Assume you are the management accountant for the Foleo Group. After her meetings with the various business units, Tracey Chen has identified a number of opportunities for the organisation to improve its sustainability performance. One such opportunity is Robyn Smith's suggestion for moving the manufacturing operations of Foleo Fones and Accessories off-shore to address the local residents' concerns. Robyn had done some research and has supplied Tracey with the below data relating to the relocation of Foleo's manufacturing plants offshore (specifically to Guangzhou in southern China). Awwal Direct Labow Costs Anal Direct Materials Corts Annual operational expenses (Variable Manufacturing Overheads) Animal waste produced from operations requiring disposal Cost of waste disposal per ke Annual fixed manufacturing owerheads Average / estimated delivery time for SK Fones and Accessories Estimated Comissions produced by operations per hour of operation Number of employees required by manufacturing operations Nuwber of working weeks per your purwowe Australian Plants Guangzhou Plant $1,953,315 51,074,323 52,976,480 SI,785.888 5343.440 $120.204 710 825 tonnes S120 per omne SITO per omne $623.000 $375,000 5 working days 35 working days 266 grams per hour 430 grams per hour 1.450 1.250 16 weeks 50 weeks Robyn has advised Tracey that the expected relocation costs to Guangzhou would amount to $1,500,000 but that some of these costs could be offset with the sale of Foleo's current manufacturing assets and the sublease of the plants (the amount of which, she has estimated as an inflow of $950,000 at the time of the relocation) As mentioned above, the relocation of Foleo's manufacturing operations will mean the closure of the Australian plants, which will result in all factory workers currently employed at the various Foleo plants being laid off. More than half of these workers have been with Foleo for at least 10 years and many of them have not claimed their accrued long service and annual leave. Tracey has calculated that these workers' entitlements, which must be paid on their termination, will amount to $6,400,000. Whilst the cost savings look good on paper, Tracey has some concerns about the merit of this proposal in terms of its alignment with the Foleo Group's overarching objectives and the newly formulated sustainability objectives. She is also concerned about relinquishing control over the manufacturing process and how this will impact the quality of the products being produced and ultimately customer satisfaction. Tracey has asked you to analyse this data and report back to her with a recommendation that she can take to a meeting with Robyn Smith and Allan Raymond for further discussion. (a) Using the above financial data, prepare a comparison in the space provided, of the financial costs and benefits over the next five (5) years of both options (i.e. relocating the Foleo manufacturing operations and maintaining the current operations here in Australia). Then rank the two (2) options based on the net financial benefits or costs you have calculated. (2 marks) (HINT: Include only the financial costs/benefits in this comparison and ignore the time-value of money.) (a) Using the above financial data, prepare a comparison in the space provided, of the financial costs and benefits over the next five (5) years of both options (i.e. relocating the Foleo manufacturing operations and maintaining the current operations here in Australia). Then rank the two (2) options based on the net financial benefits or costs you have calculated. (2 marks) (HINT: Include only the financial costs/benefits in this comparison and ignore the time-value of money.) Costs/ Benefits Maintaining Australian Operations Relocating Operations to China Year Years 1-5 TOTAL Year Years 1-5 TOTAL initial cutlay for the relocation of operations to China Estimated inflow of funds from sake of sets and subleasing plants Annual Direct Labour Costs Annual Direct Materials Costs Annual operational expenses (Variable Manufacturing Overhead) Annual waste produced from operations requiring disposal Annual fixed manufacturing overheads Payout of entitlements to Australian factory workers TOTAL NET FINANCIAL COST/(BENEFIT (b) Using the non-financial data provided by Robyn Smith, summarise and briefly discuss the environmental and social costs/benefits over the next five (5) years of both options. Then rank the two (2) options based on the non-financial benefits or costs you have discussed. (HINT: Include only the non-financial (or physical) measures in this analysis and explain whether your suggestions are costs or benefits to society or the environment. Include at least four (4).) (1 mark)