2022/23 BUSM107 Assessment (100% coursework assessment) Queen Mary University of
Place your order now for a similar assignment and have exceptional work written by our team of experts, At affordable rates
For This or a Similar Paper Click To Order Now
2022/23 BUSM107 Assessment (100% coursework assessment)
Queen Mary University of London
BUSM107: Financial Analysis and
Management Accounting
2022/23 assessment: Case study (100%)
Case study brief
“The Coffee Shop” is one of the most respected coffee shops chains in Canada. The company
prides itself on its exceptional standards of service and has won several awards for the best
customer service provider in the coffee shop industry. The company is specialised in plantbased coffee products and in 2021, the company had control of 30% of the coffee shop market
in Canada.
The company hired a new CEO, Charles the 3rd, who has an ambitious plan to expand the
company market and to open series of local stores in the south near to the United States given
the increasing interest in the plant-based milk. The company believes that thanks to (i) its
‘good’ relationships with different supplier, (ii) the ‘positive’ reputations it built over years,
the new launch of the new stores will be successful, and (iii) the 5-years tax-free incentive
scheme which the Canadian governments adopted to boost the business of healthy food
products. As a result, Charles the 3rd decided to set up a new subsidiary “Oatty” in December
2022 which will be responsible for managing the new branches which will open in the new
area. Charles believes in decentralised management and its merits in saving time in the
decision-making process. In the same time, “the coffee shop” main competitor “Zero fat”
simultaneously announced opening new stores in the southern Canada in order to increase their
market share of coffee customers.
Charles asked the management accounting team to provide him with some information which
will help him decide the expansion (opening 10 new stores). Rebecca, a senior management
accountant who worked for “the coffee shop” for several years, provided Charles with the
following information after she undertook significant market research:
§ Market research indicates that the demand for the coffee at an average unit selling price
of $12 and advertising costs over the next four years, are as follows:
2022/23 BUSM107 Assessment (100% coursework assessment)
Year Demand (number of coffee
cops per year)
Expected sales revenue of
pastries and cakes
Advertising Costs
($)
1 200,000 408,200 20,000
2 180,000 350,000 10,000
3 150,000 300,000 8,000
4 120,000 250,000 Nil
§ The demand for the coffee after year 4 is expected to be too few to continue marketing
it. The variable cost per one coffee cup is expected to be $6.
§ Decoration and setup cost (one-off payment) $2m.
§ 20 barista machinesto be purchased for $100,000 to serve the new 10 stores. The barista
machines will be depreciated using the straight-line method over 4 years. There is no
scrap value at the end of its useful life. In addition, the staff salary of Oatty
(Headquarter) is estimated to be $50,000 a year, and to be allocated equally to the 10
stores.
The board of directors sees that the figures shown above are an accurate estimation of each of
the four years. The company has two options to fund the new expansion:
• The first option is 100% debt via a 4-years 10% interest-only loan.
• The second option is split the fund needed for the expansion; 50% using the retained
profit, and the other 50% by a 6% 4-years interest-only loan. In 2022, the average return
on equity in the TSX (Toronto Stock Exchange) is 6%.
• The finance needed (initial investment cost) should cover purchasing the 10 barista
machines, the decoration and setup cost and year 1 operating expenses & advertisement
cost.
• Other information regarding the yearly operating costs (per store) includes: $15,000
salaries, $25,000 rent of premises, $5,000 utility bills, and $10,000 insurance.
The company adopts the cost-plus pricing policy believing that they are leading the market of
the plant-based coffee products. However, “Zero fat” is planning to sell their products at a
competitive price of $10 and not to spend any money on marketing campaigns. “Zero fat”
believes that customers will appreciate the price over any other factor.
Charles the 3rd adopts the comprehensive view of performance appraisal, and as a result he
purchased a license of the well-known Balanced scorecard (BSC) to be used to evaluate the
performance of the staff joining ‘Oatty’. Oatty will be responsible for monitoring and managing
2022/23 BUSM107 Assessment (100% coursework assessment)
the new launched stores in the South. If the company decides to go with the expansion plans,
the new stores will be opened for customers in July 1st 2023. Subsequently, the first appraisal
evaluation will take place by June 2024.
Requirements:
a) Prepare a forecast income statement for the year to 30 June 2024 based on the
assumptions and data provided above. You should show gross profit, operating profit
and retained profit for the year. (15 marks)
b) Assume that “the coffee shop” plans to raise the finance needed for the investment
in Oatty and the related 10 new stores through a mixture of both equity and debt.
Evaluate the advantages and disadvantages of using both methods of finance. Your
report should be 500 words in length. (15 marks)
c) Before “The coffee shop” fully commits to the investment in ‘Oatty’ and the planned
10 stores, Charles the 3rd (the company CEO) has asked you to investigate the longterm viability of the investment. The company uses payback period and NPV as the
base of its appraisals. Specifically, you have been asked to:
i. Estimate the future cash flows for the four years. (5 marks)
ii. Calculate the non-discounted payback period in years, to two (2) decimal
places. (5 marks)
iii. Calculate the Net Present Value (NPV) assuming that the company uses
a mix of debt and equity to finance the initial investment cost investment
cost. Ignore tax in your calculations. (10 marks)
d) Write a report to the company’s senior management team which makes a
recommendation on the investment. The report must draw upon your calculations made
in both parts a) and c) and include a discussion on the advantages and disadvantages of
using profit, payback and net present value to assess the long-term viability of an
investment. Your report should be 900 words in length. (25 marks)
e) Critically discuss the cost-plus pricing method which the company adopts and show
the conditions that make this pricing method sound for “the coffee shop”.
