案例分析题Bazeele hires out plant and machinery to small firms working in the construction industry. Bazeeles senior managers, including the chief executive officer (CEO), have worked in the business since it was established 30 years ago, and they own the majority of the shares. During that time, Bazeele has acquired many smaller plant hire businesses. Of these business units, those which have underperformed after acquisition have either been sold on or restructured, for example, to increase their operating margins. Bazeele has recently diversified by hiring out large items of plant to large construction firms working on major infrastructure projects. These projects can last for up to 10 years. Strong growth in the general economy has increased the number of these large projects and has also led to a predicted large increase in bank interest rates. The shareholders objective is for Bazeele to maintain its historic return on capital employed (ROCE). Managers at business units are given the objective of maintaining net profit margins of their own business units. Similarly, managers at individual branches of business units are given the same objective according to their own areas of responsibility. Following two years of poor performance, it has been suggested to the CEO that Bazeele would benefit from adopting a value-based management (VBM) approach. The CEO requires your advice and has said, The shareholders are unsure what VBM is, whether it will benefit Bazeele, and what changes the business would need to make if it were to adopt it. All managers in the business are already clear what their objectives are. For example, one business unit manager recently postponed some expensive staff training on improving customer satisfaction, which I believe was the correct decision. Our recent poor performance has meant we cannot afford this sort of expenditure, especially as we have no information on what levels of customer satisfaction actually are. Personally, I dislike change, but would not object to the adoption of VBM if it was thought to be beneficial for Bazeele. The shareholders have heard that economic value added (EVA) can be used to measure whether Bazeele has created or destroyed value for its shareholders, but this has not yet been calculated. Details of the companys recent performance are given in Appendix 1. Appendix 1 Notes from Bazeeles management accounts for the most recent year end 1. Net profit after tax for the year: $10m 2. Capital employed at the start of the year: $250m 3. The interest charge for the year was $15m on a variable rate loan with an interest rate of 10%. Bazeele is funded 60% by debt and 40% by equity. The cost of equity is 12%. Bazeele pays tax at a rate of 20%. 4. The depreciation charge for non-current assets for the year was $60m; the economic depreciation of which was $140m. At the start of the period, the accumulated economic depreciation of non-current assets exceeded its accounting depreciation by $160m. 5. Brought forward at the start of the year was a provision of $48m which was made in respect of a debt owed by a customer who has since repaid it. 6. Within the current profit or loss account there is an expense for $06m for advertising in trade magazines. This led to several enquiries from new customers involved in large infrastructure projects, which has resulted in Bazeele signing at least two large contracts after the end of the accounting period. Required:

案例分析题Iron Chicken (IC) is a multinational business which manufactures commercial building control systems

案例分析题Company information Daldorn is a manufacturer of heavy steel items

案例分析题Company information Totaig manufactures high quality and innovative small electrical appliances such as hairdryers and vacuum cleaners

