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Also, in ROI and RI, we consider Operating profits as per the statutory reports. In operating profit, R&D, BBM will be considered if an expenditure is made.
To make your point valid, a simple note of “considering R&D, BBM as capital expenses as per IFRS” would suffice I suppose.
If you’ve written it, you’re safe. The examiner can’t reduce your marks I guess if this note is mentioned.
However, I am not sure if the examiner considers such notes or not.The thing that you’re trying to say would’ve been correct if they had asked to describe EVA. What you’re trying to say is absolutely right in terms of EVA. However, they had asked ROI and RI. Both of these are flawed performance measurements as compared to EVA.
As ROI and RI is a manipulative performance measure, EVA was introduced.
If you remember studying adding back R&D expenses to the operating profit and deducting the amortization for the year only from operating profit to arrive at NOPAT.No, I didn’t do 3b. I had attempted everything else except Q3b. I didn’t get time for it.
Uhmm….I would disagree with the explanation of not considering R&D and Brand building expenses while calculating ROI and RI as ROI and RI are ratios in which manipulations can be done to the operating profit through creative accounting. However, EVA is a method that doesn’t allow such manipulations and adjusts the profits nearer to a proxy cash flow. Hence, according to me, if a divisional manager is measuring performance via ROI or RI, he will consider R&D and Brand building costs. Restructuring costs are arguable and so I toh showed calculations for both (with considering restructuring costs and without considering restructuring costs) (I had seen this type of an answer in the exam kit) That logic of long term benefits add back applies to EVA only.
1b- I described the whole BCG matrix and related it to the given case study. Financial KPIs like Sales revenue and profit margins for Essan (Differentiation strategy one) KPIs like Cost per unit and cost variances for Doilet (Cost leader strategy) and KPIs like Sales revenue, ROI, RI, EVA for Fada as it was a problem child and we have to either apply the invest or divest strategy to it. For investment, we have to check the ROI/RI with that logic I wrote ROI and RI. But to play safe, I mentioned Sales revenue in fada again because I felt that to decide upon a decision of divestment or investment, managers have to check the sales revenue trend from that particular division na so! I hope they consider and give me marks for Fada :p
We didn’t have to calculate EVA anywhere in the question paper. That question mentioned specifically that we have to stick with ROI and RI. Nothing else is expected from the management accountant for now. It was specifically mentioned in that question only.
To everyone who’s confused about question 1a regarding the Brand building costs and R&D costs-
Yes, it was leading to a long term benefit. It was mentioned in the question Appendix 1.
However, the question asked to stick specifically to ROI and RI. It didn’t ask to comment about EVA. EVA is the best method to find out the shareholders wealth because it makes adjustments to the profit and brings it closer to the cash flow which can’t be manipulated. Hence, in EVA we have to add back such expenditures leading to long term benefits to the operating profit.
However, in ROI and RI, they are a performance measurement ratio which considers the operating profit. Operating profits can be manipulated to get a better ratio (creative accounting)
Hence, in ROI and RI those divisional managers will minus those expenditures leading to long term benefits and calculate the ratio of ROI and RI.
For restructuring, since it was a questionable figure, I once considered restructuring costs and then I didn’t consider restructuring costs while calculating the ratio. And I wrote the explained that in this place restructuring costs aren’t considered because maybe the company’s senior management decides which place the business should be shifted to or located in and that divisional managers have a little say in making that decision…so…
I showed both the calculations of that restructuring costs to be on the safer side.
I am just praying that I pass this time pleaseeeee.1a- I calculated and commented on the ROI as well as the RI. In both cases, I calculated it without taking the head office costs, taking the brand building and R&D cost as well as the restructuring cost. Then I also calculated and analysed the both ratios by not taking the head office costs and restructuring costs and considering the R&D and Brand building costs. Gave a short note as to why restructuring costs was not considered as the company’s senior management would give approval for shifting the business place to a prestigious place and divisional managers aren’t quite responsible for that cost. Wrote the disadvantages of ROI too. Some advantages of ROI and RI too.
1b- BCG analysis was pretty straightforward..gave two financial KPI for cash cow, star and problem child.
1C- Idk how far I’m correct but I wrote the qualities of good information, good MIS report, what information/data is required by functional managers of different levels.2a- Wrote a short note on benchmark, compared monlich or whatever company that was with the competitor sheil. Also, analysed those ratios and wrote what monlich company should focus on to achieve the ratios like sheil. Gave some 3-4 extra ratios that could be calculated in the benchmark process.
2b- Wrote specifically the advantages and disadvantages of Benchmarking against a competitor. Idk if we should write something extra than this or no.
2c- Wrote a short summary of BPR. Wrote about how to change the process of material handling/order processing to Just in time. Wrote about how to keep close relationships with 1-2 suppliers only. All of that.3a- Described Argentine’s A score model and compared it with the given scenario sletille company or whatever that company name was. Defects, mistakes….all of that!
3b- I didn’t do, because no time.I am just hoping to pass please! This is my last paper and I studied too much for it.
1a- Evaluation of ROI, RI and analysis
1b- BCG analysis
1c- Qualities of good information and MIS. It’s uses in different levels of management2a- Benchmarking
2b- Benchmarking
2c- BPR (JIT/Value chain integration)3a- Qualitative Argentine A score model
3b- discuss that qualitative corporate failure model
Overall, the paper was quite manageable and good enough.Literally nothing except that. That note mentioned that I’m not supposed to comment on the advantages/disadvantages or even suggest a new performance measures. I was so annoyed with that note. What were they even expecting us to write for a whopping 15 marks man???!!!
