Assessment task 2: Report
Due date: Week 10 Friday September 25th by 5.00pm
Percentage weighing 20%
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Objectives of the Assignment:
The objectives of this assignment are to assist in developing effective skills which are crucial to gaining employment and ongoing career success. These skills include:
1. Critical reasoning and analytical skills; Analyse the revenue, costs and variances for Scenarios case studies to provide answers to specific questions.
2. Knowledge of industry; Research, interpret and apply management accounting techniques and theories specific to Scenarios.
3. Written communication skills: Use interpersonal skills to provide recommendations in the form of a business report.
4. Social responsibility skills; Identify social responsibility and sustainability issues in the business context.
5. Teamwork & leadership skills; Apply teamwork skills to analyse Scenarios. Develop a cohesive team structure and reflect on roles of self and peers.
Case Study: Airbnb in Hobart
Denise, an Australian resident, is a self-funded retiree from Sydney, who is planning, this year, on moving to Hobart and purchasing a home. This will be the first home she had ever purchased. She has been looking at three-bedroom, two-bathroom properties with parking for three cars, and a reasonably sized outdoor entertaining area. Her plan is to live in the property, while letting two of the bedrooms as Airbnb, for up to 4 guests. Currently, she has $700,000 in her account with the Commonwealth Bank. As she has an income stream from her investments of $4,000 per fortnight, she is prepared to put up to $450,000 of her savings (but is somewhat flexible with this figure) towards the purchase of the property, making up the short-fall with a bank-loan. The Commonwealth Bank has already pre-approved her for a home loan of up to $350,000. However, of course, she would like to take on the lowest debt possible, while making the highest possible profit from the Airbnb.
Denise has now approached you, a highly capable Hobart team of management and cost accountants, with an excellent professional reputation, and extensive knowledge of local council regulations. She asks you to research the financial viability of the proposed project and has provided you with two options:
OPTION A:
An almost brand-new, high-end property, of 260 m2, in Sandy Bay, on the market for $750,000, including all furnishings and fittings. It meets all of Denise's criteria, has magnificent views over the Casino, and is in close proximity to the central business district (CBD), while having the added advantage of the two guest bedrooms with ensuite bathrooms, a second lounge and kitchenette being located on the ground floor, thereby affording privacy to both herself and her guests. It also has 15 solar panels,[1] providing 4,950 W of power, uses energy-efficient LED lights, providing a $380 saving on the normal quarterly electricity bill, of $900, and has a 3000 litre rain-water tank, for flushing toilets and watering the garden. While the outdoor area is big enough for entertaining guests, there is no room for a vegetable garden. This property is already operating as an Airbnb, bringing in $250, per room, per night, with a pre-Covid occupancy rate of 99%. The annual council rates are $2,500, and insurance to cover the property, including lability insurance for the Airbnb guests, and all fixtures and fittings is $1,800 per annum.
OPTION B: A spacious, 200 m2, older property in Berriedale, priced at $450,000, with a lovely outlook over the river, and in close proximity to the popular MONA (art gallery). It meets all of Denise’s basic criteria, although all three bedrooms are located on the one level, and the property is in need of a total renovation, to make it fit for purpose. Denise has received an estimate of approximately $150,000 for the renovation work, with an additional $40,000, approximately, for painting, decorating, furnishing, and landscaping, to create a dedicated outdoor entertainment area. This property has not been used as an Airbnb, but similar Airbnbs in the area earn up to $200, per room, per night. The annual council rates are $1,200, and the insurance to cover the property, including liability insurance for the Airbnb guests, and all fixtures and fittings, is $1,000 per annum. The quarterly power bill is currently $450. Denise wants to change to energy-efficient LED lighting, at a cost of $80. This should save her up to $180 on her quarterly power bill. She has also obtained a quote for $6000, for installing solar panels (4,950 W), which will lower her quarterly bill by a further $300, and another for $950, for a 3000 litre rain-water tank for the toilets and watering the garden. The property has a large back garden which is already set up for raising chickens and growing vegetables. There are also a dozen different fruit trees. Denise estimates that for an annual outlay of $200 for feed and fertilisers, she could be self-sufficient in eggs, fruit and vegetables.
Required
a)
You are required as a group to provide estimates/answers, for each option, for the following questions using an excel file
(
Reference all material taken from other sources):
1. What is the cost of the property? (Consider both possibilities: market price and market price + 10% as it is currently a sellers' market). Will Denise need a home loan? If so, for how much, and at what interest rate? [hint: use the realestate.com website]
2. Will she have any other costs to pay, in addition to the purchase price? If so, what they are, and how they are calculated. (hint: use the realestate.com website]
3. How much will the annual local council rates and insurance cost? (estimate that these may rise by a maximum of 5%)
4. What is the cost of setting up the accommodation (e.g. renovations, landscaping, decorating and furnishing costs and any Eco-friendly additions)? Will she need a loan for this? If so, for how much, and at what interest rate?
