(BQ) Part 2 book "Management accounting" has contents: Capital budgeting applications, preparing a budget, control through budgeting, standard costs, performance evaluation and feedback reporting, divisional performance, financial management - working capital and business plans,.and other contents. | Chapter 12 Capital budgeting applications Real world case This case study shows a typical situation in which management accounting can be helpful. Read the case study now but only attempt the discussion points after you have finished studying the chapter. Although in some markets we have moderated our rate of growth in space, overall we have chosen to sustain strong growth in selling area – and this will continue. With reductions in site, build and fitting costs for stores – these have fallen substantially since last year – we are able to use our capital more efficiently, and this should be helpful to long-term returns. At the end of February, our operations in Asia and Europe were trading from 1,911 stores, including 608 hypermarkets, with a total of sq ft of selling space. This year, we plan to open 320 new stores with a total of square feet of sales area in these markets and a further sq ft is planned to open in the USA. . In our fast moving business, trading is tracked on a daily and weekly basis financial performance is reviewed weekly and monthly, and the Steering Wheel is reviewed quarterly. Steering Wheels are operated in business units across the Group, and reports are prepared of performance against target KPI s on a quarterly basis enabling management to measure performance. All major initiatives require business cases normally covering a minimum period of five years. Post-investment appraisals, carried out by management, determine the reasons for any significant variance from expected performance. Source: Tesco plc Annual Report 2009 pp. 10 and 49. Discussion points 1 What are the benefits expected from the capital expenditure on growth in store space? 2 How does the company monitor the outcome of its investment appraisal? 290 Part 2 Decision making Contents Introduction 291 Capital 291 291 292 292 294 Cash flows for discounting .