案例分析题Section A This ONE question is compulsory and MUST be attempted Monza Pharma (Monza) is a developer and manufacturer of medical drugs, based in Beeland but selling its products all over the world. As a listed company, the overall objective of the company is to maximise the return to shareholders and it has used return on capital employed (ROCE) as its performance measure for this objective. There has often been comment at board meetings that it is good to have one, easily-understood measure for consideration. The company has three divisions: the drug development division develops new drug compounds, taking these through the regulatory systems of different countries until they are approved for sale; the manufacturing division then makes these compounds; the sales division then sells them. Monzas share price has underperformed compared to the market and the health sector in the last two years. The chief executive officer (CEO) has identified that its current performance measures are too narrow and is implementing a balanced scorecard (BSC) approach to address this problem. The current performance measures are: Return on capital employed Average cost to develop a new drug Revenue growth The CEO engaged a well-known consulting firm who recommended the use of a BSC. The consultants began by agreeing with the board of Monza that the objective for the organisations medium-term strategy was as follows: Create shareholder value by: Innovating in drug development Efficiency in drug manufacturing Success in selling their products The consulting firm has presented an interim report with the following proposed performance measures: Financial: ROCE Customer: Revenue growth Internal business process: Average cost to develop a new drug Learning and growth: Training days provided for employees each year The CEO and the lead consultant have had a disagreement about the quality and cost of this work and as a result the consultants have been dismissed. The CEO has commented that the proposed measures lack insight into the business and do not appear to tackle issues at strategic, tactical and operational levels. The CEO has decided to take this work in-house and has asked you as the performance management expert in the finance department to assist him by writing a report to the board to cover a number of areas. First, following the disagreement with the consultants, the CEO is worried that the consultants may not have been clear about the problems of using the BSC in their rush to persuade Monza to use their services. Second, he wants you to evaluate the choice of performance measures currently used by Monza and those proposed by the consulting firm. Third, there has been a debate at board level about how ROCE should be calculated. The marketing director stated that she was not sure what profit figure (of at least four which were available) should be used and why, especially given the large variation in result which this gives. She also wondered what the effect would be of using equity rather than all capital to calculate a return on investment. Some basic data has been provided in Appendix 1 to assist you in quantifying and evaluating these possibilities. In addition to these concerns, the board is considering introducing a total quality management approach within Monza. Obviously, quality of output is critical in such a heavily regulated industry where the products can be a matter of life and death. There has been discussion about testing this idea within the manufacturing division. The CEO wants to understand, first, the costs associated with quality issues within that division. To aid your analysis, he has supplied some detailed information in Appendix 2. Next, the board requires an outline evaluation of how a total quality management (TQM) approach would fit within the manufacturing division. Finally, the drug development divisional managers have been lobbying for a new information system which will assist their research chemists in identifying new drug compounds for testing. The new system will need to be capable of performing calculations and simulations which require high computational power and memory but will also need to have access to external data sources so that these scientists can keep up with developments in the field and identify new opportunities. The CEO is worried about the cost of such a new system and wants to know how it would fit within the existing lean management approach within that division. Appendix 2 Cost information for the manufacturing division for the most recent accounting period 1. Batches rejected at factory valued at $17m which have a scrap value of $4m. 2. Training of factory staff which cost $8m. 3. Regulatory fines costing $5m (due to drug compounds being outside the specified range of mix of chemical ingredients). 4. Discounts given following customer complaints due to late delivery costing $22m. 5. Factory product testing department cost $12m. 6. Cost of raw materials was $1,008m. Required： Write a report to the board of Monza to: (i) Assess the problems of using a balanced scorecard at Monza. (8 marks) (ii) Evaluate the choice of the current performance measures and the consulting firms proposed performance measures for Monza. (12 marks) (iii) Evaluate the effect of choosing different profit and capital measurements for different measures of return on investment and recommend a suitable approach for Monza. (11 marks) (iv) Analyse the current quality costs in the manufacturing division and then briefly discuss how implementation of total quality management would affect the division. (10 marks) (v) Briefly advise on how the drug development division can aim to make the new information system lean. (5 marks) Professional marks will be awarded for the format, style and structure of the discussion of your answer. (4 marks)

案例分析题Laudan Advertising Agency (LAA) is based in Geeland and has three autonomous subsidiaries: A, B and C

