ACCT20001 Lecture Notes - Lecture 5: Cost Driver

QUESTION I

Project Background You have just completed a postgraduatediploma in project management and are currently registered for amaster’s degree where you have to carry out a mini research oncustomer care in your organization. Develop a project proposal onthe planning, execution, analysis and reporting of the research.All processes planned for should be finalized within 6 months fromthe 4th august 2018.

GENERAL PROJECT TASK
The following needs to be done:

You know:
 How to conduct research according to the study-guide
 Sample of respondents should be at least 100
 Pilot study to be carried out

You have:
You have constituted a good team, and have decided to pay asfollows:

Note: Assign resources as much as you can to accomplish all youridentified tasks

State the objective i.e. why your help is needed. State theproject goal, plus any constraints or conditions. Break down thegoal into several objectives that will be researched, and the valuethat each objective offers to the research study.

List all resources that will be needed, including your researchprofessionals like a statistician. Discuss assumed resources,including research requirements. Especially note external resourcesand requirements, e.g. does the study need an externalreviewer?

Present the specific tasks you will do as a WBS, and give costestimates, with sub-totals at each level and total estimated cost.Briefly discuss the estimates, where the costs mainly go, andefforts made to save costs.

Discuss the project dependencies and list the tasks on thecritical path. Discuss the critical path tasks, and methods used toshorten the critical path.

List and discuss the milestones and the deliverables for each.Be very specific about each milestone, including the project finishmilestone.

Explain the general strategy that will be used to manage theproject to completion. Project must have at least two phases.Discuss how they connect to each other, and the milestones. Explainwhy you took this strategy. Summarise 10 most important projectrisks, and how they will be dealt with if they occur.

Briefly summarise, giving the overall project cost, the projectbenefits as bullet points, and the general strategy. Provide a listof meetings with research specialists and others involved in theresearch process, with details like who, when and where andestimated times, and desired deliverable.

€ million Note 2016 2015

Sales revenue 1 217,267 213,292
Cost of sales 2 -176,270 -179,382
Gross profit 40,997 33,911
Distribution expenses 3 -22,700 -23,515
Administrative expenses 4 -7,336 -7,197
Other operating income 5 13,049 12,905
Other operating expenses 6 -16,907 -20,171
Operating result 7,103 -4,069
Share of profits and losses of equity-accounted investments 7 3,497 4,387
Finance costs 8 -3,247 -2,393
Other financial result 9 -61 773
Financial result 189 2,767
Earnings before tax 7,292 -1,301
Income tax income/expense 10 -1,912 -59
Current -3,273 -2,859
Deferred 1,361 2,800
Earnings after tax 5,379 -1,361
of which attributable to
Noncontrolling interests 10 10
Volkswagen AG hybrid capital investors 225 212
Volkswagen AG shareholders 5,144 -1,582

Basic earnings per ordinary share in € 11 10.24 -3.20
Diluted earnings per ordinary share in € 11 10.24 -3.20
Basic earnings per preferred share in € 11 10.30 -3.09
Diluted earnings per preferred share in € 11 10.30 -3.09

What is the Profit Margin Ratio for 2016 and 2015? (Net income/Net sales)

Depreciation by Two Methods; Sale of Fixed Asset

New lithographic equipment, acquired at a cost of $800,000 atthe beginning of a fiscal year, has an estimated useful life offive years and an estimated residual value of $90,000. The managerrequested information regarding the effect of alternative methodson the amount of depreciation expense each year. On the basis ofthe data presented to the manager, the double-declining-balancemethod was selected.

In the first week of the fifth year, the equipment was sold for$135,000.

Required:

1. Determine the annual depreciation expensefor each of the estimated five years of use, the accumulateddepreciation at the end of each year, and the book value of theequipment at the end of each year by the following methods:

a. Straight-line method

b. Double-declining-balance method