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Assessment Task 1 Assessment components and other details,
which must be read along with assessment details on page 10 of the course profile
Assessment Task 1: Individual Assignment - Problem Solving Assignment
Due date Monday 28
th
April, 9.00 am AEST
Weighting 40%
Length Maximum 2,200 words excluding executive summary and other appendices
This assessment requires students to develop a budget and CVP analysis (using accounting
and budgeting concepts as well as their practical application), to make short term tactical
decisions, long term strategic decisions, and make decisions about a sustainability project
(which includes an environmental plan within a business plan) based on their calculations.
Students should use basic functions within an Excel spreadsheet to calculate their master
budget and expected financial information for annual planning and calculate profitability for
short term tactical decisions. Also, Tables in Appendix 2 of Bazley and Hancock (2013) (i.e.,
the textbook) should be used to calculate cash flow for long term strategic and sustainability
project decisions.
Additionally, students must use the provided business plan builder facility to compile their
business plan and then download the contents for final work in the business plan builder
prior to submitting the assignment on-line. Also, the calculations mentioned above are
needed to support the analysis provided by students. Therefore the result must be
converted from an Excel file and included in the Business plan Word file.
The business plan should not exceed 2,200 words (the executive summary or appendices are not
included in this word count). Students should read through the accompanying document for
using the business plan builder to understand what is expected of them for this assignment.
Submission Guidelines:
1. All assignments (including calculations in an appendix) submitted for grading must be word
processed. Any Excel calculations need to be converted into the Business plan Word file.
Students must be able to produce an electronic copy of all work submitted, and be able to
resubmit if requested by the Convenor. Students are expected to retain copies of all
assessment items submitted until a final grade for the course has been awarded. Creating a
backup of all your computer files is highly recommended.
2. Assignments received by fax, e-mail, or any other form other than soft copy (unless
specifically advised by the course convenor) will NOT be accepted. Refer to -Unit- Section on
Late Submission Assignments
3. SafeAssign is an online text-matching service available through the course
Learning@Griffith site. It enables students to submit electronic versions of their assignments
via the internet, and generate a text-matching report. This service is designed to aid in
educating students about plagiarism and the importance or proper attribution of any
borrowed content. It is recommended that all students utilise this service prior to submitting
a hard copy of their assignments. A student user guide is available at the following site:
https://intranet.secure.griffith.edu.au/ data/assets/pdf_file/0007/53746/submittingsafeassignment.pdf
4. Citation and referencing format should conform to the GBS guidelines both in the body of
your paper and its attached reference section. Please check with your convenor to confirm
the required style (ie. APA (American Psychological Association) or Harvard) and refer to the
GBS Resource Bank for correct referencing format.
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Task for Assessment Task 1: Individual Assignment - Problem Solving Assignment
Top Juices Pty Ltd Case Study
You have been operating a single “mango surprise” juice product business since you established a
fruit juice manufacturing business in 2007. Your product has been sold to high quality restaurants.
You are able to supply your product to your customers all year round, which gives you a competitive
advantage. Gaining market share has required an extensive amount of personal selling by you and
your staff visiting restaurants at times convenient to them; usually late afternoons including
Saturdays.
Long term contacts with suppliers from fruit cooperatives throughout Australia (see Table 1) have
been necessary to secure a supply of mango puree and pulp. This diversity of supply source has
provided you with an extended ripe mango season. However, it also has been necessary to have
refrigeration units to store the puree and pulp so that Top Juices achieves its “all year round”
strategy of “Mango surprise” juices for restaurants.
For 5 years, the sales growth has been good but sales growth has been limited in the past 2 years.
Market research suggests that Top Juices will need to offer a wider range of juices to achieve
significant growth. Your investigations have found suppliers of other fruits and vegetables in
Victoria, New South Wales and Tasmania to support this expanded product range goal. However,
the expanded range of product will require two additional refrigerated units to ensure that Top
Juices has a year round support of its range of juice products for its customers.
The introduction of more juice products will require Top Juices to identify and pay for new
distribution outlets to accommodate restaurant market growth because you and your staff do not
have the time now to service the existing customers as well as undertake a personal selling approach
to new customers. Also, there is a limited supply of mango puree and pulp, due to its seasonal
availability, and you do not want to reduce your current capacity for supplying your core business
product (“mango surprise”) to your existing customers. You therefore decide to consider
introducing one additional product, Pineapple and Mango juice, at this point in time.
Another issue concerning you is the current cost of electricity. The purchase of additional
refrigerated units to house the extra Pineapple juice concentration and the running costs of these
new units will increase Top Juices costs.
To achieve these goals, you will need to apply for a business loan. Your lender has asked for a
detailed business plan to support your annual master budget and capital investment budget when
you submit your loan application.
