Explain all the questions

Business processes and internal controls - Part B

[Same scenario as previous question]

Below is an extract of the revenue process within Calders Ltd.

Calders Ltd manafacturers and sells packaging products to businesses around Australia.

A customer calls sales office and asks for quote regarding a specific packaging item and price. A sales representative emails the customer regarding the quote. The customer agrees to the quote and sends Calders a purchase order. The sales representative checks the customer against customer table, and if the customer is not in the list, he sets up a new customer and grants a default customer credit of $5,000.

The sales representative prepares and approves a sales order matching with the quote and emails the customer the c... Ethics

JobKeeper recipients paying millions in bonuses to their executives, research reveals

At least 25 companies have paid bonuses worth a combined $24.3 million to their executives after claiming JobKeeper subsidies, an analysis of the financial reports of 290 entities on the ASX 300 has found.

The analysis of Australia's largest publicly-listed companies was conducted by corporate governance advisory Ownership Matters. It comes after Jennifer Westacott, the chief executive of the Business Council of Australia, this week called on companies to refrain from paying executive bonuses if they are receiving JobKeeper payments.

"Companies should not be paying executive bonuses if they are receiving JobKeeper," Ms Westacott said. "It wasn't designed for that. It was designed to keep people working."

...

The Ownership Matters report also questioned the practice of companies paying dividends to shareholders (including foreign shareholders) after receiving JobKeeper and other government subsidies. For instance, it noted Accent Group received roughly $25 million in total government subsidies and paid out $23 million in dividends. It reported that Qube Holdings received $19.4 million in total government subsidies and paid out $43.3 million in final dividends.

...

The four largest recipients Qantas ($267 million), Crown Resorts ($111 million), G8 Education ($86 million) and Star Entertainment Group ($65 million) have accounted for over half of all JobKeeper payments amongst the group.

Companies with more than $1 billion a year in turnover had to show a 50 per cent drop in revenue at the start of the pandemic to claim the subsidy, rather than the 30 per cent fall required for smaller firms.

While Qantas is the largest recipient of JobKeeper and other government subsidies on the ASX 300, its chief executive Alan Joyce has said he would not be taking a salary and no bonuses would be paid to the airline's executives this year.

He has also asked executive staff to take a 15 per cent pay cut.

Source: Hutchens (2020). JobKeeper recipients paying millions in bonuses to their executives, research reveals. ABC News. Available: https://www.abc.net.au/news/2020-09-10/25-companies-paid-executives-bonuses-despite-claiming-jobkeeper/12647688

Required

Imagine you are the Chief Executive of Qantas. Identify and apply the five steps of the ethical decision-making framework to the case to explain his decision in not taking salary or bonus.

1. What is the ethical issue? (2 marks)

2. What are the facts? (3 marks)

3. What are the alternative actions and how are they evaluated against four different ethical approaches (consequence-based, action-based, rights, and fairness approach)? (8 marks)

4. What is the recommended course of action and why? (4 marks)

5. How should the decision be implemented? (3 marks)

The mark for your assignment will be determined by reference to the quality of its analysis, its clarity and organisation, and its presentation, including its freedom from distracting stylistic errors (grammatical, spelling, punctuation and typographical). Where appropriate, reference should be made to legislation, cases, texts and other commentary. The Chicago or A. P .A style of referencing is preferred. Full case and/or legislation citation is expected. See the Library guide on Chicago referencing of legal materials, at http:// libguides.murdoch.edu.au/Chicago/legal.

Question

Kandice is a student studying Finance Law. Kandice has been watching the stock markets all her life and finds them extremely interesting Kandice has developed a good sense of the market and has recently been investing in shares on her own behalf and has been pretty successful. Kandice's cousin Benjamin is pretty impressed by all this and asks Kandice to give him advice on investments. When her advice results in him doubling his money in a short time, he recommends her to all his friends. Within the next two weeks 12 have asked Kandice for advice about investing their money on the stock exchange. Advise Kandice as to whether she requires an Australian Financial Services Licence ('AFSL') to

A company must raise new capital externally to invest in a new project. The investment cost of the project is 100 and the project generates a certain cash flow of 140. This information is known to the potential new external investors. The company has no internal financial resources to finance the project, and it can only raise new equity externally. However, the potential new investors do not know whether the current asset value of the company (i.e., before investing in the new project) is 100 or 20 and estimate both possible values as equally likely. The manager of the company knows the true current asset value, but cannot make this information public for competitive reasons. All participants are risk-neutral, the manager acts in the interest of the existing shareholders and the risk-free rate is zero. Assume that potential new investors believe that the manager will raise new equity and invest in the new project, regardless of the true value of the existing assets. a. What share of the company value after investing in the project does the manager have to offer to the new external investors so that they finance the investment cost of 100? b. Assume that the current asset value of the company is 100. Does the manager raise new equity? c. Assume that the current asset value of the company is 20. Does the manager raise new equity?