5. Estimate the number of rental nights (remember the effect of Covid-19). You will need to check if there is any limit on the number of nights an Airbnb in Hobart can be rented out. For example, in London, a property cannot be let out on Airbnb for more than 90 nights, in total, per year.
6. Will Denise be required to apply for an Airbnb permit? Why/why not? If she does, where will she need to apply for it, and how much will it cost?
7. What are the estimated operating costs: water, power, internet, food for guests' breakfasts, cleaning, depreciation, rates, insurance, tax, … etc.? (estimate these by taking into consideration any existing or planned Eco-friendly elements of the property)
8. Calculate the competitive price that Denise should consider.
9. Calculate the annual profit, using the variable costing system.
10. Calculate the breakeven point for the project?
11. Calculate the investment Payback period, NPV, and IRR.
b)
As a group, write a business report, in which you evaluate Denise's investment proposal.
Your report will be evaluated on the criteria listed below:
1. Technical content i.e. your discussion of the issues should be directly linked to the Denise's investment proposal. Vague and general discussion will not get marks.
2. Inclusion of academic and professional material relevant to the topic. It is important that management accounting terminologies and key words are mentioned in your report.
3. The quality of written communication; The report should be professionally presented (presentation, grammar and spelling); and
4. Use of academic referencing (use
Harvard Style referencing).
Team Operating Guidelines
1.
Each student should attend team meetings decided on by the group.
2. This is a group work. Each group member should equally participate and share the assessment workload. There should NOT be any free riders in the group.
3. Each group should comprise of
5
members only.
4. Each student should complete tasks assigned within the group on time.
5. Keep team members informed of any unforeseen difficulties that could affect your ability to complete your task (e.g., illness, poor understanding or lack of knowledge).
6. Contributions should be equal in quality. There should NOT be any free riders in the group
7. Contribute and share ideas equally with other team members.
8. Use proper referencing with all your contributions.
9. Keep adequate meeting minutes with action items; all members should sign these as true after each formal meeting. All meeting minutes should be available to present upon request.
Submission guidelines
1. As a group, you must submit two separate files; excel file and word file.
2. Information not provided in the case or the need to be estimated should be obtained from industry sources, which should be appropriately referenced
in the excel file.
3. Your report (in word file) should have four sections: Executive summary, introduction, Main Body, and conclusion and recommendations.
4. Your report must be typed using 12 font, 1.5 line spacing and 2.5 cm margins on all sides,
with a maximum length of 2000 words (including in text references and bibliography).
State the word count at the beginning of the assignment.
5.
DO NOT
copy and paste .jpg and other image files into your word document to circumvent the word count, or you will be penalised. Reference your Excel workbook rather than copy and paste tables and diagrams into your written report.
6. The report and accompanying spreadsheet will be marked strictly according to the rubric supplied.
7. Under no circumstances should you share your assessment with other students. This constitutes academic misconduct and action will be taken. All similarity reports on Turnitin will be thoroughly checked for matching with other assignments.
8. An electronic copy of your assignment needs to be submitted to the relevant BFA612 MyLO assignment dropbox by the due date and time (Week 10 Friday September 25th by 5.00pm). The file name should include your names and student numbers.
9. Altogether your assignment should contain excel files and word documents.
Criterion
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High Distinction (80-100%)
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Distinction (70-79%)
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Credit (60-69%)
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Pass (50-59%)
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Fail (0-49%)
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Analyse the revenue, costs and variances for the case study, to provide answers to specific questions. Execute calculations correctly, and compile the Excel worksheet using formulae and hyperlinks
5 marks
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Demonstrates exemplary ability to calculate costs, with more than 80% of calculations correct. Provides an outstanding analysis, based on management and cost accounting principles. Makes comprehensive use of formulae and hyperlinks in compiling worksheet.
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Demonstrates a very good ability to calculate costs with more than 70% of calculations correct, provides a very good analysis, based on management and cost accounting principles. Uses some formulae and hyperlinks in compiling worksheet.
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Demonstrates good ability to calculate costs, with more than 60% of calculations correct. Provides a sound analysis, based on management and cost accounting principles. Makes limited use of formulae and hyperlinks in compiling worksheet.
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Demonstrates an average ability to calculate costs, with more than 50% of calculations correct. Provides an adequate analysis, based on management and cost accounting principles. Makes minimal use of formulae and hyperlinks in compiling worksheet.
