(ii) Comment briefly on the use of its own tree plantations as a source of raw materials b
(ii) Comment briefly on the use of its own tree plantations as a source of raw materials by Our Timbers Ltd.
(3 marks)
(ii) Comment briefly on the use of its own tree plantations as a source of raw materials by Our Timbers Ltd.
(3 marks)
Required:
(iii) A firm of consultants has offered to undertake a study on behalf of Envico Ltd which will provide perfect
information regarding seminar attendance during the forthcoming year.
Advise the management of Envico Ltd with regard to the maximum amount that they should pay to
consultants for perfect information regarding seminar attendance and comment briefly on the use of
perfect information in such decisions. (5 marks)
(ii) Briefly discuss TWO factors which could reduce the rate of return earned by the investment as per the
results in part (a). (4 marks)
(ii) Briefly explain the extent to which the application of sensitivity analysis might be useful in deciding
which refrigeration system to purchase and discuss the limitations inherent in its use. (3 marks)
(ii) Briefly discuss FOUR non-financial factors which might influence the above decision. (4 marks)
(ii) Comment on the figures in the statement prepared in (a)(i) above. (4 marks)
budgeting approaches.
However, academic studies (e.g. Beyond Budgeting – Hope & Fraser) argue that the annual budget model may be
seen as (i) having a number of inherent weaknesses and (ii) acting as a barrier to the effective implementation of
alternative models for use in the accomplishment of strategic change.
Required:
(a) Identify and comment on FIVE inherent weaknesses of the annual budget model irrespective of the budgeting
approach that is applied. (8 marks)
(c) Explain the term ‘target costing’ and how it may be applied by GWCC. Briefly discuss any potential
limitations in its application. (8 marks)
(b) Briefly explain THREE limitations of negotiated transfer prices. (3 marks)