Treadcushy: Cgma Operational Case Study Examination November 2021-February 2022 Pre-Seen Material

CGMA Operational Case Study Exam - November 2021–February 2022 Pre-seen material
CGMA Operational Case Study Examination

November 2021–February 2022
Pre-seen material
COVID-19 Statement 
This pre-seen and the case study in general (while aiming to reflect real life), are set in a context
where the COVID-19 pandemic has not had an impact. 
 
Remember, marks in the exam will be awarded for valid arguments that are relevant to the question
asked. Answers that make relevant references to the pandemic or social distancing will, of course, be
marked on their merits. In most cases, however, candidates may find it helpful to assume that there
are no restrictions to the movement of people, goods or services in place. 
TreadCushy
CONTENTS:
Content Page
Your role 2
Introduction 3
Extracts from the TreadCushy website: 4–5
• What’s special about our athletic shoes?
• Where can I buy a pair of TreadCushy athletic shoes?
The directors 6
Production, Sales & Distribution and Finance teams 7–8
Other information about company operations 9–15
The industry 16–17
Financial statements for the year ended 30 June 2021 18–20
Budget information for the year ending 30 June 2022 21–23
Articles 24–25
Tax regime in Keyland 26
© CIMA 2021. No reproduction without prior consent

1
Your role
You are a Finance Officer working within the Finance Department of TreadCushy. You are
principally involved in the preparation of management accounting information and providing
information to managers to assist with decision making. At times you are also expected to
assist with the preparation of the financial statements and answer queries regarding financial
reporting and other financial matters.

2
Introduction
TreadCushy is a company that designs, manufactures and sells a range of athletic shoes
made using natural and recycled materials. The company is based in Keyland, a country
located in mainland Europe, which has the K$ as its currency.
TreadCushy was founded in 2007 by Sophia Grigg and Harry Blanc. Prior to founding the
company, Sophia and Harry worked for the same major worldwide athletic shoe and clothing
brand. Sophia and Harry were, and still are, passionate about the environment, sustainability
and the use of natural materials. Whilst working for this worldwide brand, they increasingly
found themselves frustrated at the lack of focus on environmental concerns and the lack of
natural and recycled materials being used to create athletic shoes.
As a result, Sophia and Harry decided to develop their own brand of athletic shoes and
founded TreadCushy in 2007 based in a small workshop. They worked closely with raw
material suppliers and by early 2010 they had developed the first range of casual athletic
shoes made almost entirely from natural materials. These included wool, natural rubber, sugar
cane and caster beans. The athletic shoes were launched to the market in mid-2010. Sales,
all of which were through the company’s own website, amounted to 25,000 pairs in the first
year after the launch.
Sophia and Harry decided that production would be kept “in-house” so that they could control
the sustainability of the manufacturing process and to ensure that there was a focus on
craftsmanship. Therefore, in early 2010, a site in Central Keyland was purchased. A
Production Facility, Distribution Centre and Head Office were established on that site.
In its early stages, the company was funded with venture capital finance as well as by private
investors who saw promise in this new and innovative brand. The passion and drive of both
Sophia and Harry, as well as the support of early investors, ensured that TreadCushy went
from strength to strength, not only gaining brand awareness in Keyland but in many other
European countries.
In 2015, the company launched a range of athletic shoes with uppers made from fabric created
from yarn derived from wood pulp. With such fabric giving natural weather-resistant properties,
Sophia and Harry developed a range of performance athletic shoes for running which were
first launched to the market in 2017. In the same year, TreadCushy opened its first store in
the capital city of Keyland having previously relied entirely on direct selling through its own
website. In addition, the Production Facility was expanded, and a new Distribution Centre was
opened 10 kilometres from the main site.
In the year to 30 June 2021 the company’s revenue was K$68 million and profit before tax
was K$6 million. During that year, the company sold more than 700,000 pairs of athletic shoes
in 10 European countries and opened its fourteenth store. By 2025, TreadCushy aims to be
selling over 1 million pairs of athletic shoes a year across more than 20 countries. The
company also has the aim to be carbon neutral by 2030.