案例分析题Alflonnso is a large producer of industrial chemicals, with divisions in 25 countries. The agrochemicals division produces a chemical pesticide, known internally as ALF, to control pests in a crop which is of worldwide significance, economically and for food production. Pesticides such as ALF only remain effective for a limited time, after which pests become resistant to them and a replacement product needs to be found. A scientific study has shown that the current variant, ALF6, is becoming ineffective in controlling pests and in some places, it has accumulated in the soil to levels which may significantly reduce crop yields in the future if it is continued to be used. The agrochemicals division is evaluating three new products to find one replacement for ALF6. ALF7 ALF7 is produced by a small chemical modification to the existing product and requires little research and development (RD) resources to develop it. As it is closely related to the current variant, it is only expected to remain effective, and in use, for three years. It is unclear whether ALF7 will accumulate in the soil in the same way as ALF6 does. Red Red is a new type of pesticide which will incur large amounts of RD expenditure to develop a commercial version. In addition, the agrochemicals division will have to fund a long-term scientific study into the effect of Red on the environment at a cost of $4m for each of the 15 years that the product will be in use, and for five years afterwards. Production of Red generates large amounts of toxic by-products which must be treated in the divisions waste treatment facility. The production plant used to produce Red must also be decommissioned for cleaning, at an estimated cost of $45m, at the end of the life of the product. Green Green is a form of a naturally occurring chemical, thought to be safe and not to accumulate in the environment. It is expected to remain in use for eight years. Production of Green requires relatively large amounts of energy. Significant RD expenditure is also needed to produce an effective version, as Green remains active in the environment for only a short time. Because of this, Green is unsuitable for use in climates where crop production is already difficult. The Global Food Production Organisation (GFPO) is a non-governmental organisation which funds new ways to increase global crop production, especially in regions where food for human consumption is already scarce. The GFPO has agreed to make a significant contribution to the RD costs of producing a replacement for ALF6, but will be unwilling to contribute to the RD costs for Green because it cannot be used in every region. Similarly, a number of governments, in countries where Alflonnso has licences to operate its other chemical businesses, have warned the company of the potential public disapproval should the agrochemical division choose to replace ALF6 with a product unsuitable for use in areas where food production is scarce. The newly appointed chief financial officer (CFO) for the agrochemicals division has asked you as a performance management consultant for your advice. One of our analysts in the agrochemicals division, she said, has produced a single period statement of profit or loss (Appendix 1) to show the profitability of the three new products we are considering as replacements for ALF6. I think the analysts calculations are too simplistic, she continued. The costs of the waste treatment are apportioned based on the expected revenue of the new products. This is consistent with Alflonnsos traditional group accounting policy, but I dont think this gives an accurate costing for the new products. Also, I watched a presentation recently about the use of lifecycle costing and also how environmental management accounting (EMA) can help reduce costs in the categories of conventional, contingent and reputation costs and as a result improve performance. Notes to the statement of profit or loss: 1 All figures exclude the contribution from the GFPO towards the RD costs of the new product. 2 Waste treatment is an overhead cost incurred in the divisions waste treatment facility. Currently, costs of waste treatment are apportioned to products according to expected revenue. The total annual cost of the waste treatment facility, which processes a total of 55m litres of waste each year, is $300m. Any waste treatment capacity not used by any of the three new products can be used to treat waste created during the manufacture of other products in the division. One litre of waste by-product is produced for every 125 litres of ALF7 produced, for every 25 litres of Red produced and for every 100 litres of Green. 3 RD costs are incurred in the divisions RD facility. In accordance with the groups accounting policy, RD expenditure is not currently apportioned to individual products. The annual cost of the RD facility is $60m and has a total of 30,400 RD hours available, of which 800 hours would be required to develop ALF7, 8,500 hours to develop Red, and 4,000 hours to develop Green. Required:

案例分析题Company information Veyatie is a fashion clothing retailer which caters for both male and female customers of all adult age groups

案例分析题Folt Manufacturing: Company information Folt Manufacturing (Folt) is a company, which is majority owned by its management team

