Accent Group Limited - Transfer Pricing - Accounting Assessment Answer

Accounting Assessment Answer

Assessment Task:

 Accounting Assessment Answer

1 Problem Domain
The problem domain is a simplified portion of what you came across earlier in Assignment 1. Advertising agency Shine manages its client companies’ advertising campaigns. It has a number of staff members with specialized skills. A record is kept of each client company, and of every campaign. Each campaign is based on a unique theme. A Shine staff may work on zero, or one or more campaigns at a time. When a campaign starts, an estimate of the cost needs to be set and agreed upon. The actual cost of a campaign is calculated from staff time devoted to it. Staff members are paid (and clients charged) based on the hourly rate associated with their pay grade.

When the campaign is completed, an actual completion date and the actual cost are recorded and a single invoice for the whole campaign is sent to the client. The issue date and payment status of the invoice are also recorded. When the client pays, the date paid is recorded. A relational data model for this domain is provided below to facilitate your understanding of the domain. A DDL script (create_DB.sql) for creating the corresponding database and a DML script (populate_DB.sql) for populating this database with some sample data are being provided in the Assignment 2 folder. Note that the DDL script will also create another table (not included in the diagram), called alerts, which is meant to contain messages as to which
invoices are overdue.

Task One 
Create the tables listed in the relational data model as shown in Figure 1, as well as the alerts table, by running the provided DDL script provided in the 'Assignment 2' folder. Then insert sample records to the tables by running the provided DML script provided. Verify that the tables
are created and populated as intended.

Task Two and Three 
A template (stored_programs_template.sql) is provided for you to write the required programs (one trigger and two procedures). You must not change the “signature” (name, parameters with their types, orders, etc.) these programs. It is best to take this template and fill out the required codes. Remember to put your name and student number at the top as required. You should save this file with name of the following format, and submit it among other files: <yourLastname_yourFirstname>_programs.sql.

Task Two 
Shine considers any invoice that remains unpaid for more than 30 days after it has been issued as overdue. Write a trigger called tr_overdue that fires whenever the invoice table is updated. If the STATUS of any invoice is updated to “OVERDUE” from something else, then a new row is inserted to the alerts table with the current date as the message_date, user as the origin, and 'Invoice with number: x is now overdue!' as the message, where x is the invoice number in question.

Task Three 
As part of this task you will write two procedures:

1. Procedure sp_finish_campaign (in c_title varchar(30)) that takes as input the title of a campaign, and records that the corresponding campaign has been completed by (a) updating the CAMPAIGNFINISHDATE to the current date, and (b) updating the ACTUAL COST. The actual cost of a campaign is calculated from the number of hours different staff put into it on different dates, and the salary grade they were on such days. The procedure should signal an error with the message 'ERROR! Campaign title does not exist' if the input does not match any existing campaign.

2. Procedure sync_invoice() that identifies the invoices which are still recorded as UNPAID (as value of STATUS) more than 30 days after the invoice was issued. It updates those records, and sets the status to OVERDUE.

Task Four (Testing) 
This task involves testing the code developed in Task Two and Task Three.

• First you are required to test the programs you wrote against the sample data provided. The tests to be carried out, in the order given, is provided in the provided file: test_script.sql. These tests constitute a minimal test against a very small number of records. Look at this file carefully to understand what is being tested and what should be the expected result. Note the roles of setting auto-commit off and the rollback
statements.

• Next you carry out a more extensive test by testing the programs against a larger set of records that are designed to easily expose any flaws in your programs. You do that by deleting records, adding records, or modifying the records in other ways, and then calling different procedures. You accordingly modify the file test_script.sql, and save it as <yourLastname_yourFirstname>_test_script.sql, and submit among other files.

3. Report Preparation
You will also prepare and submit a report (in the PDF format). A word file template for this purpose will be provided which you will complete, convert to pdf, and submit. The file you submit would be named: <yourLastname_yourFirstname>_report.pdf. Your report should have the following sections:

1. Initial State of the database. Paste to the word file the screenshots showing the provided sample data in the tables.

2. Stored Programs. Paste into this section the programs you wrote (the sql file <yourLastname_yourFirstname>_programs.sql that you prepared).

3. Required Testing against Sample Database. Paste into this section the initial tests you ran (one by one) and then the corresponding results as screenshots. The provided script file lists what tests to run, how, and in which order.