The following information in Table 2 and Table 3 has been gathered after conducting some market
research and discussion with potential suppliers. The purchasing and running costs (cash outflows)
for two new alternative refrigeration units are provided in Table 6. The cash inflows during the
period are based on forecast sales of the Pineapple and Mango juice.
Table 1: AUSTRALIAN MANGO PRODUCTION AREAS AND HARVEST WINDOWS
Location
Harvest Window
Darwin Late August - September
Kununurra Late September - October
Katherine Mid - September - November
Burdekin / Bowen November - December
Mareeba / Dimbulah December – February
Carnarvon December - February
Bundaberg January - February
Northern NSW Late January - March
Gingin (WA) Late January - March
Source: Williams,R. et al.2012. Industry Situation Statement - Mango. http://www.hin.com.au/resources/industry-situation-statement-mango
accessed 25 February 2014 on page 5 in Australian Mango Industry Strategic Investment Plan 2014 /15 – 2018/19, published June 2013 by
Australian Mango Industry Association (AMIA) and Horticulture Australia
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Task for Assessment Task 1: Individual Assignment - Problem Solving Assignment
Top Juices Pty Ltd Case Study (continued)
You need to know the following information so you can make decisions about the future direction of
your business. You also need to provide the following information as part of your business plan to
support a loan application.
1. Information needed to be included in Top Juices’ Financial plan:
a. What is the breakeven point in sales units and dollars for our current single product
“mango surprise” juice?
b. What costs are relevant for us to consider for the introduction of the second
product, Pineapple and Mango, option?
c. Is the production of the second product viable?
d. What would be the new breakeven point for each product?
e. What are the estimated monthly figures for each operating budget and each
financial budget within my master budget for the period April 2014 to March 2015?
f. Which one of the two types of refrigeration units should be purchased to enable
adequate refrigeration of the extra juice concentrate?
You have identified two types of refrigeration units with different life expectancy
and efficiency ratings. You plan to use a NPV discounted cash flow analysis in your
capital long term budget (using 7% cost of capital) to provide the information you
need to make your decision about the optional purchases. You should explain why
you would use a NPV analysis and not another analysis method.
2. Issues needed to be considered for Top Juices’ Operating Plan: How should you
a. alter your relationships you have with your existing suppliers and customers?,
b. develop your relationships with your new suppliers and customers?,
c. develop, service, protect and support your products?,
d. alter your plant layout and production process to accommodate the housing of the
new refrigeration machinery?, and,
e. organise a second production run for the second product?
3. Environmental and social indicators measurements need to be considered for use in Top
Juices’ Environmental Management Plan. How and which of the following measures should
you use to reduce operating costs (eco-efficiency) while maintaining your social
responsibility:
a. Input measures such as material, energy, water?
b. Output measures such as emissions, waste?
c. Product responsibility (product safety) measures?, and
d. Labour practices and decent work (employee safety) measures?
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Task for Assessment Task 1: Individual Assignment - Problem Solving Assignment
Top Juices Pty Ltd Case Study Prepare the following calculations and analyses for inclusion in the appropriate
section of your Business Plan (as a summary in a tabular format) as well as in detail as Appendices.
1. What is your Contribution Margin per unit for the Mango Surprise single product line?
2. Prepare the following quarterly budgets for the 12-month period from 1 April 2014 to 31 March 2015
based on the information in Tables 2, 3, 4, and 5 (ignoring the information for requirement 4).
a. Sales dollars budget,
b. Purchases budget [due to the seasonal purchasing pattern of the juice puree and pulp
materials as provided in Table 1, you need to make the following assumptions. First, assume
you purchase the fruit materials as set in Table 4. Second, assume you purchase sugar and
bottles each quarter in the same quantity as the sales for the quarter. Third, assume you pay
all materials in the month the purchases occur in; just-in-time purchasing (JIT)],
c. Labour dollar budget,
d. Selling expense budget,
e. Administration fixed costs budget,
f. Cash Budget based on you receiving 90% cash from sales in the month you sell the fruit juice
and the other 10% in the month after the sale of the fruit juice. The bank account balance on
31 March 2014 was $25,000,
g. Projected Income Statement for the year ended 31 March 2015, and
h. Projected Balance Sheet as at 31 March 2015
The beginning balances for assets, liabilities, and equity are provided in Table 4 (ending balances in the
Balance sheet as at 31 March 2014).
3. Identify the relevant costs in Tables 2 and 3 for producing the second product (Pineapple and Mango).
Do the incremental increases exceed the incremental costs for adding an additional product? (assume
the higher or highest relevant costs if there should be two or more products). Use your calculations to
support your answer in the appropriate section of your Business Plan.