Q3B- Which selling price did you guys select? That Risk seeking question where multiple variable costs and contribution were provided? I wrote $75 selling price and $50 Variable cost when the demand is 1200 units so as to capture the market by selling most units. Am I correct?
Thank you for having this humanity to help us or guide us without getting anything in return. Much appreciated. People like you are few! Stay blessed man.
Listen up fellow human. Nobody cares what courses you’ve done or where you work or what are you studying. Do you think people cry about the 9/11 incident everyday? Obviously no. When people can forget about such a huge inhumane incident in 10-15 days, what makes you think anyone would give a damn about a stranger’s degree?
Speaking of your degree, unless and until your masters isn’t from Cambridge or Oxford or Stanford or Harvard or University of London or IIMs, keep your mouth shut. Because nobody on earth gives a damn about a master’s degree or an MBA from any other university/institute other than this.
I’m myself on the second last paper of ACCA and pursuing CPA USA. I’ve plans of doing CFA too. But did you see me mention up that till now? No. I had too do it now because you tried humiliating another person for no reason. He/she was just trying to help us!
There are a few people left who help others without getting anything in return. I appreciate this person trying to help us being an ACCA affiliate. If you don’t want then ignore that comment and scroll through. Common sense, which is not as common as it should be. I understand. Have a great day ahead.Q1a- 12 marks. 1b- 12 marks. Total 24 marks.
2a- 10 marks. 2b- 14 marks. Total 24 marks.
3- 16 marks.
4a- 8 marks. 4b- 12 marks. Total 20 marks.
Rest 16 marks was Q5. I don’t remember the break up of thatChill. You didn’t have to mention that I guess. The question asked to evaluate the NPV and question the method of evaluation of NPV.
That wasn’t needed here I guess. You can chill.Has anyone written about not including staff training costs and 5 years of maintenance contract cost to the initial investment of $38m in the NPV Question 4b?
I don’t understand why have people used porter’s 5 forces for Question 1a. The question had asked analyse the environment and comment on the way it’ll affect the organisation’s mission and strategy. I strongly felt to use SWOT analysis for this question. Porter’s 5 forces revolves around how competitive and attractive the industry is to make above average profits. PESTLE could have been used in 1a. That still makes some sense to me.
Why did we have to use porters or pestel for 1 a? The question said to analyse the company’s strategic position analysing it’s environment na? I thought SWOT was applicable for it. 1b I wrote 4 types of different risks and even wrote about risk map and Risk response.
2a) I used PESTEL. But there were only PEST available. EL there was nothing much info the question paper.
2b) I wrote like a general answer. I wrote about how would the company use the profits generated from Southland and other outlets of Noria as now that they’ve closed down the loss making outlets. Wrote about investing that extra funds for R&D, innovation etc. Wrote using it for market development and all of that stuff by doing R&D. Wrote about investing it for society development purposes for being an ethical organisation.
3) I wrote it as a general answer of internal control and weaknesses and the recommendation for it.
4) The question asked benefits of CDMS so I specifically stuck to that and wrote Various points on how you could increase the sales and also market your product by sending out messages to your existing customers which will in turn help you increase your revenue. Loyalty points, after reaching a certain limit customers can be given a gift voucher or some discount which will in turn induce the customer to buy and so increase in sales.
4b) General answer again about how the NPV was kinda calculated wrong. And just for the sake of it I added other project benefits which are observable, measurable must also be considered before accepting the project case.I got the 8.6L machine with a residual value of 1.6L as well as the July, Aug, Sept cash flow forecast. My 31st and 32nd sum is right. The section A and B had a lot of sums about forex so maybe people found it a little tricky. Overall, it was a balanced paper. Section A- One could solve approx 9-10 questions properly if one studied well. Section B part “a” was quite manageable. Section B part “b” out of 5, approximately 3 questions were manageable. Rest you had to guess it if you didn’t know the correct answer. Section “c” one could solve atleast 2-3 questions.
Overall it was a balanced paper.
I hope to pass. Fingers crossed.I think I’ll pass. Cash flow sum was good. Did y’all get a positive NPV while solving with corporate taxation buy option in the 32nd sum? The lease was a negative NPV though. Fair enough.
I just spoke to one ACCA professor and enquired about the relocation expenses in question no 4. It was definitely not living accommodation. It would be considered as relocation expenses only but maybe 3 months of rent might be considered as relocation expenses. Also, if the concepts are right and you’ve done a calculation error somewhere, they do give marks for the concepts and format. I’m just hoping to get the magic figure of 50 and clear this exam. Fingers crossed.
I think I’ve made a blunder in the question number 3 liber part. Does anyone know how much marks would ACCA deduct if I did a calculation mistake while considering the consideration due to which the other answers came wrong too? I’ve written on takeovers share to share transaction is a no gain no loss transaction and those gains are deferred till the sale of the shares. I’ve also written cash recieved on takeovers would be attracted to capital gains at the time of disposal. And in the b) part I’ve mentioned that he would get an additional AEA in the next year if he sells the shares. Also, the capital gains tax payment date can be further delayed if sold in the next year. How much marks will they give for this? Does anyone have any idea?