QUESTION 2 (TEST NOV 2021 V2)

Cemerlang Airlines is a new, budget local airline services throughout peninsular Malaysia.
From its first flights on June 1, 2017 Cemerlang Airlines launched an era of unprecedented
affordability in air travel described by the local newspaper as “Influencer in low-cost fare” by
offering a low fare and increase in passenger traffic wherever the airline serves. The company
is currently using financial measures, especially Return on Investment (ROI) to measure its
performance. ROI is calculated using net profit after tax over the total capital invested.
However, there are complaints from the customers regarding bad in-flight services and long
turnaround time of flights that caused delays which may have affected the company’s
reputation and indirectly its profitability. Given below is the financial information for the
company four consecutive years beginning 2017 to 2020.

Net profit after tax Total Capital Invested

2017 180,000 1,500,000
12%
2018 300,000 2,000,000
15%
2019 625,000 2,500,000 25%
2020 320,000 3,200,000 10%
Tax rate charged for all the four years is at 25%.

Required:
a. Calculate the return on investment for 2017 to 2020.
b. Discuss three (3) disadvantages of using ROI as the main performance measurement
system.
(10 marks)

c. The management of Cemerlang Airlines decided to make use of Balanced Scorecard

to help in designing key performance indicators for their various strategic objectives

Prepare a report discussing introduction to Balanced Scorecard (BSC) and its four
main perspectives in brief. You are also required to propose one objective and two
(2) performance measures under each perspective which relates to the industry the
company is in.
(15 marks)
(Total: 25 marks)
QUESTION 2 (TEST MAY 2021)
A. It is important to continually reassess the cost competitiveness of the business's
products and processes, particularly if their competitive strategy is focused on minimizing
cost.
Required:
Discuss four (4) challenges that businesses might face to benchmark against competitors’
cost structures.
(10 marks)

Octo Taco Bell Bhd is a Mexican-inspired restaurant established in 2010. The company is
currently facing difficulties in linking operations with its strategic objectives. As a newly
appointed management accountant, you are requested to assist in suggesting a balanced
scorecard based on the company’s vision and mission.

‘Our vision is to be the leading Mexican Food and Beverage Company in the Eastern Region,
providing our customers with high-quality foods and beverages with added value at
competitive prices, simultaneously ensuring the long-term viability and profitability of the
organization.’

Our missions are:

• We are seen as a friendly, caring, and efficient organization whose primary focus is on
providing customers with safe, value for money, and convenient high-quality food
products.

• We are conscious of our role, as a leading corporate citizen, one which requires us at
all times to be in tune with and responsive to the social, environmental, economic, and
cultural aspirations of the people, whilst ensuring our shareholders a reasonable return
on their investment.

• We are seen as an ideal place of employment with good working conditions and
benefits, with an internal environment in which our staff can achieve job satisfaction,
self-development, and their reasonable aspirations.

• We are viewed as a perfect example of an enlightened, innovative, modern corporation

with a progressive and dynamic team of internal researchers that continuously
improving our food and beverage production process with the support of modern
technology with the ultimate aim of providing the best to satisfy our customers.
Required:
i) Propose one (1) objective for each core perspective of a balanced scorecard for Octo
Taco Bell Bhd.
(5 marks)

ii) Based on the case of Octo Taco Bell Bhd, suggest two (2) measurements for each
objective that you have specified in (i) above.
(10 marks)
(Total: 25 marks)
QUESTION 2 (AUG 2021)
a. Astrascience Tech Academy (ASTA) was established in 2008, offering short-term courses
related to accounting, accounting information systems and technology. The vision of ASTA
is to be a leading college in accounting information and technology, and able to transform
the students into a highly employable and competent accounting technician. Madam
Saleena, the founder of ASTA has developed an academy mission of providing an
affordable, innovative and internationally benchmarked education for its students. She also
exposes the students to an open learning approach to enhance learning opportunities
within formal education systems or broaden learning opportunities beyond formal
education systems. In order to achieve her mission, Madam Saleena has accentuated
non-financial indicators as the main drivers of ASTA’s financial performance. She identifies
excellent leadership traits of the academic board, students’ excellence, competent
academicians supported with highly skilled management and operational staff as the key
drivers for the academy’s performance.
Required:
Based on the key performance indicators identified by Madam Saleena above, propose an
appropriate performance measure for each driver; and explain the main reason why the
measures are proposed.
(10 marks)
b. Established in 2010, Delivery Puns Express (DPE) operated by highly dedicated workers
and experienced professionals. With the main office located in Klang, DPE operation
covers the whole country offering flexible and customised personal and business delivery
services. DPE is committed to offering the safest, fastest, most reliable delivery services;
ranging from courier services, messenger services, errand services as well as shopping
services.
Whilst the recent pandemic of Covid-19 brought many challenges to numerous
businesses, DPE courier agents have seen mounting demands for their services. The
board of directors of DPE were very pleased as the company reported a triple increase in
net profit as compared to the preceding year. Unfortunately, at the beginning of March
2021, the operation started facing issues relating to late deliveries and goods delivered in
unacceptable conditions. Making things even worse, a video has gone viral on social
media about some bad handling of parcels in one of DPE’s logistic warehouses.
Customers’ complaints started to rise and the queue on the line to speak to customer
service agents has reached to more than one hour. There are also issues arising on
underpaid delivery staff and some warehouse supervisors raised issues on overloading
parcels that have caused some parcels to have to be left inside the lorry outside the
warehouse.
The board members are concern about the declining operational performance fearing that
it would soon be affecting the company’s financial performance. During the board meeting,
you as the consultant of DPE are required to present the issues and to identify how to
resolve them quickly and efficiently.
Required:
Using the four (4) perspectives of a balanced scorecard, discuss the strategies and measures
that DPE could initiate in ensuring its competitive position in the market.
(20 marks)
 (Total: 30 marks)
QUESTION 2 (FEB 2022)

