Dorsey Scott MU Company manufactures and bottles a collection of health-oriented fruity beverages. Dorsey’s CFO. Rozella, recently signed a series of new contracts with several dozen large universities to serve as the sole external beverage supplier on these campuses. Although the company has never internally conducted or externally disclosed any sustainability activities. Dorsey’s CEO. Les, has a strong hunch that the company would be wise to look into the idea of sustainability, given its recent significant growth in the university market. Therefore, Les and Rozella assigned Dorsey’s team of five interns to spend their summer internships creating Dorsey s first corporate sustainability report.
Required:
- 1. CONCEPTUAL CONNECTION Briefly explain the most likely reason(s) that Les believes Dorsey would be wise to begin looking into sustainability at this time.
- 2. CONCEPTUAL CONNECTION List and describe three challenges that the internship team might face in creating Dorsey s first corporate sustainability report.
- 3. CONCEPTUAL CONNECTION List and describe three benefits that Dorsey or its key stakeholders might enjoy as a result of Dorsey creating and issuing its first corporate sustainability report.
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Chapter 13 Solutions
Managerial Accounting: The Cornerstone of Business Decision-Making
- A company uses the systems development life cycle to develop the capability to analyze what type of pastries sell best with different beverages honey Bun Limited and other food manufacturers have been using GAAP in preparing their financial statements. Recently, the JSE mandated that all companies should implement the IFRS system in addition to GAAP. Because Honey Bun Limited current system cannot handle the IFRS requirements, the financial reporting system must be modified. Some members of the project management team of Honey Bun Limited believe that there needs to be a change of scope for the implementation of the IFRS phase, when should the project manager and project sponsor approve scope changes? When should they deny scope changes?arrow_forwardPiscataway valves decided to pursue development of a new product line for natural gas pipelines. The development effort has been successful and Piscataway is preparing to begin manufacturing and marketing the new product line next year. Piscataway has learned that marketing to natural gas pipeline companies requires commercial skills and experience they do not have. Management has, as a consequence, decided to have a partner and are in serious discussions with two companies having the requisite marketing expertise: Fargo Pipeline Supplies (FPS) and Quantum International (QI) Note: For this question, all cash flows are incremental cash flows. Part A: FPS Proposal FPS would provide only marketing, sales, and distribution for natural gas pipeline valves. Piscataway would have to invest in faciliites to manufacture the valves, spending $7,465 in Year 0 Piscataway would have to invest in facilites to manufacture the valves, manufacture the valves themselves, and incur administrative…arrow_forwardThe following quote appeared in an article entitled ‘Business and society in the coming decades’, which was available on the website of McKinsey & Company (accessed in October 2015). “There are compelling reasons companies should seize the initiative to drive social and business benefits. First, in an interconnected world facing unprecedented environmental and social challenges, society will demand it. Increasingly, a basic expectation among customers, governments, and communities will be that the companies they do business with provide a significant net positive return for society at large, not just for investors. This will be part of the implicit contract or license to operate”. Now a) Explain the above statement in the context of corporate social responsibility. b) Further, do you think such a statement would impact the perceived ‘legitimacy’ of companies? Explain.arrow_forward
- . Refresh Resorts, Inc., operates health spas in Key West, Florida; Phoenix, Arizona; and Carmel, California. The Key West spa was the company’s first and opened in 1991. The Phoenix spa opened in 2004, and the Carmel spa opened in 2013. Refresh Resorts has previously evaluated divisions based on RI, but the company is considering changing to an EVA approach. All spas are assumed to face similar risks. Data for 2017 are: Q.Refer back to the original data. Calculate EVA for each of the spas, using net book value of long-term assets. Calculate EVA again, this time using gross book value of long-term assets. Comment on the differences between the two methods.arrow_forward. Refresh Resorts, Inc., operates health spas in Key West, Florida; Phoenix, Arizona; and Carmel, California. The Key West spa was the company’s first and opened in 1991. The Phoenix spa opened in 2004, and the Carmel spa opened in 2013. Refresh Resorts has previously evaluated divisions based on RI, but the company is considering changing to an EVA approach. All spas are assumed to face similar risks. Data for 2017 are: Q.Refer back to the original data. Calculate the WACC for Refresh Resorts.arrow_forwardThe following quote appeared in an article entitled ‘Business and society in the coming decades’, which was available on the website of McKinsey & Company (accessed in October 2015).“There are compelling reasons companies should seize the initiative to drive social and business benefits. First, in an interconnected world facing unprecedented environmental and social challenges,society will demand it. Increasingly, a basic expectation among customers, governments, and communities will be that the companies they do business with provide a significant net positive return for society at large, not just for investors. This will be part of the implicit contract or license to operate”.Required:a) Explain the above statement in the context of corporate social responsibility. [Word limit 150-200words] b) Further, do you think such a statement would impact the perceived ‘legitimacy’ of companies?Explain. [Word limit 200 – 250]arrow_forward
