Environmental Accounting & Management Accounting

 

Environmental Accounting & Management Accounting

Task

This assignment provides you with an opportunity to apply your developing accounting and financial management skills to the case firm, Premier Investments.

Premier Investments operates a range of retail fashion chains throughout Australia, New Zealand, Singapore, the UK, Malaysia and Hong Kong. The company’s brands include Smiggle, Portmans, Just Jeans, Peter Alexander, Jay Jays, Jacqui E and Dotti. In 2016, group sales revenue exceeded AUD$1 Billion for the first time (Mitchell, 2016a). Solomon Lew, the chairman and largest shareholder of Premier Investments, recently became the first Australian to be inducted into the World Retail Congress Hall of Fame (Mitchell, 2016b).

As at 15 May 2017, Premier Investments’ share price was $12.70, giving the group a total market capitalisation of AUD$2.0 Billion. The group’s success in recent times has, in particular, been propelled by the success of Smiggle and Peter Alexander. These two brands now account “for the lion’s share of Premier’s half-year sales and earnings growth” (Low 2017) and the group plans to open further stores throughout Asia, the UK and North America (Chang, 2015; Mitchell, 2016; Low, 2017). It has been argued that Smiggle and Peter Alexander are particularly well suited to online retail and the group is targeting online sales of $100m a year by 2020 (Batholomeusz 2017). The strong results of Smiggle and Peter Alexander contrasts with the weak performance of other brands within the Premier Investments group including Just Jeans, Jay Jays, Dotti, Portmans and Jacqui E (Mitchell, 2016a).

This assignment is broken into three parts.

References:

Part A (70 Marks)

In recent years, directors and CEOs of companies have been placing more importance on holistic reporting of company activities rather than simply reporting what is required by the Accounting Standards, the Corporations Act and other legislation. The Global Reporting Initiative (GRI) is an international not-for-profit organisation that has pioneered and developed the world’s most widely used voluntary Sustainability Reporting Framework.
www.asx.com.au/documents/public-consultations/global-reporting-initiative-and-sba-submission-15No (http://www.asx.com.au/documents/public-consultations/global-reporting-initiative-and-sba-submissio

In 2013, the fourth iteration of the Sustainability Reporting Framework guidelines were released. These can be accessed via the link below.
www.globalreporting.org/resourcelibrary/GRIG4-Part1-Reporting-Principles-and-Standard-Disclosure (http://www.globalreporting.org/resourcelibrary/GRIG4-Part1-Reporting-Principles-and-Standard-Disc

Premier Investments’ Board Policies include statements concerning Business Sustainability and Ethical Sourcing.

Required:

With specific reference to Section 5.1 of the Sustainability Reporting Guidelines of the GRI, your task is to write a report that:

  1. Provides an overview of the environmental and social impacts (positive and negative) of Premier Investments’ operations (10 Marks).
  2. Identifies and discusses four key GRI disclosures that are likely to be of most relevance to the stakeholders of Premier Investments and reviews whether this information is provided by the firm (15 Marks).
  3. Compares the quality and depth of environmental performance information provided by Premier Investments with the practices of Myer (20 Marks).
  4. Evaluates whether widespread compliance with the GRI guidelines by Australian retail businesses would benefit potential investors, current shareholders and other stakeholders of Premier Investments (15 Marks).

The assignment needs to be thoroughly researched and presented in a standard report format including:

  • Executive summary
  • Table of contents
  • Introduction
  • Body
  • Conclusion.

The report is to be 1,500 words in length. References must be clearly acknowledged in-text and in the reference list and in accordance with APA style (marks available for academic writing: 10 Marks).
Part B (20 Marks)

A key part of Premier Investments’ growth strategy has included plans to open further Smiggle and Peter Alexander stores throughout Asia, the UK and North America (Chang, 2015; Mitchell, 2016; Low, 2017)

Required:

