ACCT3039 Advanced Managerial Accounting Graded Tutorial Activity No.3 Worth 5% of the overall grade Due by March 19th 2014. N.B. Students should note that this tutorial assignment should be submitted on a Word document by the due date stated above at the appropriate drop box on the Learning exchange. H is an investment group which owns a number of subsidiary companies. Each subsidiary produces a particular product, product range or service. For the purposes of management control, subsidiaries are organised into 3 sectors. 1) Consulting and Services (CS): comprising a consultancy practice which provides advice on product design, manufacturing technique and material usage both to H group companies as well as businesses outside the group. Salaries comprise about 95% of the costs in CS sector. 2) Heavy Engineering (HE): comprising 2 subsidiary companies producing machinery, equipment and tools used in a variety of industrial applications. These companies require a major investment in the form of factory premises, plant and transport facilities. 3) Light Engineering (LE): comprising 4 subsidiaries which produce a range of small mechanical and electrical components, many of which are designed into the products of HE sector companies. The production of these components is generally considered to be labour intensive. At the start of 2012 the management of H decides to prepare a five year plan strategic plan for the group. A team of H executives is assembled to prepare this plan. At its first meeting the team is provided with the following summary of the group’s performance in 2011.

CS $’000 Book value at 31 December 2011 Non-current assets Current assets Current liabilities Capital Employed 80 90 (20) 150

HE $’000

LE $’000

4,970 820 (140) 5,650

810 180 (65) 925

CS $’000 Year to 31 December 2011 Sales Trading profit 860 220

HE $’000

LE $’000

6,320