submit all workings. Follow the assignment requirements (refer below to the Requirements section above) very closely.
Question 1 Internal Control
How is the separation of duties an example of internal control? Give two specific examples.
Question 2 Bank Reconciliation
A. How can the bank reconciliation statement be used as a control device? Give examples.
B. Create a spreadsheet model to show a bank reconciliation statement. Use the Smart Touch Learning example in Reading 5 for inspiration but create your own original data. Implement all the usual spreadsheet requirements.
Question 3 Introduction to management accounting
A. Which groups use information from an accounting system?
B.. "The problem with accounting is that accountants never get to become top managers such as CEOs." Do you agree? Explain. Illustrate your explanation with specific examples. Use the internet as a resource.
C.. "Classification of costs into variable and fixed categories depends on the decision situation."
Explain giving examples.
Question 4 Ethical Issues
Identify and discuss two examples of business or accounting ethical dilemmas from the current media. Reference your text pages 36 - 40.
Question 5 Work Integrated Assessment case study
Qantas Annual Report
Learning Objectives: The subject you are studying is vocational. It is designed with the workplace in mind. Work integrated assessment provides opportunities for students to link theory and skills learned in a subject to a real work context. Students can use these opportunities to develop and practice the professional and academic skills they learn about in a subject or through the online environment and then be assessed on their capabilities in these simulated authentic environments. Work integrated assessment allows students to simulate and situate their learning in an authentic workplace that encourages them to explore their knowledge and apply it to practice. Integrating real world, authentic assessment tasks allows students to learn about the particular environments and culture of their chosen professions, while at the same time absorbing and practicing the skills they need to succeed. Doing these tasks can help students develop skills that can help their employability.
Resources for this task include the 2015 Annual Report for Qantas. Your friend Bob is studying architecture at another University and knows very little about accounting and annual reports. Bob's uncle gave him $100,000 recently to invest. Bob knows you have begun studying accounting and is considering buying Qantas shares. Bob has some questions for you.
Present your answers concisely in a business report format.
Bob's questions:
1. What is the Balanced Scorecard and how is this relevant to Qantas?
2. In summary, how much were the Executives paid in 2015?
3. Why might Qantas have chosen Todd Sampson to be on the Board of Directors? Briefly describe Todd's profile by searching on the Internet.
4. Explain Revenue Seat Factor, EBITDA, Revenue received in advance and Retained Earnings.
5. Calculate and comment on the Working Capital ratio.
6. Create a two charts in Excel from any data in the report, showing 3D columns and a pie chart. Paste the spreadsheet graphs in your assignment. Show the data area.
7. Summarise your advice to Bob re the investment decision.
Find the Qantas 2015 Annual Report on the web.
Question 6 Costing
Define and briefly explain variable costs, fixed costs, contribution margin, break even point and sales mix.
Question 7 Costing and Decision Making
A. Describe the accountant's role in business decision making.
B. Distinguish between the quantitative and qualitative aspects of business decision making. Give examples.
Question 8 Decision making
Suppose you're on a TV game show, and you're given the choice of three doors. Behind one door is a brand new car, behind the others, nothing. You pick a door. The TV host, who knows what's behind the doors, chooses another door and opens it to show you that it has nothing. Should you change your decision?
Please be frank and creative in answering the following questions. Ensure you answer the questions in sequence.
A. (i) Suppose you're on a TV game show, and you're given the choice of three doors. Behind one door is a brand new car, behind the others, nothing. You pick a door. The TV host, who knows what's behind the doors, chooses another door and opens it to show you that it has nothing. Should you change your decision?
Don't think about this too deeply just yet. Do you feel (intuit?) that you should change your choice? Answer initially without researching the question. What is the thinking behind your answer?
Conduct a survey of ten of your friends/colleagues to give their opinion. Choose those who have not seen this problem before. You may wish to provide them with a copy of the question. The above image and question can be used for your survey.
Include in your answer a table setting out the results of this survey. Also create a simple chart with Excel to present the results of your survey.