  1. Identify the likely major costs associated with the ongoing operations of Smiggle and Peter Alexander (2 Marks).
  2. Estimate the cost behaviour (fixed, variable or otherwise) of each of the major costs identified above in requirement 1 (2 Marks).
  3. Given your understanding of the cost behaviour of the major costs associated with the ongoing operations of Smiggle and Peter Alexander, critically evaluate whether the use of break-even analysis would be a useful and reliable screening tool for Premier Investments as they assess the desirability of opening up new stores in new territories (6 Marks).
  4. Develop a balanced scorecard that could be used to evaluate the success of Premier Investments’ strategy to open up new Smiggle and Peter Alexander stores internationally. For each perspective, identify one objective and include two measures for each objective. You should make use of both financial and non-financial measures (the table below can be used to summarise your findings). Briefly discuss the key features of your scorecard and the reasons behind your chosen measures (10 Marks).

 

 

 

Perspective Objective Measures
Financial 1. 1.

2.
Customer 1. 1.

2.
Internal Business Processes 1. 1.

2.
Learning and Growth 1. 1.

2.

 

 

Part C (10 Marks)

Peter Alexander offers a customisation service which enables customers to personalise their clothing purchases by adding their name or initials. Leveraging of this idea, the following discussion presents hypothetical information relating to a new proposal designed to improve the profitability of Just Jeans. The management team of Just Jeans have just received a new proposal one of the firm’s marketing managers. The proposal outlines a new investment to create a Custom Finish Lab. Through the Custom Finish Lab, online customers will be able to select an option to personalise purchased jeans in a range of finishes including blast wash, faded wash, and ripped and scuffed. The selling price, cost, and expected sales volumes of these custom options is provided below:

 

Blast wash Faded wash Ripped and scuffed
Selling price $30.00 $30.00 $35.00
Labour $7.00 $4.00 $10.00
Materials $4.00 $3.50 –
Variable overhead $4.00 $3.00 $6.00
Expected sales p.a. 8,000 10,000 7,000

 

 

 

Other costs associated with the Custom Finish Lab each year will include:

 

Equipment depreciation $200,000
Rent $80,000
Marketing $150,000
Other $110,000

 

The firm’s tax rate is 30%.

Required:

  1. Calculate the number of blast wash, faded wash, and ripped and scuffed finish sales that will need to be made to:
    1. break-even, and
    2. achieve an after-tax profit of $350,000 (provide workings) (3 Marks).
  2. Prepare a memo which suggests a number of possible strategic initiatives that Premier Investments could implement in relation to the Custom Finish Lab concept to enhance the break-even point and/or annual profit. These initiatives could impact the firm’s sales mix, selling prices, variable or fixed costs. Provide workings which illustrate how your proposed initiatives could influence the break-even point and forecast profit (7 Marks).

 

Rationale

Assessment Task 2 is designed to assess your understanding of the learning outcome ‘Explain and evaluate the concepts behind the management decision processes associated with the efficient allocation of business resources’ covered by Topics 5, “Social and Environmental Accounting”, and Topic 6, “Management Accounting and Professional Ethics”.

 

 

 

 

 

 

 

 

 

 

 

Marking criteria

 

 

 

