KOLEJ UNIVERSITI TUNKU ABDUL RAHMAN

BACHELOR OF ACCOUNTING (HONS.)

BACHELOR OF BUSINESS (HONS) ACCOUNTING AND FINANCE
ACADEMIC YEAR 2021/2022

BBMC2023 DECISION MANAGEMENT

GROUP ASSIGNMENT (50%)

1. Assessment criteria
This is a team-based mini-case study assignment comprising of 4-5 individuals
per team. Marks will be awarded as per assessment matrix shown in Form A and
will take into consideration the Peer Review Questionnaire in Form B (if
applicable). Each group is only required to attach a SINGLE Form A
immediately after the cover page.

2. Guidelines for GROUP written assignment:

 The report must be done using Microsoft Word.
 All supporting financial analysis must be done using only ONE (1) Excel
spreadsheet where students are required to demonstrate the ability to link all
worksheet (if applicable) and show all necessary functions and equations
wherever possible.
 Word document formatting requirements:
- Paper size: A4
- Top and bottom margin: 1 inch
- Left and right margin: 1.25 inch
- Font type: Times New Roman
- Font size: 11
- Pages should be numbered
- The written report must not exceed 1200 words including all appendixes.

3. Reference materials
 The standard Harvard Reference system must be followed in your written
assignment.
 Full references must be listed in alphabetical order and included at the end of the
written assignment which include author’s name, title of the book, publisher, the
edition as well as the page where references have been made.
 You must also include details of the website visited where information may have
been used in your written assignment, particularly the time of visit, the URL
address as well as any other information which is consider as materially
important.

4. Submission of assignment

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  A soft copy of Excel spreadsheet must be enclosed WITH your assignment.
Each issue should be shown in different Excel worksheet. Both the Word and
Excel file must be saved under the full name of your group leader follow by the
group, for example “SIMSON LOONG GROUP 1”.
 Both the written assignment AND the Excel spreadsheet must be submitted in
WEEK 10 21st March 2022 12.00 noon via google form to be created. Late
submission will be penalised as follows:
 Late submission within 1 – 3 days: total marks to be deducted is 10 marks
 Late submission within 4 – 7 days: total marks to be deducted is 20 marks
 Late submission after 7 days: reject the coursework and zero mark shall be
awarded

5. Plagiarism Check:

 Originality check in the Google Classroom is used to run the plagiarism check –
you can run the plagiarism check for 3 times before you “turn in” your
assignment.
 Flagged passages are permitted up to maximum of 10%, otherwise, a penalty of
ten (10) marks will be deducted from the total marks.
 You are required to attached the plagiarism check run in the appendixes of your
assignment.

5. The aims of the mini-case study are to test and to develop students’ knowledge,
skills and abilities in the following areas:

i) Knowledge, comprehension, numerical, analytical, critical and problem-solving

skills in the following areas:
 Profitability analysis
 Short-run decision making concepts and techniques: cost-volume-profit
analysis, ‘what-if’ analysis, shut-down decision and relevant cost
analysis
 Investment appraisal on asset replacement programme

ii) Microsoft Word Processing and Excel Spreadsheet application skills.

iii) Report writing skills.

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Company Background
Nekia Corporation is a listed company that designs and sells telecommunications equipment,
consumer electronics and various smart devices in Malaysia. The plant is located in Penang Batu
Kawan Industrial Park. The company generated a total turnover of RM200 million in 2021 and
the business continues to provide a steady profit. Nekia sees the growing demands in wearables
and plans to expand its business by launching the new Smartwatch ZT 3000 in Malaysia and
global market.

You are a newly appointed management accountant in Nekia Corporation Finance Division.
Finance Division report directly to the Board and advise on special projects and strategic matters.

Introduction
Our modern and tech-focused world allows us to fall into a sedentary lifestyle easily. We are
often plugged into our computers at work, spend time on devices at home, and have automated
home systems that can turn on our lights or TVs. Yet, technology can also encourage us to
improve our health by giving us greater access to physical therapy, telemedicine, or even help us
stay on top of our medications and manage diabetes. 

Today, the rise of smartwatches and wearables like the Fitbit and the Apple Watch are
revolutionizing healthcare in an entirely new way by allowing us to take charge of our physical
and mental well-being right from our wrists. 

Wearable devices smartwatches are quickly becoming indispensable technologies in the

healthcare industry. For patients, smartwatches can monitor your heart rate, sleep habits, and
physical activity. For doctors, patients can then take that information and share it with your
physician to gain valuable insight around your health to make alterations that could improve your
overall well-being.

Smartwatches also improve your well-being by giving you access to apps designed around
specific health conditions like diabetes. They also grant you access to tons of fitness, dieting,
and mental health apps that encourage us to maintain a healthy lifestyle more conveniently than
ever.