A (ii) After you answer the first part of this question, search the Internet for the Monty Hall problem. Provide your own explanation of the correct solution. Why do so many get the wrong answer? Did you?
Briefly comment on this Marilyn vos Savant link. https://marilynvossavant.com/game-show-problem/
B. A man goes to see his medical doctor to find out whether or not he has a deadly disease. The test is positive. The test is 95% accurate and one in one thousand men of his age has this disease. What is the probability he has the disease? He decides to seek a second opinion but the results are exactly the same. When this question was put to a group of doctors, 80% of them answered "95%". He now plans to sell up all his assets, tell his boss what he really thinks of her, quit his job on the spot and live in Mauritius in the time he has left. Is this a rational decision? Explain.
C. Suppose an urn contains 100 marbles, 75 red and 25 black. A marble is drawn at random from the urn and you are asked to guess what colour you believe the marble to be. The marble is then shown,
replaced, and the urn's contents again randomised. The aim is to maximise the number of correct guesses. Before reading any further, what strategy would you employ? What would you guess?
Assume 4 red marbles come out in a row. What would your next guess be? Why? Include a brief discussion of the gambler's fallacy.
D. Creatively discuss the rationality of human business decision making using these and other examples. Use the Internet as a source. Identify several corporate decisions that were apparently not very rational (about 300 words for this section).
Question 9 Cash Budget
Spreadsheet a cash budget for June. Incorporate the usual spreadsheet requirements.
Question 10 Variance analysis
Spreadsheet the following to calculate materials and labour variances. Follow all spreadsheet requirements. Use the IF function to for variances.
Question 11 Capital budgeting
Burger Queen Drive-In is considering a proposal to invest in a speaker system that would allow its employees to service drive-through customers. The cost of the system (including installation of special windows and drive-way modifications) is $29,000. Michele McDonald, manager of Burger Queen, expects the drive-through operations to increase annual sales by $15,000, with a 25% contribution margin ratio. Assume that the system has an economic life of 10 years, at which time it will have no disposal value. The required rate of return is 10%. Ignore taxes.
Use a spreadsheet to answer each part of this question. Use the Excel NPV function. As usual, paste a formula view.
A.1. Compute the payback period. Is it a good measure of profitability? Explain.
A.2. Compute the NPV. Should Michele accept the proposal? Why or Why not?
A.3. Using the ARR model, compute the rate of return on the initial investment.
B. Assume now: Cost of new speaker system $30,000, Cash operating cost savings per year $20,000, Contribution margin rate 30%. Other data is unchanged
C. How is part B. an example of sensitivity analysis? Explain.
Here is a template you may choose to use. Note that cell B10 uses the Excel PV function.
Question 12 Business Report
Write two separate business reports to management on the significance of two of the following four topics to the function of management and accounting. The length should be about 400 - 500 words each. Use the Internet as a resource. Give examples to illustrate your report. Consider using screen shots to enhance your reports. Refer to the earlier section 'Assessment Information' for essay/report writing skill resources. The Internet can also be searched for advice on business report structures. You may choose to use images.
A. Spreadsheets
B. Black Swans (Nassim Nicholas Taleb)
C. "Gray" ethical areas in accounting. See https://danariely.com/tag/ethics/
D. Six Sigma
Rationale
This assignment allows students to demonstrate their understanding of Topics 5,6,7,8,9 and 10 - managing working capital and inventory, internal control and cash, introduction to management accounting, Cost-Volume-Profit analysis, relevant information and special decisions, budgeting and capital budgeting and seeks to assess your ability to be able to understand and implement cost concepts, construct and analyse management accounting reports, research accounting issues, demonstrate spreadsheet skills and apply critical thinking in communicating results. In doing this it is aligned with the following subject learning outcomes:
- To be able to evaluate and apply basic accounting ideas that underlie and limit the usefulness of accounting information;
- To be able to apply computer software to quantitative business decisions;
- To be able to discuss and critique the concepts behind the decision making processes associated with the efficient allocation of business resources;
- To be able to implement and critique analytic and interpretative techniques used in accounting; and
- To be able to explain and implement financial analysis and management accounting procedures.