Now assume that potential new investors believe that the manager will raise new equity and invest in the new project, only if the true value of the existing assets is 20. d. What share of the company value after investing in the project does the manager have to offer to the new external investors so that they finance the investment cost of 100? e. Assume that the current asset value of the company is 100. Does the manager raise new equity? f. Assume that the current asset value of the company is 20. Does the manager raise new equity?

Case Analysis

One fascinating area of psychological research involves understanding the brain mechanisms responsible for learning and memory. Both human and animal research suggests that a structure in the brain called the hippocampus is important for the formation of certain types of memory, including spatial memory (memory for where things are located in your environment). In one research paradigm, rats are placed in a pool of milky water. At a particular location in this pool, there is a platform that is hidden just beneath the surface of the milky water. When the rat locates this platform, it will climb onto it so that it can get most of its body out of the water (as you might guess, rats don't like water). After several trials in the pool, a normal rat will locate the platform quickly by using the spatial cues present in the room (unique items hanging on the wall, etc.). As a researcher, you are interested in the effect of hippocampal damage on spatial learning and also whether the hippocampus is necessary for the retrieval of spatial memories that have alreadybeen learned. For this, one can randomly assign rats to one of four groups. Group 1 are rats with no damage to the hippocampus and no prior experience in the pool. Group 2 are rats with no damage to the hippocampus and prior experience in the pool. Group 3 are rats with damage to the hippocampus and no prior experience in the pool. Group 4 are rats with damage to the hippocampus and prior experience in the pool (experience was prior to damage). For each rat, you measure the time it takes for the rat to locate the platform. The group means are: Group 1 - 30 seconds Group 2 - 5 seconds Group 3 - 29 seconds Group 4 - 32 seconds Critical Thinking Questions 1. Summarize the Case.

What are the independent variables and the dependent variable for this experiment? Is there any blocking variable?

2. What type of research design is this?

3. We need to create 2 x 2 table that depicts the conditions and means.

4. We need to create line graph that depicts the conditions and means.

5. Based on the table and graph, does there appear to be: a main effect of "damage"? a main effect of "experience"? an interaction?

6. Based on your answers to #5, write a conclusion for the experiment

company operates a manufacturing process where six people work as a team and are paid a weekly group bonus based upon the actual output of the team compared with output expected. A basic 37 hour week is worked during which the expected output from the process is 4000 equivalent units of product. Basic pay is 5.00 per hour and the bonus for the group, shared equally, is 0.80 per unit in excess of expected output. In the week just ended, basic hours were worked on the process. The following additional information is provided for the week: Opening work in process (1000 units): Materials 540 (100% complete)Labour and overheads 355 (50% complete). During the week: Materials used 2255 Overheads incurred 1748 Completed production 3800 units Closing work in process (1300 units) Materials (100% complete) Labour and overheads (75% complete). There are no process losses. The FIFO method is used to apportion costs. Required: (10 marks) (a) Prepare the process account for the week just ended. (b) Explain the purpose of the following docu ments which are used in the control of, and accounting for, the materials used in the process described in part (a) (i) purchase requisition (ii) materials (stores) requisition.

Due to a national wage agreement, you find that wage rates for skilled workers are to increase by 50% over the budget figures. There is a shortage of such skilled workers and it takes over a year to train new recruits adequately. The managing director has asked you for advice as to which order of priority on the product range would give best use of the skilled labour resources available. The cost of unskilled labour, of which there is no shortage, will go up by 20% over budget. The original budget figures for the next period before allowing for the increase in labour cost detailed above, were: Product W X YZ Maximum production in units 3000 4000 6000 7000 9000 Selling price per unit Variable costs per unit Material 16 15 18 3 5 4 Skilled labour 4 per hour Unskilled labour 2 per hour 2 4 4 6 2 1 15 7 2 1 30 6 8 4 Variable overheads are recovered at the rate of 1 per labour hour. The skilled labour available amounts to 30 000 hours in the period and there are fixed costs of 22 800. You are required to: (a) calculate the product mix which would result in the maximum profit; (12 marks) (b) comment on the results of the revised budget.

A large local government authority places orders for various stationery items at quarterly intervals. In respect of an item of stock coded A32, data are: 5000 boxes annual usage quantity minimum order quantity 500 boxes cost per box 2 Usage of material is on a regular basis and on average, half of the amount purchased is held in inventory. The cost of storage is considered to be 25% of the inventory value. The average cost of placing an order is estimated at 12.50. The chief executive of the authority has asked you to review the present situation and to consider possible ways of effecting cost savings. You are required to: (a) tabulate the costs of storage and ordering item A32 for each level of orders from four to twelve placed per year; (b) ascertain from the tabulation the number of orders which should be placed in a year to minimize these costs; (c) produce a formula to calculate the order level which would minimize these costs your answer should explain each constituent part of the formula and their relationships; (d) give an example of the use of the formula to confirm the calculation in (b) above; (e) calculate the percentage saving on the annual cost which could be made by using the economic order quantity system; (f) suggest two other approaches which could be introduced in order to reduce the present cost of storage and ordering of stationery. 25 mark