Nekia Corporation plan to launch the new Smartwatch ZT 3000 in January 2023 and currently in
the evaluating stage. It required input from sales and marketing, technology engineers,
manufacturing, and finance. The data were organized and thorough, and need your team to come
up with a compelling analysis and a recommendation about whether to proceed. The top
management and CEO were excited at the idea Smartwatch ZT 3000 and plan to engage Lee Zii
Jia (Malaysian professional badminton player) to be the spokesperson of the new product.  But
top management also knew that all the excitement and flash in the world could not make up for a
project if the financials did not work. 

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Project 1: Smartwatch ZT 3000

The business case team had compiled the following baseline information surrounding
the Smartwatch ZT 3000 project: 

1. The life of the Smartwatch ZT 3000 project was expected to be six years. Assume the
analysis took place at the end of 2022. 
2. The suggested retail price of the smartwatch was RM250. Gross margins for high-
end wearables averaged about 40% at the retail level, meaning each watch sold would net
Nekia Corporation RM150.  （？）
3. The global wearables market in 2021 totaled approximately RM74.5 billion and was
expected to grow at 1.8% from 2021 to 2028, reaching RM84.4 billion by 2028. (?)
Based on market research and analysis of other recent athlete endorsements, the Nekia
Corporation marketing division estimated the following sales volumes for Smartwatch
ZT 3000: (Sales unit)

Year 2023 2024 2025 2026 2027 2028

Number sold 1.1 2.0 1.3 1.4 1.5 1.0

(millions)

4. The 2024 number assumed Lee Zii Jia participated in the 2024 games in Paris and won at
least one medal. (?)
5. For the first two years, the introduction of Smartwatch ZT 3000 would reduce sales of
existing Nekia Corporation phone as follows: 
a. Lost sales: 2023: RM38 million 2024: RM17 million (Opportunity cost?)
b. Assume the lost revenue had the same margins as Smartwatch ZT 3000. 
6. In order to produce the smartwatch, the firm needed to build a new factory in Batu
Kawan. This required an immediate outlay of RM155 million, to be depreciated at 10%
per annum using straight line method. The firm’s analysts estimated the building would
be sold for RM22 million at project termination. (R)
7. The company must immediately purchase equipment costing RM18 million. Freight and
installation of the equipment would cost RM6 million. The cost of equipment
and freight/installation was to be depreciated at 15% per annum using straight line
method It was believed the equipment could be sold for RM3 million upon project
termination. 
8. Fixed assets can claim capital allowance on a 25% reducing balance basis. A balancing
allowance is claimed in the final year of operation.
9. In order to manufacture Smartwatch ZT 3000, two of the firm’s working capital accounts
were expected to increase immediately. Approximately RM15 millions of inventory
would be needed quickly to fill the supply chain. In year 2025, the working capital
needed would be RM17 million. All working capital would be recovered at the end of the
project by the end of the sixth year. 
10. Variable costs were expected to be 60% of revenue.

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 11. Selling, general, and administrative expenses were expected to be RM8 million per
year. (FC)
12. Lee Zii Jia would be paid RM3 million per year for his endorsement of Smartwatch ZT
3000, with an additional RM1 million Olympic bonus in 2024. 
Other advertising and promotion costs were estimated as follows:  

Year 2023 2024 2025 2026 2027 2028

A&P Expense (millions) RM26 RM19 RM15 RM20 RM18 RM14

13. Nekia Corporation had already spent RM2 million in research and development on
Smartwatch ZT 3000. 
14. The Smartwatch ZT 3000 project was to be financed using a combination of equity and
debt. The interest costs on the debt were expected to be approximately RM1.2 million per
year. The Nekia Corporation discount rate for new projects such as this was 11%. 
15. Nekia Corporation’s effective tax rate was 24%. The tax is payable one year in arrears.

The CEO was worried about the marketing approach for Smartwatch ZT 3000 targeting 12- to
18- year-old males. Recent market data showed the average age of wearables purchasers to be just
over 27 years, up from 24 three years earlier. This trend was expected to continue as the
population aged. Success would depend on an effective marketing and advertising campaign that
targeted not only the younger consumer but which reached the ultimate purchaser who was more
likely to be a parent.  

Project 2: Energy-saving smartwatch  

The CEO was still contemplating the Smartwatch ZT 3000 project when she began
reviewing another proposal for a new energy-saving smartwatch being considered. Nokia
discovered a business opportunity to purchase energy-saving smartwatches from the OEM
factory, repackaged them, and sold them to the consumer in Malaysia. There are 3 different
models namely P88 Pro Max, P88, P88 Pro. The forecasted demand and price in the year 2023
are as follows:

P88 Pro Max P88 P88 Pro Total

(High-End device) (Low-End device) (Mod-End device)
Number of items can be sold 900 300 600 1800
Price per item RM1,200 RM500 RM900  
Total revenue RM1,080,000 RM150,000 RM540,000 RM1,770,000
Purchase cost per item 1150 480 890  
Total purchase costs RM1,035,000 RM144,000 RM534,000 RM1,713,000
Allocated fixed expenses
RM57,090 RM6,540 RM14,500 RM78,130
(Includes all labour)
Total costs RM1,092,090 RM150,540 RM548,500 RM1,791,130
Profit (loss) (RM12,090) (RM540) (RM8,500) (RM21,130)

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Agenda for a Forthcoming Management Meeting

A management meeting has been scheduled in the last week of March 2022 to discuss, deliberate
and decide on the best course of action for each of the following issues relating to the business.