- Ethics and the Manager Richmond. Inc., operates a chain of 44 department stores. Two years ago, the board of directors of Richmond approved a large-scale remodeling of its stores to attract a more upscale clientele. Before finalizing these plans, two stores were remodeled as a test. Linda Perlman, assistant controller, was asked to oversee the financial reporting for these test stores, and she and other management personnel were offered bonuses based on the sales growth and profitability of these stores. While completing the financial reports. Perlman discovered a sizable inventory of outdated goods that should have been discounted for sale or returned to the manufacturer. She discussed the situation with her management colleagues; the consensus was to ignore reporting this inventory as obsolete because reporting it would diminish the financial results and their bonuses. Required: 1. According to the IMA’s Statement of Ethical Professional Practice, would it be ethical for Perlman not…arrow_forward. Refresh Resorts, Inc., operates health spas in Key West, Florida; Phoenix, Arizona; and Carmel, California. The Key West spa was the company’s first and opened in 1991. The Phoenix spa opened in 2004, and the Carmel spa opened in 2013. Refresh Resorts has previously evaluated divisions based on RI, but the company is considering changing to an EVA approach. All spas are assumed to face similar risks. Data for 2017 are: Q.How does the selection of asset measurement method affect goal congruence?arrow_forward. Refresh Resorts, Inc., operates health spas in Key West, Florida; Phoenix, Arizona; and Carmel, California. The Key West spa was the company’s first and opened in 1991. The Phoenix spa opened in 2004, and the Carmel spa opened in 2013. Refresh Resorts has previously evaluated divisions based on RI, but the company is considering changing to an EVA approach. All spas are assumed to face similar risks. Data for 2017 are: Q. Why might Refresh Resorts want to use EVA instead of RI for evaluating the performance of the three spas?arrow_forward
- Ethics and the ManagerRichmond, Inc., operates a chain of 44 department stores. Two years ago, the board of directors of Richmond approved a large-scale remodelling of its stores to attract a more upscale clientele.Before finalizing these plans, two stores were remodelled as a test. Linda Perlman, assistant controller, was asked to oversee the financial reporting for these test stores, and she and other management personnel were offered bonuses based on the sales growth and profitability of these stores. While completing the financial reports, Perlman discovered a sizable inventory of outdated goods that should have been discounted for sale or returned to the manufacturer. She discussed the situation with her management colleagues; the consensus was to ignore reporting this inventory as obsolete because reporting it would diminish the financial results and their bonuses.1. Managerial Accounting2. Would it be easy for Perlman to take the ethical action in this situation?arrow_forwardThe marketing director, Mr. Thomas, has been investigating the market for disposable coffee cupsthat are fully recyclable as the contribution made by the manufacturing industry growing andtrading to environmental and social issues. The cups are manufactured from a combination of paperand coated in Polylactic Acid-Based plastic to make them waterproof. He believes that this wouldallow Ceylon Coffee Vendors PLC to sell to the big coffee shop chains, to exploit the benefits fromthe growth in this market. The initial cost of the expansion will be Rs. 3.3 million with a residualvalue of Rs. 0.05 million at the end of the fifth year. The initial cost of expansion will be paid inthree (03) equal installments at the end of the current year, year 1 and year 3. The refurbishmentcost at the end of the fifth year is Rs. 0.5 million. Thomas forecasted to produce 200, 000 cups perannum over the next five (05) years. The annual sales of coffee cups as a percentage of plannedproduction are expected to…arrow_forwardEve Corporation is considering a significant expansion to its product line. The sales force is excited about the opportunities that the new products will bring. The new products are a significant step up in quality above the company’s current offerings but offer a complementary fit to its existing product line. Sergei Bates, senior production department manager, is very excited about the high-tech new equipment that will have to be acquired to produce the new products. Will Smith, the company’s CFO, has provided the following projections based on results with and without the new products. Without New Products With New Products Sales revenue $10,000,000 $16,000,000 Net income $500,000 $960,000 Average total assets $5,000,000 $12,000,000 Instructions a) Compute the company’s return on assets, profit margin, and asset turnover, both with and without the new product line. b) Discuss the implications that your findings in part (a) have for the company’s decision.arrow_forward
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