CRITERIA High Distinction (HD) 85% to 100% Distinction (DI) 75% to 84% Credit (CR) 65% to 74% Pass (PS) 50% to 64%
Overview of the environmental and social impacts (positive and negative) of the case firm’s operations. Overview is comprehensive, covering all key features of the firm and the firm’s social and environmental impacts. Fully referenced. Overview is comprehensive, covering most of the key features of the firm and the firm’s social and environmental impacts. Fully referenced. Overview is moderately comprehensive, identifying the major facets of the firm and the firm’s social and environmental impacts. Fully referenced. Overview is adequate, identify major facets of firm and the firm’s social and environmental impacts with minimal depth. Fully referenced.
Identification and discussion of key GRI disclosures that are likely to be of most relevance to the stakeholders of case firm and review of whether this information is provided by the firm Communicates and applies sustainability concepts with clarity and depth. Discussion is supported by extensive research and examples. Elements of the framework are evaluated with reference to how they are used in guiding the inclusion or exclusion of information.Fully referenced. Communicates and applies sustainability concepts with sound understanding of concepts. Discussion is supported by relevant research and examples. Elements of the framework are analysed with reference to how they are used in guiding the inclusion or exclusion of information. Fully referenced. Communicates and applies sustainability concepts with limited understanding of concepts. Discussion is supported by relevant research and examples. Interprets results with comparison of possible alterations in reporting of information. Fully referenced. Sustainability concepts are identified but with limited research and discussion of examples. Some attempt to interpret results with description of possible alterations in reporting of information. Fully referenced.
Comparison of the quality and depth of environmental performance information provided by case firm with the practices of other firms All significant differences in the quality and depth of information presented by different firms are identified and evaluated with reasoning. Discussion is supported by extensive research and examples. Fully referenced. The large majority of significant differences in the quality and depth of information presented by different firms are identified and discussed with reasoning. Discussion is supported by valid thorough research and examples. Fully referenced. Most significant differences in the quality and depth of information presented by different firms are identified and discussed. Discussion is supported by a range of examples and research. Fully referenced. Most significant differences in the quality and depth of information presented by different firms are identified. Discussion is supported by limited research and discussion of examples. Fully referenced.
Evaluate the usefulness of compliance with the Sustainability Reporting Framework as a decision making tool for stakeholders Discusses how the tool benefits investors and stakeholders, supporting their reasoning with valid arguments. Discussion is supported by extensive research and examples. Fully referenced. Discusses the usefulness of compliance with the framework with explanation of how it is used to benefit stakeholders in the decision making process. Discussion is supported by valid thorough research and examples. Fully referenced. Describes and explains the usefulness of compliance with the framework. Discussion is supported by a range of examples and research. Fully referenced. Explains how compliance with the framework assists as a decision making tool for investors and stakeholders. Discussion is supported by limited research and discussion of examples. Fully referenced.
Describes and applies management accounting tools and techniques to support the management of the case firm to implement initiatives which promote organisational performance. Discusses and applies a range of management accounting tools to support management. Calculations are completely correct and analysis is supported with detailed and valid arguments and examples. Fully referenced. Discusses and applies a range of management accounting tools to support management. Minor calculative errors. Analysis is supported with valid arguments and examples. Fully referenced. Discusses and applies a range of management accounting tools to support management. A small number calculative errors. Analysis is supported with valid arguments. Fully referenced. Discusses and applies a range of management accounting tools to support management. Calculations are mostly correct. Limit support is provided for analysis Fully referenced.
Academic Writing Excellent written expression and very clear articulation of ideas and concepts. Superior grammar and spelling skills. References presented show evidence of significant research and are used accurately. A professional report structure is adopted with an outstanding executive summary, introduction, body, and conclusion. A table of contents is provided and headings and sub-headings are well defined. Consistently clear and concise expression of ideas. No spelling errors and only minor grammatical errors. References presented show evidence of significant research and are used accurately. A professional report structure is adopted with a high quality executive summary, introduction, body, and conclusion. A table of contents is provided and headings and sub-headings are well defined. A satisfactory standard of expression. Expression of concepts is clear and concise. Very few spelling and/or grammar errors. Several references are presented and used accurately. A professional report structure is adopted with an effective executive summary, introduction, body, and conclusion. A table of contents is provided and headings and sub-headings are well defined. Some inconsistency in sentence structure. Clarity of expression could be enhanced by some revision. Some spelling errors and/or poor grammar. Several references are presented and used accurately. A professional report structure is adopted with a satisfactory executive summary, introduction, body, and conclusion. A table of contents is provided and headings and sub-headings are used to a satisfactory level.

 

 

 

 

Presentation

This assignment must be submitted as either a word or PDF document through Turnitin.

The report to be prepared for Part A must be prepared using 12 point font and 1.5 line spacing. Please ensure that your name and student number are included as a footer.

The following guide provides further information on effective report writing:

https://interact2.csu.edu.au/webapps/blackboard/content/listContentEditable.jsp?content_id=_1053048_1&course_id=_22905_1&mode=reset

Requirements

You must use correct referencing at all times.  Please refer to the following link for details as to the correct style of referencing.

http://student.csu.edu.au/study/referencing-at-csu

 

Answer preview:

Word Limit: 3900