Project 1: Smartwatch ZT 3000

To review and critically evaluate whether Nekia Corporation should invest and produce
Smartwatch ZT 3000

Project 2: Energy-saving smartwatch  

To review and critically evaluate whether to proceed with the new business opportunity.

Required:
As the newly appointed management accountant of Nekia Corporation, prepare a REPORT
incorporating relevant financial analyses, other relevant information plus your recommendations
to assist the management of the company to decide on the best course of action for each of the
items stated in the agenda for the forthcoming meeting. Your report must include EACH of the
under-noted items in the agenda as follows:

Project 1: Smartwatch ZT 3000

1. Which cash flows should be incorporated into the project’s forecast? Why or why not?
2. Does Smartwatch ZT 3000 appear attractive from a quantitative standpoint? To answer
this question, estimate the project’s payback, net present value, and internal rate of return.
(1)
3. Suggest strategic factors that should be considered before Nekia undertake the project.
Project 1:
Q1 and Q3-Yash
Q2-THS
Project 2: Energy-saving smartwatch  

1. What is breakeven for the year? What concerns, if any, do you have about this breakeven
figure? 

2. Given that its preliminary budget shows a sizable loss, Nekia Corporation must consider
ways to eliminate this loss.  What are the options should management consider to
increase the profitability of the project?  

3. Nekia Corporation thinks it can increase the sales of its products by advertising in local
newspapers, and has decided to spend RM1,000 on advertising. To get the most out of its
advertising expenses, it has decided to concentrate on one product only. Given financial
concerns only, please discuss how it should decide which product to emphasize?  

4. One of the managers of Nekia Corporation has suggested that, since the company loses so
much P88 Pro max, it should discontinue selling them. What advice would you give
Nekia about this decision? 

Q1,2: LCW Q3: OYS q4:CJJ

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 KOLEJ UNIVERSITI TUNKU ABDUL RAHMAN
BACHELOR OF ACCOUNTING (HONS.)
BACHELOR OF BUSINESS (HONS.)
ACCOUNTING AND FINANCE
ACADEMIC YEAR 2021/2022

BBMC2023 DECISION MANAGEMENT

GROUP ASSIGNMENT (50% weightage)

Tutor:
Group/Class:
Word Count:
Percentage of Plagiarism:

Number Name (to be arranged in alphabetical order) TARC ID

1.
2.
3.
4.

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5.

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 FORM A
Assessment Matrix for Team-Based Assignment (100%)
Criteria Poor Average Good Excellent Total Marks
Marks Scored

Technical knowledge: Poor display of Limited display of Good display of Thorough display of
Comprehension, relevant knowledge relevant knowledge relevant knowledge relevant knowledge 30
numerate, analytical and/or with and/or with but with some and thorough
skills misconceptions misconceptions misconceptions analysis
(0 – 10) (11 -17) (18 – 24) (25 – 30)

Recommendation and Very limited and/or Limited and/or lacks Display reasonable Display well-
suggestions: lacks clarity and clarity and reflection upon key grounded reflection 30
Critical and problem practicality practicality issues but with of key issues and
solving skills (0 – 10) (11 – 17) limited clarity and addressing them
practicality with clarity,
(18 – 24) conciseness and
practicality
(25 – 30)

Report writing: Poor organization Reasonably clear Good organization Very good
Layout (structure and incoherent organization and and coherent organization and 10
organization and presentation; layout coherent presentation; layout coherent
presentation of issues lacks clarity, presentations; layout reasonably clear’ presentation; layout
and financial analysis) conciseness and has limited clarity, concise and effective clear, concise and
and fluency of language effectiveness conciseness and (7 - 8) effective
used (sentence (0 – 4.5) effectiveness (8.5 - 10)
construction, grammar, (5 – 6.5)
etc)

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 Assessment Matrix for Team-Based Assignment (60%)
Criteria Poor Average Good Excellent Total Marks
Marks Scored
Research effort Very limited Some evidence Clear evidence Excellent
research evidence (3) (4) (5) 5
(0 – 2)

Leadership and teamwork Poor display of Reasonable display Good display of Excellent display of
teamwork and of teamwork and teamwork and teamwork and 5
leadership between leadership between leadership between leadership between
members members members members
(0-2) (3) (4) (5)
Excel spreadsheet: data Very poor display of Poor display of Good display of data Very good display
organization, formatting data organization organization and organization and of data organization 20
and formulae creation and and application application skills application skills and application
application knowledge skills (7 – 11) (12 – 16) skills
(0 – 6) (17 – 20)

TOTAL 100

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