Office Dotcom Sdn Bhd (OD) supplies modern contemporary office equipment and machinery
to local customers. The company manufactures and assembles multiple products; operating
in two (2) main divisions: Manufacturing Division and Assembly Division. Each division is
responsible to generate adequate returns for all the investment projects they made. The
mission of the company is “to maximise the shareholder's value through delivering good
quality equipment for our valued customers”.

The investment decisions are mainly made by each divisional manager based on return on
investment (ROI) measure. Last year, the divisions recorded an average ROI of 22.7% and it
is OD’s policy to reward any division that reports growth in its yearly ROI. The members of the
division(s) will be entitled to cash bonuses and also benefits if the preceding year’s ROI is
exceeded. Besides the ROI measure, the managing director of the company is proposing the
use of non-financial performance measures to assess divisional performance, which would
include human resource development, operational efficiency, product quality and also
innovation.

As the time to conduct a yearly assessment of the division is approaching, you have asked a
senior management executive to prepare a performance report for the divisions and the whole
company. Without delay, the management executive emailed you the following report as
requested:

Manufacturing Division Assembly Division Office

Dotcom Sdn
Bhd
Average total 58,625 33,210 98,840
investments
(RM’000)
Return on investment 24% 27.1% 19.0%
Residual income 5,2762 4,9648 3,944
(RM’000)
Sales growth 5.0% -1.2% ??
RM’000 RM’000 RM’000
Sales revenues 63,200 37,550 100,750
Cost of sales 17,810 12,600 30,410
Staff costs 16,220 5,910 25,330
Other operating costs 15,100 10,040 26,240
Operating profit 14,070 8,950 18,770

Additional information:

Manufacturing Division Assembly Division Office Dotcom

Sdn Bhd
The number of staff:
at year start 256 184 450
at year-end 231 173 414
Number of staff’s 18 7 25
training sessions
Required:

a. Referring to the above performance report, comment on the appropriateness of the

performance report prepared by the senior management executive.
(10 marks)

b. During the recent board meeting, the company’s CEO is considering amendments be
made to the company’s existing mission statement. She proposes that the new mission
statement should be: “to maximise the shareholders and the stakeholders value
through delivering premium quality products for our valued customers”.

Based on the latest development in the company and the suggestion of the CEO,
discuss in detail four (4) ways how the current performance measurement systems in
the company can be further improved. Include in your discussion the significance of
the suggestions.
(20 marks)
(Total: 30 marks)

QUESTION 2 (DEC 2019)

De Verdant Sdn Bhd (DVSB) supplies and delivers fresh vegetables and fruits to numerous
hotels, restaurants as well as food processing factories in Lembah Wangsa vicinity. The
supplies of fruits and vegetables are obtained from various organically certified farms outside
the city. The supplies are delivered to DVSB's depot located approximately 29 kilometres away
from the city centre. On average, the company makes about 300 deliveries daily.
Currently, the performance evaluation of the company's divisions is done on a monthly basis
using financial performance measure, which is the return on investment (ROI). Madam Ritz,
the newly appointed operation manager has noticed an increasing trend of fruits and vegetable
wastage. The business has also reported a hike in operating costs and customers' complaints
have been escalating. The complaints are mainly on product quality and timeliness of product
delivery.
Upon investigating the issues, Madam Ritz found out that the fruits and vegetables received
are nicely packed and in good condition. However, the customers' complaint that some of the
supplies are containing a mixture of fresh and rotting fruits and vegetables. Azeez, the
management accountant of DVSB has suggested that a new performance measurement
system should be designed to overcome the issues. The critical success factors that have
been identified are delivery time, transportation efficiency and product quality.
Azeez has advised Madam Ritz that the company's sales and profit can be improved provided
that the three critical factors are addressed amicably. Azeez has also suggested that the
application of the current financial performance measure couple with benchmarking
performance measurement technique may improve the current performance measurement
system of DVSB. Currently, DVSB is competing with Super Harvest Sdn Bhd (SHSB), a large
company that supplies fruits and vegetables to local and Singapore markets.
Required:
a. Explain three (3) advantages that DVSB benefits from practising the existing
performance measurement system.
 (10 marks)
b. Discuss two (2) importance of non-financial performance measure to assess DVSB's
performance. Explain three (3) challenges that may be encountered by the
management in applying the non-financial performance measure.
(15 marks)
c. Write a formal report to Madam Ritz to suggest the most suitable type of benchmarking
that can be exercised by DVSB to address the critical success factors identified by
Azeez.
(15 marks)
(Total: 40 marks)