1. Evaluate the financial performance of an organisation using financial and narrative information

Question 1

Morrisons Plc. is a British grocery and general merchandise retailer. The company’s financial statements for the period 2011-2015 are presented below.

Required:

Prepare a business report for Morrisons’s board of directors analysing the company’s financial performance between the periods 2011-2015. Your report should utilise key ratios, horizontal and vertical analysis and make reference to relevant developments within Morrisons Plc.                                                     

                                                                                                            Total Marks (50)

Question 2

KLC limited makes two products, J678 and J432. The following data is relevant for the year.

                        Material prices
                       Material X                  £3.00 per unit
                        Material Y                  £5.00 per unit

                        Material Z                  £4.00 per unit

Direct labour cost is at £8.00 per hour.

The manufacturing overhead are estimated to be £350,000 for the period which includes £50,000 for depreciation of machinery, equipment and building. These overhead costs are absorbed into product costs using a direct labour hour absorption rate.

                        Each unit of finished product requires
                       Material X                  15 units for J678                  10 units for J432
                        Material Y                  10 units for J678                  12 units for J432

                        Material Z                  5 units for J678                   3 units for J432
                        Direct labour             8 hours for J678                  15 hours for J432

The sales director has forecast that sales of J678 and J432 will be 8,000 and 3,000 units respectively during the year. The selling prices will be £250 per unit of J678 and £230 per unit of J432.

She estimates that the stock at 1 January will be 750 units of J678 and 300 units of J432. At the end of the year she requires the stock level to be 450 units of each product.

The production director estimates that the raw material stocks on 1 January will be 3,000 units of Material X, 4,000 units of Material Y and 1000 units of Material Z. At the end of the year the stocks of these raw materials will be 4,000 units of Material X, 2,000 units of Material Y and 1500 units of Material Z.

Required:

1. a.    Prepare the following budgets:
2. Sales budget (in £s and units).
3. Quantity production budget (in units).
4. Material usage budget (in units).
5. Material purchase budget (in units).
6. Production cost budget (in £s).                                                     (15 Marks)
7. b.    Prepare a Marginal Costing Income Statement for KLC Limited (assume that the manufacturing overhead costs are all fixed).       (10 Marks)
8. c.    Whether KLC should drop product J432? Explain.              (5 Marks)

                                                                                     Total Marks (30)

Question 3

Over the last few decades, businesses across the globe have become more concerned with increasing their power to improve social and environmental conditions. This has also become a priority for policy makers and other stakeholders and is at the core of the corporate social responsibility movement.

Critically discuss how producing CSR enhances corporate accountability, transparency and sustainability and the role of accounting and financial reporting in this process.  Construct your answer within an appropriate CSR theoretical framework.                                                                                             Total Marks  (20)