案例分析题Freeze: Company information Freeze is listed on the small Kayland stock exchange and supplies construction services to the oil exploration industry in Kayland. Demand for Freezes services broadly relates directly to the world oil price. A recent fall in the world oil price has led to several corporate failures in the oil exploration industry as the exploration of new oil fields becomes unprofitable. In April 20X8, a major oil spill led to widespread environmental damage in Kayland. An initial investigation has indicated that the cause of the oil spill may be due to the incorrect installation of machinery by Freeze. Quantitative failure model: the K Score The K Score is a quantitative model used for predicting whether Freeze is at risk of corporate failure. The K Score model was developed by correlating recent historic data on financial ratios of all companies listed on the Kayland stock exchange with the incidence of subsequent corporate failure. The method of calculation of the K Score is shown in Appendix 1. Corporate failure indicators and comparator information A colleague of yours, who is an academic working in a Kayland university, has suggested that operational gearing and financial gearing1 are the two most important indicators of corporate failure in the industry in which Freeze operates. To demonstrate this, she has introduced you to Thor, which is a privately-owned company based in Jayland. Thor provides similar services to Freeze in both the Kayland and Jayland oil exploration industries. Thor reports its financial results in Jayland dollars (J$). An economic recession has recently begun in Jayland. Extracts from the publicly available accounts of Freeze and Thor for the year ended 31 December 20X7 are both shown in Appendix 2. For comparison purposes, both extracts are in K$. Financial gearing is defined as (preference share capital + long-term debt)/total equity Required: Appendix 1 Calculation of the K Score1 K Score = 2.5K1 + 5.0K2 + 0.1K3 + 1.9K4 Score Definition K1 Net current assets/total assets K2 Profit before interest and tax/total assets K3 Market value of ordinary shares2/book value of non-current liabilities K4 Retained earnings/total assets Notes: 1A K Score of 2 or less indicates that corporate failure is highly likely, whereas a score of 5 or above indicates that corporate failure is unlikely. Scores of between 2 and 5 are in the grey area, where further analysis is required to determine the likelihood of corporate failure. 2 The average price of Freeze ordinary shares on the Kayland stock exchange during the year ended 31 December 20X7 was $1060. Appendix 2 Extracts from the management accounts of Freeze and Thor Extract from the statement of profit or loss for the year ended 31 December 20X7 *The statement of financial position was approved by the board on 31 March 20X8

案例分析题Section B TWO questions ONLY to be attempted Cuthbert is based in Ceeland and manufactures jackets for use in very cold environments by mountaineers and skiers

案例分析题Tosemary and Rhyme Hospital (TRH) is a small hospital for the treatment of patients with only minor injuries. Patients arriving at TRH with more serious injuries are referred to a larger hospital nearby. Those with minor injuries are admitted into TRH and wait to be seen by a doctor. After treatment, most patients leave the hospital and need not return. If their treatment has failed, however, they are re-admitted for additional treatment. Patients do not have to pay for treatment at TRH, which is a not-for-profit, public sector hospital. It is funded entirely by the government from taxation and a fixed level of funding is received from the government each year. It is up to TRH to allocate its funding to different areas, such as doctors salaries, medicines and all other costs required to run a hospital. TRHs objectives are: to give prompt access to high quality medical treatment for patients to provide value for money for the taxpayer, as measured by the 3Es framework of economy, efficiency and effectiveness to contribute to medical science by developing innovative ways to deliver treatment to patients. It has been suggested to TRH that the hospital has inadequate performance measurement systems in place to assess whether it is achieving its objectives, and that insufficient attention is given to the importance of non-financial performance indicators. You have been asked for your advice, and have met with some of the doctors to get their opinions. One senior doctor has told you, I think TRH always delivers value for money. Weve always achieved our total financial budgets. Doctors here work much longer hours than colleagues in other hospitals, often without being paid for working overtime. There is not enough government funding to recruit more doctors. At busy times, weve started referring more patients arriving at TRH to the larger hospital nearby. This has helped reduce average waiting times. Patients arriving at TRH are now seen by a doctor within 3 hours 50 minutes rather than 4 hours as was previously the case. So, were already doing all we can. I dont know how much time we spend developing innovative ways to deliver treatment to patients though, as most of the performance data we doctors receive relates to financial targets. Recent performance data for TRH and national average information has been provided in Appendix 1. This is indicative of the data which the doctors at TRH receive. Notes 1 National average for other public sector minor injuries hospitals. 2 Staff satisfaction rating was obtained by conducting a survey of all 25 doctors. A survey score of 100% represents totally satisfied, and a score of 0% represents totally unsatisfied. Required:

