Economists and Finance of Tesco Presentation

Description

1. Identifies and demonstrates a highly  sophisticated understanding of the main governance & risk issues/problems in the organizational audit.
2. Presents an insightful and  comprehensive analysis of all  identified governance &  risk  issues/problems; successfully  completes all necessary calculations.
3. Supports diagnosis and opinions  with exemplary arguments and  well-documented evidence;  presents a balanced and critical  view; interpretation is very well argued, cogent and objective.

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4. Makes insightful and powerful connections between identified issues/ problems and the strategic concepts in the unit readings and notes; supplements organisational  audit with highly relevant and thoughtful research and documents all sources of information.
5. Demonstrates clarity, conciseness  and correctness; exhibits sophisticated writing skills;  formatting is appropriate and writing  is free of grammar and spelling  errors; Uses specified referencing  style  Finance Assignment help

FT Lexicon defines crowdfunding as a new and emerging way of funding new ideas or projects by borrowing funding from large numbers of people often accessed through a website. Although crowd funding started as a way of raising capital for start-ups, even larger and already established firms can use this financing channel to raise money. In your region, you can access more information about crowdfunding through Crowdonomic, a website for Asian crowdfunding sources, which launched in Singapore in 2013 (the website address is https://www.crowdo.com).Your uncle, an experienced engineer, is considering a proper development of his business idea – to manufacture blades for fans produced by larger firms. Your uncle has a clear Finance Assignment help
technological advantage over competitors as he came up with a revolutionary galvanizing process for blades which offers huge cost savings. He has also an extensive managerial/operational experience – in addition to it he is already running a very small operation in his garage under the name Superblades. What he lacks is the necessary funding to finance the new venture – and he hopes that you, as a UoB finance student, will be able to help him in his project which you should treat as a start-up firm.

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For a start, he asked you to write him a memorandum about start-up financing – how a small company is usually financed. He is particularly interested whether he will be able to borrow money from the bank from the early days of his company’s existence.
Only yesterday he received a trial contract from the UK firm to deliver his blades. The contract is in GBP for £50,000 payable in one month’s time, there is no credit risk arising from this UK client yet there is still the exchange rate risk and that is why your uncle wants you to hedge against currency movements. You know that he will have to pay its suppliers and employees in Singapore Dollars (SGD) and that he prefers to use forward exchange
contract.
FM Coursework, Kaplan Singapore, 2015-16 Page 3
Please prepare a memorandum to answer your uncle’s questions. In particular, in very
clearly separated sections, please:
1. Identify the sources of finance in different growth stages of the company, – 40 marks
2. Describe banks’ preferences while lending to companies in general, – 10 marks
3. Using 5 factors of your choice assess the role which crowdfunding might play in his
venture and in what stage it might become a realistic financing option – 20 marks
4. Define a forward exchange contract and explain why would you like to use this
protection and – 25 marks
5. Clearly show your calculations and flow of hedging transaction – 5 marks Finance Assignment help

Question 1

Bonza Handtools Ltd. manufactures a popular power drill suitable for the home renovator. Financial and other data for this product for the last twelve months are as follows: Finance Assignment homework help

Sales                                                                   20000 units

Selling price                                                     $130 per unit

Variable manufacturing cost                              $50 per unit

Fixed manufacturing costs                                      $400000

Variable selling and administrative costs          $30 per unit

Fixed selling and administrative costs                   $300000.

The directors of Bonza Ltd. want to try to increase the profitability of this product and invited senior staff to suggest how this might be done. Three suggestions have been received.

·      The accountant, Jan Rossi, believes that a price increase of $10 per unit is the best way to boost profits. She would spend an additional $125000 on national advertising and contends, that if this is done, sales volume would not drop appreciably from last year.

·      The production manager, Tom Tune, thinks that an improved quality product could increase sales volume by 25% if accompanied by an advertising campaign costing $50000 aimed at tradespeople as well as home renovators. The improved quality would add $5 per unit to the variable cost. Mr Tune believes that the price should not be increased.

·      The sales manager, Mary Watson, wants to undertake a promotion campaign where a $10 rebate is offered on all drills sold during the three months beginning 1 April. Normally 6000 units are sold during that period and Ms Watson believes that this could be boosted to 10000 units if an advertising campaign costing $40000 were launched late in March.

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You have been asked by the Bonza board to comment on each of these three proposals. Draft a report in response to this request. You are not asked to make an outright choice, but rather to analyse the potential strengths and weaknesses. The sales volumes forecast by each staff member should be treated as estimates only and your report should examine the effects of variations in actual sales from these forecasts.

Give figures to support your comments and mention qualitative factors that may also be involved. Finance Assignment homework help

Question 2

The Tassie Company estimates that next year it will manufacture and sell 150000 units of its product. On the basis of that level of activity, it has budgeted for the following costs and prices per unit:

Direct Material Cost                                          $2.50

Direct Labour Cost                                              3.00

Variable Factory Overhead                                  1.50

Fixed Factory Overhead                                      2.00

Manufacturing Cost                                             9.00

Variable Selling and Administrative Cost           2.00

Fixed Selling and Administrative Cost               1.50

Total Cost                                                          12.50

20% Mark-up                                                       2.50

Selling Price                                                     $15.00

The Company has an opportunity to bid for the supply of an additional 40000 units of its product to a government department. No sales commission (variable selling and admin. cost) is involved and no additional fixed costs will be incurred.

Give a reasoned opinion on the level of the bid that should be made in each of the following two circumstances:

(i)         The capacity of the Tassie Company’s factory is 200000 units per year.

(ii)        The capacity of the factory is only 180000 units per year.

Question 3

Critically discuss the following statements: Word limit for Question 3 – 750 words

•’a budget is a forecast of what is expected to happen in a business during the next year’
•’budgets are okay but they stifle all initiative. No manager would work for a business that applies control through budgets.’
• ‘any sensible person would start with the sales budget and build up the other budgets from there.’
•’a budget trying to be realistic will not motivate best performance.’
• ‘only adverse variances are worth investigating, because favorable variances, by definition, must be good.’ Finance Assignment homework help

Question 4

ABC Ltd makes trailers. It receives a special order to produce 350 trailers for a local retail outlet. The order will take 2,100 kg of material that costs $16.10 per kg and will require 1,400 direct labour hours and 525 machine hours. The following are the expected/budgeted annual costs for ABC Ltd:

Direct labour                                       $327,600

Direct labour hours                             25,795

Direct materials                                   $193,200

Indirect costs                                       $98,400

Machine hours                                    9,840

Required:

Calculate the overhead allocation rate: note that the process is labour-intensive
Calculate the total costs of the special order
Calculate the cost of the special order if ABC Ltd uses machine time as the basis for allocating overheads
Calculate the minimum price per trailer that ABC Ltd could accept.
Explain how segmented overhead cost pools and activity based costing can assist accurate costing for pricing purpose (200 words)

Question 5

Write around 500 words explaining how segmenting the overheads can help in allocating overhead costs to individual jobs or services. You must support your discussion by real world examples and acknowledge the source of your information (referencing). Finance Assignment homework help