4. Calculate the weighted average contribution margin per unit if your relevant benefits/costs calculations
(identified in requirement 3) support considering the proposed two product-mix strategy. Also, use the
weighted average contribution margin per unit to calculate the expected profit based on the budgeted
sales for each product provided in Table 2
5. Using NPV analysis and the information in Table 6, calculate (using a 7% cost of capital) the discounted
net cash flow for the two options being considered. Use your calculations to support your analyses and
your long term decision between two options and be included in the appropriate section of your
Business Plan; to purchase one of the two refrigeration units. In your Business Plan, you should justify
your decision to use the NVP analysis by identifying one major limitation with the payback period and
one major limitation with the internal rate of return (IRR)) alternative approaches.
6. Appendix A provides photographs of the factory, fittings, the positioning of existing and proposed new
equipments including the current equipment and light fittings. The factory has 14 fluorescent lighting
tubes throughout the factory, which runs for 14 hours every day for operational and security purposes
each day 7 days a week for 52 weeks. The refrigeration units run 24 hours each day 7 days a week for
52 weeks. The factory does not have solar panels on the roof. You consult your electricity account and
find there is a daily usage of 36 kilowatts per day. Investigate (a) the cost of installing Mono Crystalline
solar panels on the roof of the factory, (b) the cost of installing LED lighting to replace the 14 fluorescent
lighting tubes, and (c) the expected electricity savings benefit based on the usage mentioned above and
the electricity rate for the local provider and installation cost analysis to support your answer in the
appropriate section of your Business Plan.
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Table 2
Litre Bottles of Juice Drink
Sales Budget for Quarters Mango Surprise Pineapple and Mango
01 Apr-14 to 30 Jun-14 18,000 14,000
01 Jul-14 to 30 Sep-14 12,000 8,000
01 Oct-14 to 30 Dec-14 35,000 20,000
01 Jan-15 to 31 Mar-15 40,000 28,000
Total Sales 105,000 70,000
Table 3
Materials Quantity of input per bottle Material Cost per bottle
Mango Surprise
Pineapple and
Mango
Mango Surprise
Pineapple and
Mango
Mango 35.00% 17.00% $0.72 $0.35
Pineapple 0.00% 18.00% $0.00 $0.01
Other juices 65.00% 65.00% $0.06 $0.06
Sugar
18 20 $0.01 $0.01
Bottle 1 1 $0.75 $0.75
Total costs $1.54 $1.18
Manufacturing Variable Costs Mango Surprise
Pineapple and
Mango
Labour Cost per 1 litre bottle of juice $0.55 $0.55
Operating Variable Costs per 1 litre bottle of juice Mango Surprise
Pineapple and
Mango
Selling expenses
Distribution agent’s fee per bottle $0.00 $0.60
Delivery to customers per bottle $0.10 $0.10
Total variable selling cost per 1 litre bottle of juice $0.10 $0.70
Fixed or Committed Costs Quarterly Annualised
Annual Fixed Administration expenses (e.g., salaries) $54,000 $216,000
Interest paid on a 6% Interest only Bank Loan
$525 $2,100
Factory leasing costs (paid monthly)
$7,161 $28,644
Motor vehicle leasing costs (paid monthly)
$5,865 $23,460
Laptop Depreciation expense
$300 $1,200
Depreciation on existing Refrigeration equipment
$1,000 $4,000
Annual Telephone landline (paid monthly)
$210 $840
Broadband Internet service provider fee (paid monthly)
$240 $960
Business Insurance (paid in April)
$675 $2,700
Market selling price per bottle Mango Surprise
Pineapple and
Mango
$5.00 $4.00
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Table 4
Seasonal Purchasing of Juice Puree and Pulp Pattern as a Percentage Forecast Annual Sales
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total
1 Apr-14 to 30
Jun-14
01 Jul-14 to 30
Sep-14
01 Oct-14 to 30
Dec-14
01 Jan-15 to 31
Mar-15
0.00% 10.00% 40.00% 50.00% 100.00%
Table 5 Balance Sheet as at 1 April 2014
Assets
Current Assets
Cash in Bank $25,000
Inventory of Juice puree and pulp and bottles $184,431
Accounts Receivable $17,500
Non-Current Assets
Refrigeration equipment $40,000
Less Accumulated depreciation -$24,000
Laptop and MF Printer/Scanner $3,600
Less Accumulated depreciation -$1,200
Total Assets $245,331
Liabilities
Current Liabilities $0
Non-Current Liabilities
Long Term Bank Loans $35,000
Equity
Issued Shares (150,000 @ $1 each share) $150,000
Retained Profit $60,331
Total Liabilities and Equity $245,331
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Table 6 Two options for new additional refrigeration units
Projected cash flows for two refrigeration units
Cash flows
Two Cold rooms, Blast Chillers, and Shelving provided by
James Cold Rooms, Moruya, NSW (Option 1)
Two Cold rooms, Blast Chillers, and Shelving Industry
Electronics Technology Co., Ltd, Shaanxi, China
(Option 2)
Capacity to use of Pineapple concentrate Cash inflow Cash Outflow Cash inflow Cash Outflow
30 April 2014 refrigeration equipment purchase ($80,000) ($68,000)
April 2014 – March 2015
$280,000 ($209,955) $280,000 ($209,955)
April 2015 – March 2016
$294,000 ($217,304) $294,000 ($217,304)
April 2016 – March 2017
$301,000 ($222,552) $301,000 ($222,552)
April 2017 – March 2018
$308,000 ($227,801) $308,000 ($227,801)
April 2018 – March 2019
$315,000 ($233,050) $315,000 ($233,050)
Disposal benefits* (costs) ($2,000)
April 2019 – March 2020
$322,000 ($238,299)
Disposal benefits* (costs)
$8,000
You receive advise from an electrician that the refrigeration units provided by James Cold Rooms (option 1) has an expected file of 8 years but an effective life of 6
years for maximum efficiency whereas the electrician believes that the refrigeration units provided by Industry Electronics Technology (option 2) has an expected file
of 5 years. The electrician also estimates that the residual (disposal sales value net of selling costs) value for option 1 equipment is $8,000 due to some useful life for
other refrigeration uses to third parties but the disposal costs of option 2 equipment is $2,000 (the cost of disposal of the equipment because there is no market for
the equipment.