案例分析题Section A This ONE question is compulsory and MUST be attempted Thyme Engine Products (Thyme) manufactures jet aircraft engines for the commercial aircraft market. This is a worldwide business although Thymes production and development are all based in the country of Beeland. Thyme is a listed company and its stated overall objective is to be a world-class jet engine manufacturer trusted by our customers to deliver excellent products. Its promise to its shareholders is that it will maximise their returns. The strategy to achieve this is to use world-class engineering to design engines and high quality production and customer service in order to drive profitable growth. Thymes share price has recently suffered as a result of the failure of a new engine design which led to large cash losses and a difficulty in obtaining new financing. There has also been a bribery scandal involving a senior manager and one of its key customers. As a result, a new chief executive officer (CEO) has been employed and she has begun a major review of systems at Thyme. The first area which the CEO wants to examine is the information given to the board for strategic decision-making in both the planning and controlling of the business. The government of Beeland has been encouraging information sharing between businesses and has recently sponsored awards for management accounting. The winner of the engineering sector has produced a sample dashboard template (with dummy figures) for an annual review and this is given in Appendix 1. The CEO realised that the winner had a very similar overall objective and strategies to Thyme and wants to know what it is about this dashboard that helped it win the award. She does not want a new dashboard for Thyme at this stage but there may be some useful, specific comments to make about the contents of the dashboard given Thymes recent problems. The CEO has also recently been reading about integrated reporting and in the light of this review of the dashboard, the CEO has also asked for your views on how integrated reporting might impact on the type of information prepared by the companys management accountants. As high quality engineering products lie at the heart of Thymes competitive advantage, there has been a total quality management (TQM) approach to the management of all resources and relationships throughout the business. Thyme currently has a project under consideration to develop a new simple jet engine which would compete in the crowded market for small corporate jets. In order to compete in this market, it is believed that a target costing approach to this new engine would be beneficial. The CEO wants you to calculate the target cost gap for the new engine using the data in Appendix 2. Next, she wants to know how the use of target costing would fit within the existing TQM approach for this new engine. The new engine project has further raised the profile of quality as a broad issue at Thyme and the CEO wants your advice on the costs associated with quality. She needs to know the cost of each of the four categories of quality costs. She has gathered data in Appendix 3 for this exercise. She is happy that she has identified that prevention costs are complete but is worried that some of the possible costs for the other three categories are missing and needs suggestions of cost areas to be examined to identify these missing items. Finally, she needs advice on the relative importance to Thyme of each of the four categories. Required: Write a report to the CEO of Thyme to: (i) Evaluate why the dashboard in Appendix 1 was award winning, as requested by the CEO. (15 marks) (ii) Explain broadly the role of the management accountant in providing information for integrated reporting. (6 marks) (iii) Calculate the target cost gap for the new engine (using the data in Appendix 2) and assess how the use of this target cost will fit within the TQM approach. (12 marks) (iv) Categorise and calculate the costs of quality at Thyme (given in Appendix 3). Suggest cost areas to be examined as required by the CEO, and evaluate the relative importance of each category to Thyme. (13 marks) Professional marks will be awarded for the format, style and structure of the discussion of your answer. (4 marks)

案例分析题Nelson, Jody and Nigel (NJN) operates a warehouse and distribution centre, storing and distributing 5,000 product lines on behalf of its client, an overseas sports equipment manufacturer