3
Extracts from the TreadCushy website:
What’s special about our athletic shoes?
There are three main things that make our athletic shoes special:
Made from 100% natural or

recycled materials
We use yarn made from sustainably

sourced wool or wood pulp to create our
shoe uppers. We use combinations of
natural rubber and sugar cane
composites to mould into the midsoles
and outsoles of our athletic shoes. All
insoles are made from caster bean, laces
from recycled plastic and even eyelets
are stitched using sustainably sourced
cotton thread. Finally, all our packaging is
made from 100% recycled cardboard.
Made in Keyland at our own

Production Facility
We pride ourselves on keeping 100% of our
production in-house. From weaving the fabric
used to create our shoe uppers, to assembly
and final inspection of the shoes. All this is
carried out at our Production Facility in Central
Keyland by our skilled craftspeople.
Created with both comfort

and style in mind
All our athletic shoes are designed to be
stylish whilst also being the most
comfortable pair of athletic shoes that
you will own. We strongly believe that
once you’ve owned a pair of TreadCushy
athletic shoes, you’ll never want to go
back to another athletic shoe brand!

4
Where can I buy a pair of TreadCushy athletic shoes?
Step 1: Pick from:
One of our retail Our online store, Our shopping app,

stores, locations which is available available to
or or
of which can be on this website by download by clicking
found by clicking clicking here. here.
here.
Step 2: Choose either:

PERFORMANCE RANGE
CASUAL RANGE
For a pair of athletic shoes
For a pair of comfortable which will support your
and stylish athletic or
feet and enhance your
shoes to wear every running performance.
day.
Wool Wood Hill Flat

Natural wool Natural wood With a wood With a wood
upper for upper for upper and a upper and a
complete added shoe design shoe design
comfort, weather adapted for hill adapted for flat
available in proofing, running, running,
many available in available in a available in a
different many range of Basic, range of Basic,
designs and different Regular and Regular and
colours. designs and Elite designs, Elite designs,
colours. each in five each in five
colours. colours.

5
The directors
Sophia Grigg, Managing Director, is one of the co-

founders of TreadCushy and has responsibility for the business as
a whole. She also has responsibility for marketing and together
with her co-founder, Harry Blanc, has final sign-off on new designs
and products. Sophia has a keen interest in sustainability and is
continually looking for ways to reduce any harmful impact of the
business on the environment.
Harry Blanc, Product Development & IT Director,

is the other co-founder of TreadCushy and has overall responsibility
for the development of new athletic shoe designs, as well as the IT
Department. Harry is passionate about fitness and well-being and is
keen to expand the product base of the business into apparel and
other fitness related products. He is also interested in digital and
social media marketing and has recently appointed a dedicated Social
Media Marketing Manager.
Oleg Scragg, Production Director, has been in post

since 2010, having previously been a Senior Production Manager
at a garment manufacturing facility. He has responsibility for the
Production Facility (which includes the raw materials warehouse).
He has an interest in sustainable production and works closely with
Sophia to continually improve the working practices at the
Production Facility.
Jack Tang, Sales & Distribution Director, has been

in post since 2020. He has responsibility for online sales, retail
stores and the Distribution Centre. Jack has experience with
technology and IT systems and would like the Distribution Centre
to embrace the use of more technology.
Emily Queda, Finance Director, has been in post since

2012 and has been qualified as an accountant since 2002. She
has responsibility for the Finance Department and was
instrumental in securing financiers in the early stages of the
business. Emily believes that the business is on a sound financial
footing and that now is the time to invest in new products and
markets.
Sara Gomez, Human Resources Director, has been

in post since 2018 when the post was created. Previously Emily
Queda had been responsible for human resources. Sara has
responsibility for all aspects of human resource management
across the business. She was keen to take this role because of
TreadCushy's excellent reputation for staff welfare.

6
Production, Sales & Distribution and Finance teams

Production:
Production
Director
Oleg Scragg
Head of Head of Raw Head of Head of

Purchasing Materials Production Maintenance
Georgia Foster Warehouse Terry Amos Ned Hills
Tim Gould
Sales & Distribution:
Sales & Distribution

Director
Jack Tang
Head of Finished
Head of Online Sales Head of Retail Stores
Goods Warehouse
Gaby Lopez Lin Chi
Pax Ghandi

7
Finance:
Finance Director
Emily Queda
Finance Manager
Ben Numa
Finance Team
- 4 Finance Officers (of which YOU are
one)
- 4 Finance Assistants