The cash flow information reflects the years that each option would be retained and used by Top Juices for your long-term capital investment decision based on the
electrician’s advice.
* the expected life of the equipment and residual value has been created for the specific purpose of this exercise only and should not be considered as an example for academic purposes.
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Criteria & Marking:
The assignment covers all material relating to the following topics
- Topic A: The Financial Accounting and Management Accounting Systems for a Sustainable Business
- Topic B: Business Accounting and CVP Planning for a Sustainable Business
- Topic C: Budgeting for a Sustainable Business
- Topic D: Short term Decision Making and Long-term Decision Making for a Sustainable Business
- Topic E: Environmental and Social Management Control, Marginal Abatement Cost, & Performance Measurement
- Topic F: Business plan and Strategic report
The task will assess your understanding of budget preparation, CVP analysis, accounting and budgeting concepts and your
practical application, calculations needed for short term tactical decisions, as well as long term strategic and sustainabili ty project
decisions, and your practical application within a performance measurement system and your understanding of business plan
development. The business plan should include a discussion about the suggested performance measures. The assignment
calculations may be completed using basic functions within an Excel spreadsheet software. However, the spreadsheet should be
converted to a Word document as an appendix to business plan. A list of assessment criteria are provided below. Assignment 1
relates to learning objectives 2, 6, 7, and 8.
Task for Assessment Task 1: Individual Assignment - Problem Solving Assignment
Content Possible
Mark
The case will be assessed on the following criteria:
a) Collecting relevant information and calculating CVP analyses (new breakeven point) using the
understanding of key concepts (provide a calculation summary in your business plan and
details of your calculations in an appendix) 15
b) Collecting relevant information and calculating budgets using the understanding of key
concepts (provide a calculation summary in your business plan and details of your
calculations in an appendix) 20
c) Demonstrating an understanding the key concepts which underpin the cash budget and
projected income statement and interpreting the information 5
d) Collecting and using relevant information for adding another product using the understanding
of key concepts (provide a calculation summary in your business plan and details of your
calculations in an appendix) 10
e) Calculating the weighted average contribution margin per unit
10
f) Calculating the expected profit based on the budgeted sales for each product and support the
decision whether or not to adopt two product mix production stragey.
5
g) Calculating the NPV analysis and use the analysis to support your decision between the two
options 15
h) Identifying and discussing one limitation for each of the payback period and internal rate of
return (IRR) approaches 5
i) Calculating costs and benefits of replacing the lighting and installing the solar panels and
using the information as components of the Environmental Management Plan in your
business plan and measures to monitor efficiencies. 5
j) Using deductive and inductive reasoning to develop discussions, to support your loan
application in the conclusions of your business plan 5
k) Providing a professional presentation (e.g., proof-reading and using the appropriate format
and presentation). The business plan should be prepared without any comments about how
you achieved your calculations (e.g., do not write I divided x by y) but it should focus on the
interpretation of the information and calculations to support your discussion. The
information in your conclusions must be derived from your discussion in your analysis (body
of the business plan). 5
Total 100
Submission: Please submit this Assessment Task electronically through Blackboard. See Assessment
Submission Instructions (How to submit your learning/assessment tasks to Blackboard) in the Course Profile
and Assessment areas of this Blackboard course
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Appendix A – Photographs of the factory, fittings, the positioning of existing and proposed new equipments
External view of the factory Office and front freezer room Proposed Type of additional refrigeration unit Proposed Shelving
Entrance to main preparation area Main preparation area
Possible LED lighting systems to consider
Proposed area for two
refrigeration units along
the far wall of this room