4. More Extensive Testing. Explain what sort of changes you are going to make to which tables, what tests you are going to run, and why. Copy and paste from your file <yourLastname_yourFirstname>_test_script.sql the DML statements you used to modify the tables followed by the screenshots of the records in those tables; then copy and paste the procedure calls you made, and the screenshots of the records in the relevant tables (or the error messages).

5. Notes (optional). In this optional section, you might wish to note anything, such as whether you faced any particular difficulty in completing any of these tasks, the nature and extent of any help you received from anyone, and why.

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Using APA referencing, this report must be supported by reference to a range of relevant academic and other research sources (5 marks for academic writing).

For simplicity, you are encouraged to focus the above report on a narrow range (i.e. one or two) of the firm's major products or brands.

Question 2 –Transfer Pricing (10 marks)

Vans produces a range of lifestyle footwear styles. The following question presents hypothetical data concerning the transfer of rubber from Vans' Rubber Department to the firm's Assembly Department.

Beyond supplying other internal departments, the Rubber Department can also sell rubber to external customers for $2.00/kg.

Relevant cost data for each department is supplied below.

*Does not include the cost of rubber.

Required

Illustrate how the price for internally transferred rubber could be set using negotiation between the Rubber and Assembly Department managers. Identify and discuss the likely transfer price range and how this would impact the contribution margins of the respective departments (2 marks).
Provide and discuss three examples which illustrate how the use of transfer prices based on cost-plus pricing could be used for rubber transfers.

Ensure that these examples effectively illustrate how cost-plus pricing is influenced by the cost base and the markup (2 marks)
Assume that the transfer price for rubber was set using the market price. If the Assembly Department was approached by an external supplier offering to supply rubber for $1.20/kg, what would be in the best financial interests of the Rubber Department? From a financial standpoint, would using the external supplier be in the best interests of the firm as a whole? What other factors should be considered by the firm in evaluating this proposal? (2 marks)

Provide and discuss examples which illustrate how the general transfer price rule could be used for rubber transfers. Which of the options provided would be preferred by each department? (2 marks)

Identify and discuss the most appropriate method of setting a transfer price for rubber in this situation (2 marks).
Ensure that your answers for the above are discussed and supported by relevant calculations/workings. All calculations must be performed in Excel.

Question 3 – Capital Investment Analysis (10 marks)

The management team of Accent Group Limited have received a proposal from the manager of Hype DC. This proposal concerns a major upgrade to Hype DC's stores to improve the customer experience. Key details relating to this proposal include:

The initial cost will be $22 million. This cost will be depreciated using the straight line method over the 5 year life of the upgrade.
During year 1, the firm will increase marketing costs by $2.0 million to promote the store upgrades.
Over the five year life of the project, it is expected that the upgrade will increase the firm's sales by $18 million per year. On average, cost of sales is 45% of revenue.
The firm will need to higher additional staff over the life of the project to help to deal with the increased sale volume. In year 1, the firm's staffing costs will increase by $1.0 million. These costs will increase by 3.5% p.a.
The upgrade is expected to increase the firm's energy costs by $500,000 in year 1. This increase will be ongoing across the life of the project and will increase by 6% p.a.
Upgraded stores will include an old shoe recycling drop off zone.  This recylcing program will cost $75,000 in year 1. These costs will increase by 2% p.a. At the end of year 3, the firm will spend $1.5 million on a minor refurbishment to the stores. The firm’s tax rate is 30%. The firm requires a 16% required rate of return on all potential investments.

Required

In relation to the above proposal:

Calculate the annual after-tax cash flows (1 mark) and annual after-tax profit (1 mark).
Calculate the payback period (0.5 mark).
Calculate the net present value (0.5 mark) 
Calculate the internal rate of return (0.5 mark)
Calculate the accounting rate of return (0.5 mark)
Provide an overview of the key environmental and social factors that the firm should consider in evaluating the proposal (2 marks).
Based on an assessment of the above and other factors, discuss whether the firm should go ahead with the proposal (2 marks). 
Discuss how sensitive your recommendations are to changes in assumptions in regards to the financial impact of the new capital investment. In your discussion, include examples which illustrate how changes to at least two assumptions impact the financial analysis (2 marks). Ensure that your answers for the above are discussed and supported by relevant calculations/workings.

This Accounting Assessment has been solved by our Accounting experts at My Uni Paper. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+ Students in Australia, UK & US by helping them to score HD in their academics. Our experts are well trained to follow all marking rubrics & referencing style.

Be it a used or new solution, the quality of the work submitted by our assignment experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire an HD either way. You could choose a new assignment solution file to get yourself an exclusive, plagiarism (with free Turnitin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.