Friday, December 6, 2019
Cost Model Analysis-Free-Samples for Students-Myassignmenthelp
Question: Take a role of Asset Manager in a Gaming environment that is a microcosm of the asset Management Practice. This provides a test bed for students to make decisions in an asset management environment based on the knowledge framework, and provides the opportunity to obtain feedback on the results of decisions that are consistent with what may occur in practice. Answer: Introduction As Asset Manager of Charles Strut Local Council my role is to keep the assets owned by the council in a financially viable condition and keep the council members apprised of the financial health of these assets. We follow the International Accounting Standard 16 - Property, Plant and Equipment (IAS 16), a financial reporting standard recommended by the International Accounting Standards Board (IASB). Revaluation of the assets, using IAS 16, is carried out to report accurately the true and actual value of all the capital assets owned by the council. This method is different from the planned depreciation method adopted by businesses, where the asset value declines with its age. Thus the Revaluation Model provides the option to carry forward the revalued amount of the asset at the end of the accounting period. Hence, under the revaluation model, the amount carried forward in the account books is the fair value of the asset after diminishing the accumulated impairment losses, say Gruis Nieboer (ed), (2013). Week 01 Facts And Figures This is the fifth five-year Strategic Asset Management Plan (SAMP) of the council. Presently, the council has 6 nos. Hino tip trucks, each of 10 m3 capacity. These trucks have ben servicing the local community but have now reached the end of their service life. I have proposed four different options for replacing this aging fleet and these are Purchasing KW T409 tip trucks which come with dog-trailers. These trucks are technically very advanced but have a high price-tag. Purchasing FL CST 112 trucks which are reliable, cheaper than KW T409 but not as advanced. Importing SinoTruk tip trucks from China. These are comparatively very cheap compared to the above two options but are also less reliable then these two options. Re-furbish the existing Hino fleet by rebuilding their motors and their drive-train system. This option will have to be carried out from internal sources as no external funding will be available for re-furbish The above suggested options have been made the basis of the financial outlay which was put forth by me, along with the SAMP documents to the management committee, as per Emerald Gems (ed), (2015). The committee had cleared that the decision will be based on the basis of the external as well as the internal inputs, which shall be compiled by my team. This report shall reflect the effects of the various options and make a suggestion to choose the most viable option (See Week-1 which showcases current financial for 2017). Week 02 Scenario Updates: Case Study Analysis It is now 2018 and fresh decisions are required to be taken for managing the assets. Here we have to consider three possible options Effect of reduction in diesel cost. Purchase of two more trucks. Retain the existing fleet and increase outsourcing. Although a drop in diesel cost will be beneficial, the breakdown rate of the old fleet is proving to be more costly. Hence, my suggestion of purchasing two more trucks for taking care of the shortfall due to breakdown. I also suggest that the SinoTruk purchase option should not be exercised. SinoTruk has reported frequent breakdowns and it will not be advisable to rely fully on this fleet. Hence, an alternate is to go for third option mentioned above, suggest Kaganova McKellar (ed), (2006). Week 03 Scenario Updates: Case Study Analysis We have moved into 2019 and two important factors have eased the financial situation. Firstly, efficient management has reduced the outsourcing factor to 1.2, compared to 1.3 in the last year. Secondly, the council has been able to get Federal funding for investing into fresh assets. Here, my suggestion, as outlined in the financial report for this period, is to change the old fleet and replace it with Kenworth fleet. This suggestion is based on the factor that Kenworth tip trucks come with dog trailers. Moreover, increased cost of diesel to $1.15 per litre from $1.00 per litre in 2018 also prompts the management to go for a new fleet which will save on the fuel consumption and cut down the operational expenses, as explained by Christensen Duncan, (2004). Week 04 Scenario Updates: Case Study Analysis Now we are into 2020. Diesel cost remains at last years level but the outsource factor has decreased to 1.3. Implementation of councils recommendation to outsource routine maintenance has been reflected in my cost model for this year. Significant changes occur in the maintenance cost and the utility of the tipper trucks, says Parker, (2012). Week 05 Scenario Updates: Case Study Analysis Going into 2021, I find the following changes in the scenario Diesel cost has increased to $1.35 per litre. Outsource factor has also increased to 1.1. 4 Hino trucks of 10 m3 capacity have been acquired from an adjoining council after its merger with our council. My revised cost model estimates for 2021 have been shown in the Week-5 Table. Week 06 Scenario Updates: Case Study Analysis Moving into 2022, the final year of this summary exercise, I have come to the final conclusions which have been reflected in the table. Conclusion Table for Week-7 shows my financial conclusions for the period 2017 to 2022, during which time the council had to go through some changing times which made big impact on the financial outlay of the council. My key decisions for this period were Purchase Cost At base price of $230,000 for each truck, total cost base is $1,380,000. Servicing Cost Annual service charges for each truck comes to $22,400, hence annual cost base comes to $134,400 and for 5 years the cost base will be $672,000. Disposal Value Total Cost Base over the 5 year period is $2,052,000 and after deducting the annual depreciation of $90,000 per unit, the fleet of 6 Kenworth Tipper Trucks at the end of this SAMP will be $1,512,000. Based on these facts, my choice of Kenworth Tipper Trucks proves to be the best viable option, both from financial as well as operational factors as per Marsden, (2011). My recommendation for Kenworth stands to benefit the council and community in the coming five year period. List Of References Christensen, S. and Duncan, W.D. 2004, Professional Liability and Property Transactions. Federation Press, Annandale, NSW. Emerald Gems (ed). 2015, Built Environment and Property Management: A Focus on Australia. Emerald Group Publishing Limited, Bingley. Gruis, V. and Nieboer, N. (ed). 2013, Asset Management in the Social Rented Sector: Policy and Practice in Europe and Australia. Springer Science Business Media, Berlin. Kaganova, O. and McKellar, J. (ed). 2006, Managing Government Property Assets: International Experiences. The Urban Institute, Washington DC. Marsden, S. 2011, Business, Charity and Sentiment: The South Australian Housing Trust 1987-2011. Wakefield Press, Kent Town. Parker, D. 2012, Global Real Estate Investment Trusts: People, Process and Management Real Estate Issues. John Wiley Sons, West Sussex.