案例分析题Section B TWO questions ONLY to be attempted Framiltone is a food manufacturer based in Ceeland, whose objective is to maximise shareholder wealth. Framiltone has two divisions: Dairy division and Luxury division. Framiltone began manufacturing dairy foods 20 years ago and Dairy division, representing 60% of total revenue, is still the larger of Framiltones two divisions. Dairy division This division manufactures cheeses and milk-based desserts. The market in Ceeland for these products is saturated, with little opportunity for growth. Dairy division has, however, agreed profitable fixed price agreements to supply all the major supermarket chains in Ceeland for the next three years. The division has also agreed long-term fixed volume and price contracts with suppliers of milk, which is by far the most significant raw material used by the division. In contrast to Luxury division, Dairy division does not operate its own fleet of delivery vehicles, but instead subcontracts this to a third party distribution company. The terms of the contract provide that the distribution company can pass on some increases in fuel costs to Framiltone. These increases are capped at 05% annually and are agreed prior to the finalisation of each years budget. Production volumes have shown less than 05% growth over the last five years. Dairy division managers have invested in modern production plant and its production is known to be the most efficient and consistent in the industry. Luxury division This division was set up two years ago to provide an opportunity for growth which is absent from the dairy foods sector. Luxury division produces high quality foods using unusual, rare and expensive ingredients, many of which are imported from neighbouring Veeland. The product range changes frequently according to consumer tastes and the availability and price of ingredients. All Luxury divisions products are distributed using its own fleet of delivery vehicles. Since the company began, Framiltone has used a traditional incremental budgeting process. Annual budgets for each division are set by the companys head office after some consultation with divisional managers, who currently have little experience of setting their own budgets. Performance of each division, and of divisional managers, is appraised against these budgets. For many years, Framiltone managed to achieve the budgets set, but last year managers at Luxury division complained that they were unable to achieve their budget due to factors beyond their control. A wet growing season in Veeland had reduced the harvest of key ingredients in Luxurys products, significantly increasing their cost. As a result, revenue and gross margins fell sharply and the division failed to achieve its operating profit target for the year. Framiltone has just appointed a new CEO at the end of Q1 of the current year. He has called you as a performance management expert for your advice. In my last job in the retail fashion industry, we used rolling budgets, where the annual budget was updated to reflect the results of every quarters trading. That gives a more realistic target, providing a better basis on which to appraise divisional performance. Do you think we should use a similar system for all divisions at Framiltone?, he asked. You have obtained the current year budget for Luxury division and the divisions Q1 actual trading results (Appendix 1) and notes outlining expectations of divisional key costs and revenues for the rest of the year (Appendix 2). Appendix 2 Expected key costs and revenues for remainder of the current year 1. Sales volumes are expected to be 2% higher each quarter than forecast in the current budget. 2. Average selling price per unit is expected to increase by 15% from the beginning of Q3. 3. The exchange rate between the Ceeland Dollar (C$) and the Veeland Dollar (V$) is predicted to change at the beginning of Q2 to C$100 buys V$150. For several years up to the end of Q1, C$100 has been equivalent to V$140 and this exchange rate has been used when producing the current year budget. Food produced in the Luxury division is despatched immediately upon production and Framiltone holds minimal inventory. The cost of ingredients imported from Veeland represents 50% of the divisions cost of sales and suppliers invoice goods in V$. 4. The rate of tax levied by the Ceeland government on the cost of fuel which Luxury uses to power its fleet of delivery vehicles is due to increase from 60%, which it has been for many years, to 63% at the beginning of quarter 3. 70% of the divisions distribution costs are represented by the cost of fuel for delivery vehicles. 5. The CEO has initiated a programme of overhead cost reductions and savings of 25% from the budgeted administration costs are expected from the beginning of Q2. Q3 administration costs are expected to be a further 25% lower than in Q2, with a further 25% saving in Q4 over the Q3 costs. Required:

案例分析题Sweet Cicely (SC) manufactures sweets and confectionery and has delivered stable but modest increases to the shareholder wealth for many years. Following a change in ownership, the new shareholders are keen to increase the long-term performance of the business and are prepared to accept a high level of risk to achieve this. SC is considering setting up a factory to manufacture chocolate bars. There are three options (1, 2 and 3) for the size and output capacity of the new chocolate factory. SC must choose a size most suited to the expected demand for its products. As well as the impact of the quality, branding and pricing of its products, demand for SC chocolate bars will be influenced by external factors such as consumer tastes for chocolate over other sweets, and even the suggested health benefits of certain types of chocolate. A high-cost ingredient in chocolate bars is cocoa, a commodity traded on international markets. The market price of cocoa fluctuates with worldwide demand. Due to economic growth, chocolate consumption is rising in many countries, where it was once considered a luxury. In some countries, however, governments are considering introducing additional taxes on products containing sugar in order to reduce the consumption of chocolate and confectionery products. Being derived from an agricultural crop, the availability and price of cocoa is also influenced by climatic conditions, soil erosion, and disease. Conflicts and political instability in cocoa growing regions can also restrict its availability. Recent technological advances in the production of cocoa, such as the use of genetically modified crops, promise higher yields from cocoa plants in the near future. You have been asked to help SC choose one of the three options for the new chocolate factory. One board member told you: The board proposed expanding into cake manufacturing several years ago. With hindsight, our planning on that proposal was poor. We sold only slightly fewer cakes than expected, but hadnt realised how sensitive our operating profit would be to a small change in demand. The previous shareholders thought problems in the cake business would put their dividends at risk, so SC stopped manufacturing cakes, barely a year after it started. The board does not want to repeat these mistakes. We want to minimise the opportunity cost of making the wrong decision about the size of the new chocolate factory. Appendix 1 shows the net present values for the three options discounted at SCs current cost of capital. Appendix 2 shows the expected operating profit generated by the three options in the first year of the project, according to the market price of cocoa, and assuming an annual demand of 70 million chocolate bars. Required:

