To build upon the intermediate level knowledge and skills acquired in AC2200 Management Accounting. Students will apply their problem solving skills to more complex problems in management accounting and will develop the ability to critically apply management accounting solutions to realistic problems.
WV are a car parts manufacturer with factories and sales on a global basis in America, Europe, Asia and Africa. Extracted financial results for the year ended 30 September 2015 are shown in the table below.
Consolidated total accounts 2015 $m
Cost of Sales
Non current assets
Non current liabilities
Sales (in units)
27 000 000
Production capacity (in units)
30 000 000
They have calculated the global split of sales is: America 45%; Europe 25%; Asia 20% and Africa 10%.
Global sales of car parts are estimated at 3 billion units.
They have accumulated a $60m cash pile and have sketched out 4 scenarios for 2 years time, based on different decisions:
Option 1 – do not invest the funds in the firm, keep the money effectively in the bank – they are aiming for a return of 4% on the cash;
Option 2. Invest the funds in new machinery increasing production capacity by 10%;
Option 3. Invest the funds in specific marketing in America, increasing the American sales by 10%;
Option 4. Invest the funds in new machinery cutting cost of sales by 9%.
The Board of Directors make the final decision on the options and the cash investment. The Board operate a working policy that any financial budget projections have a 50% chance of occurring in full; a 20% chance of being upto 10% higher; a 30% chance of being 5% lower.
You are to create a report to the Board of Directors covering the following issues:
1-Calculation of the four option’s financial implications for the firm in two years time with your suggested investment option and comments including risk issues. This is perhaps more discursive – talks about ‘risk options’ (remember risk attitudes); also specific firm risks and systematic market risks. Asks about investment – ARR; payback; NPV and IRR [20 marks]
2-Calculation of the Expected Values based on the Boards policy on budget projections with a stated suggested investment option and comments including risk issues. The investment options (consider if appropriate – Expected values – relationship risk and return – check and only use where appropriate [20 marks]
3-Evaluate the issues with decision making including: risk and uncertainty; Expected Values; Decision Trees; Averages and trends; standard deviation Issues with ways of taking into account ‘risk’ – EV; SD; ranges etc –advantages and limitations [25 marks]
4-Critically evaluate the issues for WV in operating as a global firm, including: decentralisation and centralisation; ROCE/ROI performance measurement; motivation and PRP. Review issues for global firms – decentralisation v decentralisation – ROI v RI and how can be linked to PRP. (Chapter 19 Drury and Bhimani)
5-Report format, presentation and use of referencing and research.mark 10%
Word count guide: 2000 +/- 10%.
The University operates a universal penalty scale for unauthorised late submission of any form of assessed work. Students who submit work within 5 working days after the published submission date without an authorised extension will obtain a maximum mark of 40% for that element of assessment.
All work submitted later than 5 working days after the published submission date will be awarded a mark of 0%.
AC3200 Advanced Management Acconting
Rational for mark awarded.
In order to assess your coursework it has been benchmarked against the work of other
students using the guidelines below.
In order to maintain consistency of marking, a sample of work has been:
1. Internally moderated, and
2. Copied for External Examiner review. Marks awarded are subject to the external
I have been guided in my assessment by the following:
Assessment criteria, with weightings:
The assessment criteria (as specified on the coursework requirement)
Calculation and discussion and recommendation of four financial investment options.
20% E G A S I
Calculation and discussion of Expected Values of four financial investment options and recommendation.
20% E G A S I
Evaluation of issues in decision making including: EV; Decision Trees; averages and trends; standard deviation.
25% E G A S I
Critical evaluation of issues for globalised firms including: decentralisation and centralisation; ROCE/ROI as performance measures; motivation and PRP.
25% E G A S I
Report format, presentation and references and research.
10% E G A S I.
When you calculating the numbers I need to know the formula for each number. Or you can send me the exel sheet and should be the formula clear