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Fails to demonstrate an adequate ability to calculate costs, with less than 50% of calculations correct. Fails to provide an adequate analysis based on management and cost accounting principles. Makes insufficient use of formulae and hyperlinks in compiling worksheet.
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Use interpersonal and written communication skills to provide recommendations in the form of a business report
5 Marks
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Presents a professional report that has flawless English. Provides an executive summary that accurately captures the subject matter, analytical methods (both quantitative and qualitative) and key findings, as well as the report’s limitations. Uses the introduction of the report to comprehensively and accurately explain terms of reference and methods, and to clearly outline the structure of the report. Concludes the report with a clear and comprehensive summary of findings, relevant comments, and recommendations.
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Presents a report that demonstrates mostly clear and accurate use of English. Provides an executive summary that adequately captures the subject matter, analytical methods (both quantitative and qualitative) and the key findings, as well as the limitations of the report. Uses the introduction of the report to adequately explain terms of reference and methods, and to provide a basic outline of the structure of the report. Concludes the report with a mostly satisfactory summary of findings, mostly relevant comments and recommendations.
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Presents a report that fails to meet the minimum requirements, in terms of clear and accurate use of English. Provides an executive summary that fails to adequately capture the subject matter, analytical methods, (both quantitative and qualitative) the key findings, and the limitations of the report. Fails to provide a satisfactory amount of information both in the introduction and conclusion of the report.
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Research, interpret and apply management and cost accounting techniques and theories that are relevant to the case study.
5 marks
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Demonstrates excellent usage of relevant management and cost accounting keywords, techniques and concepts. Provides comprehensive discussion, which is strongly supported by evidence from Excel file and relevant management accounting literature. All citations comply with Harvard Style.
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Demonstrates good usage of management and cost accounting keywords, techniques and concepts. Provides sound discussion, which is well supported by evidence from Excel file and relevant management accounting literature. All citations comply with Harvard Style.
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Demonstrates some awareness of management and cost accounting keywords, techniques and concepts. Provides satisfactory discussion, which is supported by some evidence from Excel file and relevant management accounting literature. All citations comply with Harvard Style.
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Demonstrates only a vague knowledge of relevant management and cost accounting keywords techniques and tools. Provides only limited discussion, which is supported by limited evidence from Excel file and relevant management accounting literature. The majority of citations comply with Harvard Style.
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Fails to demonstrate knowledge of relevant management and cost accounting keywords, techniques and concepts. Provides poor discussion, and supported by little evidence from Excel file and relevant management accounting literature. The majority of citations do not comply with Harvard Style.
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Identify social responsibility and sustainability issues in the business context.
2.5 marks
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Provides exemplary critical analysis of key social responsibility and sustainability issues.
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Provides a good analysis of the majority of the social responsibility and sustainability issues.
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Provides a basic analysis of only a few of the social responsibility and sustainability issues.
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Provides only a vague discussion of a minimal number the social responsibility and sustainability issues.
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Provides inadequate discussion of social responsibility and sustainability issues or provides discussion of irrelevant issues.
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Apply teamwork skills to analyse the case study. Develop a cohesive team structure, and reflect on roles of self and peers.
2.5 marks
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Assignment shows strong evidence of excellent teamwork skills. Group members have contributed equally. Report reflects quality and uniformity. Information on team structure, roles and work distribution is systematically documented and presented when asked.
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Assignment shows good evidence of teamwork skills. Group members have contributed equally. Information on team structure, roles and work distribution is documented and presented when asked.
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Assignment shows some evidence of teamwork skills. Information on team structure, roles and work distribution is presented (when asked) but lacks clarity.
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Assignment shows minimum evidence of teamwork skills. Information (when asked) on team structure, roles and work distribution is unclear and points towards some inconsistencies.
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Assignment shows least evidence of teamwork skills
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Demonstrates strong evidence of excellent teamwork, to which the various group members have contributed equally, to produce a quality report that reflects uniformity. Systematically documents, and presents, when requested, very clear information pertaining to team structure, roles and task distribution.
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Demonstrates above-average evidence of good teamwork, to which the various group members have contributed equally. However, the report, although sound, is not always uniform. Systematically documents, and presents when requested, clear information pertaining to team structure, roles and task distribution.
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Demonstrates some evidence of average teamwork. Presents when requested, information pertaining to team structure, roles and task distribution, but this lacks uniformity and clarity as well as evidence of consistent documentation.
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Demonstrates minimal evidence of adequate teamwork. Presents when requested, information pertaining to team structure, roles and task distribution, but this is vague, with some inconsistencies that suggest that it was neither systematically nor accurately documented
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Demonstrates little evidence of teamwork skills. Fails to present, when requested, information pertaining to team structure, roles and task distribution.
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[1] 5kW system