案例分析题Section B TWO questions ONLY to be attempted Pitlane Electronic Components (Pitlane) manufactures components for use in the electricity distribution network in Deeland. Demand from Pitlanes biggest customer, to replace identical but worn out components, has been constant for many years. Pitlane has recently renewed an exclusive long-term supply agreement with this customer, who has always agreed to buy the components for their total standard cost plus a fixed profit margin of 15%. Variances between standard and actual costs of the components are negligible. Pitlane runs several production lines in two factories located in different areas of Deeland. The factories layout is poorly designed and the production process requires components to be transported around and between the factories. The Deeland government wants to encourage renewable electricity generation. It is offering a three-year subsidy scheme, beginning in 2018, for consumers to have solar panels installed on the roofs of their homes. As an added incentive, businesses will be exempt from tax on profits made on the sale of solar panels and related components. To take advantage of this scheme, Pitlane has built a prototype of a new electrical component, known as the Booster, which increases the output from domestic solar panels. The Booster will be sold to installers of solar panels and not directly to consumers. Pitlanes marketing department has estimated market data for the duration of the scheme based on a similar scheme in Veeland (Appendix 1). As a result of its products being unchanged for many years, Pitlane has little recent experience of developing new products and estimating costs and potential revenues from them. It is expected that many competitor products will be launched during the scheme, at the end of which demand is expected to fall greatly, and production of the Booster will discontinue. Pitlanes shareholders insist that for the Booster project to go ahead, it must meet the financial performance objective of achieving a 15% net profit margin, after all costs, for the duration of the scheme. The Boosters total fixed costs during the scheme are estimated to be $10m, including $28m upfront development costs to enable the Booster to communicate the amount of solar energy generated directly to consumers smartphones via an app. The product development team at Pitlane believes this feature, and the use of highest quality packaging, will allow it to charge 10% more that the average price of its competitors. The marketing team, however, has questioned the overall value of these two features and whether customers would be prepared to pay extra for them, as most of the Deeland population do not yet own smartphones. Pitlane has estimated the direct costs for the Booster (Appendix 2). The largest direct cost is for the four main sub-components. These are bought in bulk from six different suppliers in Deeland, though all are readily available from suppliers worldwide. The sub-components are fragile. During production of the Booster prototype, many sub-components were found to be damaged during the production process by workers incorrectly assembling them. This resulted in the completed prototype Boosters being scrapped after testing by the quality control department. The manufacturing director is concerned that the incorrect assembly of sub-components by workers may mean that it may not be profitable for Pitlane to start full scale production of Boosters. To counteract these quality problems, Pitlane will employ more highly skilled workers, who are paid around 30% more than most other workers in the business which is accounted for in the cost estimate given in Appendix 2. Pitlane staff have never been encouraged to suggest any ways to improve the manufacturing process. Pitlanes directors are concerned that the Booster project will not meet the shareholders financial performance objective. They have asked you, as a consultant experienced in target costing, Kaizen costing and other Japanese business practices, for your advice. Appendix 1 Estimated market data for Booster Required:

案例分析题Company information Coruisk is a clothing manufacturer in Teeland which produces a range of dresses which it sells to Ericht

案例分析题Dibble is formed of two autonomous divisions