year 10 accounting and economics the government has imposed new health and safety laws. the cost of...
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![Page 1: Year 10 Accounting and Economics The government has imposed new health and safety laws. The cost of safety training will be $30,000. You hope this](https://reader036.vdocument.in/reader036/viewer/2022072015/56649ec95503460f94bd65bf/html5/thumbnails/1.jpg)
BUSINESS SIMULATIONYear 10 Accounting and Economics
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SITUATION 1
The government has imposed new health and safety laws. The cost of safety training will be $30,000. You hope this will reduce stoppages and increase output by 5%
Do you1. Introduce the training2. Do nothing and risk a fine
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OUTCOME
1. Option one Total costs increase $30,000 (staff
training) Increase output by 500 units
2. Option two An inspector arrives and fines you
$40,000 Add $30,000 to total costs Increase output by 500 units
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SITUATION 2
Your production manager wants to break up the task of making the skis into several smaller jobs and retrain the staff. Training costs will be $45,000 but output should increase by 20% and raw materials cost increases by $20,000
Do you1. Introduce the change2. Do nothing
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OUTCOME
1. Option one Increase output by 2000 units Increase total costs by $45,000 (training) Increase total costs by $20,000 (raw
materials)
2. Option two No changes
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SITUATION 3
You are considering installing sprinklers and improving fire safety. This will cost $12,000. You estimate the risk of fire is <2%
Do you1. Install sprinklers2. Do nothing
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OUTCOME
1. Option one Add $12,000 to total costs
2. Option two There is no fire but your insurance
company is not happy and increases your insurance premium so total costs increase by $10,000
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SITUATION 4
Due to the removal of import barriers the local market is flooded by cheap skis from overseas. You consider increasing advertising which will cost $60,000
Do you1. Advertise2. Not advertise
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OUTCOME
1. Option one Increase total costs by $60,000
(advertising)
2. Option two The flood of cheap imports forces you to
cut your output by 2,000 units
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SITUATION 5
Your factory staff are demanding a 10% pay rise or they will strike. If they do strike your annual output will fall by 10% from last year.
Do you1. Accept the pay rise2. Ignore the threat
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OUTCOME
1. Option one Increase total costs by $15,000 (wages)
2. Option two The strike does not work and they return
to work. However output falls by 1000 units
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SITUATION 6
Your molding machine is getting old and causing an estimated 5 - 10% reduction in output. A new machine will increase output by 1000 units but will cost $50,000 a year to lease. It will also effect the cost of raw materials
Do you1. Lease the machine2. Keep using the old machine
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OUTCOME
1. Option one Increase output by 1000 units Increase total costs by $50,000 (lease
costs) Increase total costs by $4,000 (raw
materials)
2. Option two Reduce output by 500 It keeps breaking down so increase total
costs by $5,000
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SITUATION 7
You want to buy the warehouse next door so you can reduce your rental costs of your current warehouse. You will need to borrow $500,000 at 8% interest but it will save you $45,000 in rent.
Do you1. Buy the warehouse2. Not buy the warehouse
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OUTCOME
1. Option one Interest costs up by $40,000 but rent
down by $45,000 so total costs down by $5,000.
2. Option two No change
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SITUATION 8
You want to expand your business by taking over a rival ski maker. This will increase wages costs by $100,000, rent $20,000, freight by $10,000, machinery by $10,000, raw materials by $120,000, power by $2,000, staff training by $5,000 but will also increase output by 10,000 and help you compete with the increasing imports of skis from overseas.
Do you1. Expand2. Not expand
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OUTCOME
1. Option one Increase total costs by $277,000 Output up 10,000
2. Option two Increase overseas supply means you have
to sack some of your workers resulting in a output drop of 1,000.