(10 marks)
f) Critically analyse whether the Balanced scorecard is effective for the coffee shop (10
marks)
(5 marks for presentation and referencing)
[100 Marks]
2022/23 BUSM107 Assessment (100% coursework assessment)
Submission
The assignment must be uploaded via QMPlus, as a Word or pdf file. Please ensure your ID
number (but not your name) is clearly noted.
All assignments must be word processed and marks will be given for good presentation. Poor
presentation and poor use of the English language are not marker-friendly and you will lose
marks. The length of this piece of work should be no more than 2,500 words (excluding the
references), but it is quality and not quantity that counts.
Submission deadline:
Friday 16th of December by 15:00 (3 PM London time).
Academic Integrity
What is academic integrity?
Academic integrity simply means that you act honestly when you submit a piece of work for
marking and avoid committing any form of assessment offence. By acting honestly, we expect
that you avoid cheating or plagiarising and maintain high academic standards.
Students found to have plagiarised or committed an assessment offence of any nature will be
penalised and penalties can range from failing the module to failing the entire programme of
study and exiting without any award.
The University uses Turnitin which is a plagiarism detection service tool where you can upload
your work which helps you to reference your work correctly when you write an essay, report
or case study for example. Turnitin will compare the work you submit with stored resources
(e.g. from both contemporary and previous submissions, reference texts / periodicals / books
and the internet).
You may well be using the Internet as a resource for your work, but you must always reference
the sites you use. Be very careful when you download materials from the Internet: you must
either quote material if you use it directly, or put the substance in your own words. Copying
from the work of another student, or getting another student to write something which you
hand in as your own work, is also plagiarism and is subject to the same penalties as the
unacknowledged use of printed sources. Remember this is an individual piece of work and
plagiarism will be dealt with severely. You can find details of Queen Mary’s assessment
offences regulations online:
http://www.arcs.qmul.ac.uk/policy_zone/assessment_…
Please also note that the university reserves the right to put submitted work through antiplagiarism software (the ‘Turnitin’ programme) to assist in finding plagiarised text therein.
For each piece of work submitted Turnitin provides two things:
1. A similarity index, which indicates the percentage of the submitted paper that Turnitin
has identified as matching other sources.
2. An originality report, which shows each of these matches in more detail, including
the source(s) that Turnitin has found.
Guidance on interpreting the similarity index and originality report can be found in the SBM
UG and PG Information zones on QMplus.
2022/23 BUSM107 Assessment (100% coursework assessment)
You are strongly encouraged to do the following for each piece of work you submit:
1. Take academic Integrity seriously.
2. Upload your work onto Turnitin well in advance of the submission deadline so that
you:
a. have enough time for the system to turnaround your work (the first and the next
3 uploads will typically take 1 hr each to process)
b. have enough time to respond to any issues identified in the originality report
c. Return to your assignment drop box before the submission deadline to make
sure you have not left your work in “publish” form.
Only after you have made the publish submission and addressed issues identified in the originality
report you should make the final submission. Please note that you will no longer be able to
make publish submissions or make changes after the submission deadline.
Your module organiser will check the similarity index for all the submissions after the deadline
and any submissions with a high similarity index will be sent to the Academic Offences Officer
for further investigation which will delay your work being marked.
References
This is a research-based assignment and as far as possible you should refer to appropriate
books, professional journals and academic journals. All sources of information should be fully
cited in a list of references. Some possible sources are listed in the appendix: most have been
uploaded onto QMplus. These are suggestions only, there is no requirement to read all (or any)
of these sources. Find (and use) others instead of (or as well as) these.
Academic accounting journals that you might find useful:
• AOS – Accounting, Organizations and Society
• AAAJ – Accounting, Auditing and Accountability Journal
• Abacus
• ABR – Accounting and Business Research
• CPA – Critical Perspectives on Accounting
• EAR – European Accounting Review
• AF – Accounting Forum
Professional Journals:
• Economia
• Accounting and Business
• Financial Management
A list of all the references used should be included at the end of your work in list in
alphabetical order of author surname.
References should follow the Harvard system. Guidance on the is available on QMPlus at
https://qmplus.qmul.ac.uk/mod/book/view.php?id=653…
All references MUST be fully cited, even journal articles accessed online.
2022/23 BUSM107 Assessment (100% coursework assessment)
Other notes
• Your answer must be in report form, making suitable use of sub-headings
• You must include a word count at the end
• Font size 12 (either Times Roman or Arial)
• Use paragraphs appropriately
• The coursework must be typed and double-spaced
• Do not rely solely on the internet for research
• Ensure that you answer the question
• Take care with presentation
• Insert page numbers
• You should not put your name on the coursework, or on the front sheet, just student
ID etc. as directed.
• Pay attention to spelling and grammar
