CAN YOU PLEASE ANSWER TO THE QUESTION 5

White Bolder Investments (WBI) You are an intern working for WBI, a large investment advisory services in Sydney. Among other regular customers, WBI has been providing advisory services for Jumbo Bank (JB) and Ombrelloni Felici (OF). For the sake of simplicity, this assignment does not consider taxes and other fees. You might have to use information from previous questions for answering information for following questions and whenever possible support your arguments with your calculations. Question 1 One of your LinkedIn contacts who poses himself as an entrepreneur and is starting a trendy business shirt venture has offered you a one chance in a lifetime of becoming his partner in this new incredible venture. The entrepreneur has offered you a partnership in this venture under the condition you share with him the WBI employees and customers contact list. The entrepreneur has guaranteed you a commission for any WBI employee or customer who buys one of the trendy business shirts. Required Please seate one of the ethical standards, as provided by the Institute of Management Accountants (IMA) Statemet of Ethical Profesional Practice', which would be jeopardized if you accept the business offer and justify why this standard being jeopardized (there might be more than one ethical standard being jeopardited but only one is equired for this question). Please elaborate on how the business offer could be accepted without jeopardizing any ethical standard. (Chapter 1, 10 marks) Question 2 WBI board is discussing how much a business advisor should charge per hour of service. WBI has budgeted to supply 300,000 hours of business advisory service for the forthcoming year. Its variable cost is estimated at $35 per hour and its fixed costs are estimated at $4,000,000 for the forthcoming year. The board has been discussing whether to use a cost-plus approach or perhaps examining the demand levels. The marketing department has the following estimation on demand levels at different prices: Table 1-Demand levels Price per hour $64 $65 $66 $67 $68 Demand in hours 310,000 300,000 280,000 270,000 250,000 Requireu a) Calculate the price per nur WBI should charge based on a cost-plus approach for pricing the service at full fost plus 35%. (Chapter 12,5 marks) This is the additional reading for this unit. A copy of the document is available at https://www.imanet.org/insights-and-trends/business- leadership-and-ethics/ima-statement-of-ethical-professional-practice Page 4 of 9 b) Conside ing WBI can meet Iny demand level in Table 1 and that fixed costs will remain unchanged for all the preceding demand vels, what price per hour should WBI charge based on demand levels? (e.g., Exercise 12.13, Chapter 12, 10 marks) c) State ore benefit of the cott-plus approach and one benefit of the demand levels approach applied to WBI nd, between the two approaches, which approach should WBI board choose for long-term planning of the business ac isory service and why? (Chapter 12, 10 marks) Question 3 Jumbo Bank (JB) is a bank specialized in advisory for loans and savings for retail customers and corporate customers. The manager responsible for retail customers is Kim Schifino and the manager responsible for corporate customers is Matt Johnson. JB has 'Know Your Customer' (KYC) procedures for their retail customers and corporate customers; the procedures are (i) Customer Identification Program (CIP), (ii) Customer Due Diligence (CDD), and (iii) Ongoing Monitoring. JB currently uses the following cost-allocation rate per procedure, based on the following cost drivers used as the allocation base for the previous year: Table 2-Cost-allocation rate KYC procedures Cost driver used as allocation base CIP Applications (potential customers) CDD Applications (potential customers) Ongoing Monitoring Ongoing customers Quantity 600 600 55,000 Cost-allocation rate $55.0 $125.0 $20.0 Currently, there has been much discussion regarding how much each procedure costs for each activity for retail customers and corporate customers. The accounting department has provided a breakdown for costs for each type of customer and procedure from the previous year. Table 3 - Costs of procedures per type of customer KYC procedures Retail customers Corporate customers Total CIP $25,000 $8,000 $33,000 CDD $25,000 $50,000 $75,000 Ongoing Monitoring $500,000 $600,000 $1,100,000 Total costs $550,000 $658,000 $1,208,000 The manager responsible for corporate customers, Matt Johnson, is concerned there is a product-cost cross- subsidisation. As an example, he argues the cost-allocation rate of $20 regarding ongoing monitoring used for his corporate customers is artificially high because of the costs of ongoing monitoring for retail customers. The manager responsible for retail customers, Kim Schifino, argues exactly the opposite, that the corporate customers are the one pushing the cost-allocation rate higher, because, when compared to the retail customers, they are few in numbers. The commercial department has the breakdown of applications (potential customers) and ongoing customers from the previous year. Table 4-Customers KYC procedures CIP CDD Ongoing Monitoring Retail customers 500 400 50,000 Corporate customers Total customers 100 600 200 600 5,000 55,000 Page 5 of 9 Require a) Calculate the cost rate per unit of the dest driver for each KYC procedure for retail customers and corpoate customers. (e.g., Exercise 11.1 and 11.12, Chapter 11,5 marks) b) Explain whether there is evidence of product-cost cross-subsidisation between retail customers and corpo ate customers and who is correct the manager responsible for corporate customers or the mana ter responsible for the retail customers. Use your calculations for supporting your argument. (e.g., Exercise 11.11 and 11.12, Chapter 1, 10 marks) Question 4 You have been assigned for reviewing the actual and budgeted figures of the variable manufacturing overhead of straight umbrellas at Ombrelloni Felici (OF). The management at OF argues there are no evident issues with the variable manufacturing overhead budget as the static-budget variance is often favourable, which proves the budgeting process works quite well. The management at OF also argues the employees at the production line of straight umbrellas are always highly efficient because of the consistently favourable efficiency variances Your analysis is for a specific month of the year, comparing the budgeted and actual figures. The variable manufacturing overhead cost is allocated to each straight umbrella based on budgeted direct manufacturing labour-hours per straight umbrella. For the specific month of the year, each straight umbrella is budgeted to take 5 labour-hours. Budgeted variable manufacturing overhead cost per labour-hour is $20. The budgeted number of straight umbrellas to be manufactured in this given month is 100. Actual variable manufacturing overhead costs in the given month were $12,000 for 95 straight umbrellas started and completed. There was no opening or closing stock of straight umbrellas. Actual direct manufacturing labour-hours for this given month were 490. Required a) Calculate the static-budget variance, the exible-budget variance, the sales-volume variance and the spending and efficiency variances for the iven month for the variable manufacturing overhead. (e.g., Exercise 1.11, Chapter 16, 10 marks) b) Explain wifether the management at OF i correct or not regarding having a good budgeting process due to offen having a favourable static budget variance and a consistently favourable efficiency variance.se your calculations for supporting your argument. (Chapter 16, 10 marks) Question 5 Ombrelloni Felici (OF) has a division of folding umbrellas which can produce two different types of umbrellas, the Ombrelli Divertenti, which is made of polyester fabric, and the Ombrelli Sicuri, which is made of flame- resistant fabric. The company has 10,000 machine hours available to produce these products. Table 5 - Straw Production Per batch Ombrelli Divertenti Ombrelli Sicuri Sales price $2.00 $6.00 Variable expenses $0.50 $3.00 Contribution margin $1.50 $3.00 Contribution margin ratio 75% 50% Page 6 of 9 One batch of Ombrelli Divertenti requires 5 machine hours and one batch of Ombrelli Sicuri requires 8 machine hours. Required How many of each product should Ombrelloni Felici (OF) produce for maximizing the profit of the division of folding umbrellas and why? Use your calculations for supporting your argument and showing the maximum profit the division of folding umbrellas can achieve. (Product-mix decisions under capacity constraints, 10 marks)