Report: Part A For JB Hi-FI there are 4 types of corporate social responsibility to report. The environmental section must be included and it provides information on actions the company is taking to meet carbon footprint requirements. Second are Philanthropic responsibilities stating how the company supports charities through funding. Third is ethical involves workplace safety or the employee health and mainly involves the welfare of employees at the workplace. Lastly are the ethical responsibilities. They are responsibilities of the company to do what is right and without any obligation.
On the CSR initiatives employed by JB HI-FI is the Helping Hands program. It is a philanthropic initiative whereby directors, executives and employees offer donations towards the financial gain of community partners and has already raised $10 million for their charity partners (page 15). JB HI-FI also has donation boxes in their stores where customers donate at the point of sale. JB Hi-FI is also a member of Employer Leadership Group (ELG) that creates awareness of workplace giving to support the charitable sector (page 15).
JB HI-FI has also disclosed its environmental sustainability statement. Some initiatives include the carbon disclosure project that monitors and reports annual energy consumption/emissions. There is also the Smarter Choice Program for advice on energy efficiency of commodities. JB HI-FI is a signatory to the Australian Energy Packaging Covenant hence commits to reduced effects of packaging on the environment. Others include the mobile phone recycling and re-uses that helps lower entry of mobile phones into landfill, the Cartridge 4 Planet Ark for re-cycling used printer cartridges and recycling of paper, cardboards and old appliances (page 14).
Third in CSR are ethical responsibilities. JB HI-FI code of conduct specifies respect accorded to employees, there rights and freedoms, professional ethics and adherence to laws and regulations (page, 10). In the ethics statement, they state responsibility to respect suppliers, employees and customer and protect their personal sensitive information. The firm is committed to a safe working environment to its employees and there is also a diversity statement whereby JB HI-FI fully values diversity of skills, gender, experience and background of its employees (page 9).
Various theories support CSR. There are instrumental theories. JB HI-FI tries to maximize shareholder value and that’s the reason the company uses the Helping Hands program where employees try to meet social demands. It also involves strategies for competitive advantages. For example, recycling is cost saving to the firm in addition to protecting the environment hence creates competitive advantages. Instrumental theories also involve cause-related marketing. For instance, JB Hi-FI has partnered with charitable firms where it makes donations and in turn builds its brand.
The second CRS theories are political theories. JB HI-FI has made major interactions with the society hence had gained corporate citizenship through partnerships. The social contact with environmental bodies and charitable firms mandates the firm to give back to the community as demonstrated by its philanthropic initiatives. Last theory is Integrative theories. The community has social demands that offer the firm some legitimacy (Garriga,
Factors in Inventoriable Costs
1) Definition of inventoriable costs
In accounting, inventoriable costs are those costs incurs when company obtain products or make to the end products before they sell them. So inventoriable costs are also involving to product costs which include costs of direct labour, direct material and manufactural overhead.
inventoriable costs are recorded in inventory account as assets in balance sheets before products are sold as costs of goods sold expenses which are recorded as expenses in income statements. (Wilkinson, 2013)
2) Examples of costs are included and not included in inventoriable costs
Costs are included in inventoriable cost such as raw material and direct labour. For example, raw materials such as cloth and zipper which are purchased by hang bag factories. Direct labour which are workers use those raw material to make hand bags. All finished hand bags cannot be recorded into expenses until they are sold and will record into costs of goods sold expenses in income statements.
Selling expenses and administrative expenses are not included in inventoriable costs .They are period costs which are recorded as expenses directly into income statements. Examples of costs are not included in inventoriable costs such as salaries paid to salesperson, advertisements expenses which are not related to production costs.
Activity based cost drives can be identified as volume-based cost driver and non-volume cost based drivers. Volume based cost drives include input and outputs.
Volume cost based drivers
Outputs are one of cost drivers such as the number of units produces. If a business has only one product, then if use outputs cost drives will be the simplest method. However, if businesses have more than one product, and each product need to allocate difference overhead resources, the outputs will not be cost drivers.
A noodle shop in the night market in Auckland can use outputs as cost drives because they only have product of noodle and the ingredient and labour costs in each bowl of noodle is same. However, there are different breads in bakery, so bakery cannot use outputs as cost drivers.
Direct labour hours or direct labour cost. Many businesses uses direct labour hour or cost as manufacturing overhead cost driver. For example, tax agency they charge their client by their time cost.
Machine hour. Some business their equipment is more automatic and they need fewer direct labour cost, so they use machine hour as overhead cost drivers. For example, Fuji Xerox they charge their client by printer’s meter reading.
Direct material quantities or costs. Some businesses require large numbers of material and they use direct materials as cost drivers. (Langfiled-Smith, 2012)
Management accountant he use input of volume cost based drivers to decide the price of custom furniture for their clients in ABC furniture design shop. The costs of custom a chair as following:
There are $50 direct material, $100 labour cost, $20 machine hour. Management accountant will set that chair’s price must be more than $170.
Examples: followings are electricity costs for producing cookie in a cookie company.
Electricity cost for month
Numbers of batches produced for month
Variable cost of
Electricity per batch = ($7400-5400)/ (1320-750) =3.51 per batch produced
At the lowest activity of 750 batches, total variable cost is $2633 ($3.51×750), subtracting lowest cost in lowest activity was $5400, and difference was $2767.
Monthly cost of electricity = $2767 ($3.51 x number of batches produced in a month)
Weakness of high low method: this method is not recommended in estimate cost behavior, because this method only use two data (highest and lowest) and ignore the rest data. So we have no assurance about this method to present cost behavior accurately.
a. Avoidable and unavoidable costs
Avoidable costs are those costs will not happen if some particular decision is made. (Langfiled-Smith, 2012)
Example: Bank of New Zealand they decided to close some braches and cutting opening hours because they use digital bank more. BNZ use this method to save the avoidable cost such as wages, rates, and rents in some branches by closing them. (Parker, 2017)
Unavoidable costs: are costs still incur even no matter what decisions or actions are made.
Example: residential property owner whatever the decision is made to rent or not rent the house, the council rate and insurance costs are not avoidable.
Sunk and Opportunity costs
Sunk costs are those costs already happened and cannot be changed now and in the future. Those costs are resources already acquired and they will not be affected by different decisions are made. So when make decision can ignore those costs. (Langfiled-Smith, 2012)
Example: accountant purchase a printer for $1000. The cost of $1000 is sunk costs.
Opportunity costs are potential benefits are arisen when alternative decision is made over another. (Langfiled-Smith, 2012)
Example: if accountant did not purchase that printer cost $1000, he/she will save $1000, and $1000 is opportunity cost.
Relevant and irrelevant costs
Relevant costs: costs are affected by the different managerial decision made. Normally, there are two or more alternative managerial decision, and manager will choose more profitable alternative. Relevant costs will be incur in one managerial decision but avoid in another.
Example: those costs in closed BNZ branches are relevant costs, because BNZ will save more expenses and to get more profit if they close those branches.
Irrelevant costs: costs are not affected by different decision making. In other words, irrelevant costs are costs will continually happen no matter what decision are made.
Example: CEO salary is irrelevant costs whether BNZ decide to close some branches
Langfiled-Smith, K. (2012). Management Accounting: information for creating and managing value. Sydney, NSW 2113, Australia: Rosemary Noble.
Parker, T. (2017, March 17). BNZ cuts branches and opening hours. Retrieved from nzherald.co.nz: http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12