8
Other information about company operations

Sales markets and sales channels
TreadCushy sells its athletic shoes to customers in Keyland and 9 other countries in Europe.
The company has always had a policy of direct selling to customers and does not currently
sell through intermediary retailers or wholesalers. Until 2017, all sales were made online via
the company’s website. In 2017, TreadCushy opened its first retail store in the capital city of
Keyland. There are now 8 stores in major cities in Keyland and a further 6 stores in the capital
cities of 6 other European countries. For the year ended 30 June 2021, TreadCushy’s revenue
is analysed as follows:
Northern Southern
Keyland European Europe Total
Revenue analysis K$ million K$ million K$ million K$ million
Online sales 30.9 14.9 5.4 51.2
Retail stores 9.7 6.8 0 16.5
Total 40.6 21.7 5.4 67.7
Sales are not uniformly distributed across the year. Peak sales are in the period October to
December and then in the period April to June and correspond to new design launches which
typically happen in March and September of each year. Online sales are managed from an
office at the Distribution Centre (see below). Customers can either order from the website or
through the TreadCushy shopping app which was launched in 2020.
TreadCushy athletic shoes appeal to a broad range of customers, across a wide age range.
The Casual range is designed for casual every day wearing and is fast becoming one of the
most “trendy” brands of athletic shoes to be seen in: partly because of TreadCushy’s appealing
designs and partly because of its sustainability credentials. The Performance range of running
shoes is also growing in popularity and has a good reputation. It is currently targeted at people
who use running to keep fit or as a hobby, rather than elite runners. For both the Casual and
the Performance ranges, TreadCushy’s prices are slightly above the market average for
similar products.
The mix of sales between Casual and Performance shoes is different in retail stores and
online. This is because many customers prefer to come into store so that they can benefit from
the expertise of the sales team when selecting their Performance shoe. Many of TreadCushy’s
customers are loyal to the brand and own more than one pair of TreadCushy athletic shoes.
Production Facility
TreadCushy makes all its shoes at its single Production Facility where it weaves the fabric
from which shoe uppers are made, moulds the soles of the shoes and where the shoes are
assembled and finished. The site includes a number of different buildings used for the different
production operations and a Raw Materials Warehouse.

9
Production is typically for inventory rather than to order. On completion of production, finished
goods are sent to TreadCushy’s separate Distribution Centre which is located 10 kilometres
from the Production Facility.
The production process
Design and
prototype
Weaving of
upper fabric
Cutting of upper
fabric Moulding of
soles
Stitching of
upper fabric
Lasting
Finishing

10
Design and prototype
New shoe designs are launched twice a year. Each design starts as a conceptual drawing in
the Product Development Department. After initial approval, the paper design is digitalised
using CAD software, which allows a pattern to be created. From this initial pattern, prototypes
of the shoe are developed and rigorously tested, with the pattern and material requirements
tweaked until the perfect shoe has been created. After final design approval, any new
moulding and cutting dies required for production are sourced and then production can
commence.
Weaving of fabric
All the fabric used to create the upper of TreadCushy’s shoes is woven at the Production
Facility by modern weaving machinery. The company buys in yarn made from either high-
quality wool or from wood pulp and this is woven into rolls of fabric.
Cutting
Each shoe upper consists of a number of segments that need to be cut out from the fabric that
has been woven. Two methods are used to cut out these segments: by hand using cutting
dies or using digital laser-cutting machinery.
Stitching
All the segments of a shoe upper (outer layers and lining) are stitched together by one of
TreadCushy’s skilled craftspeople using modern sewing machines, designed specifically for
the task. At this stage, eyelets are stitched into the upper ready for laces.
Moulding of soles
At the same time as shoe uppers are being made, a separate production team makes the
midsoles and outsoles. Pellets of natural rubber and a composite made from sugar cane are
combined in a melting vat and the soles are moulded by an injection moulding process.

11
Lasting
Lasting is the process where the shoe is assembled and takes its shape. A last is a metal
model for the foot shape relevant to the type and size of the shoe being created. Lasting
machinery is set up with the relevant lasts and the floppy shoe uppers are stretched onto these
lasts. The bottom ends of the upper are folded over onto the base of the last and the midsole
and outsole of the shoe are then pressed onto the upper by the machine. After the sole is
added the shoe is taken off the last and is ready for finishing.
Finishing
Finishing involves adding insoles, laces and labels, before final quality checks and packing
into our distinctive recycled cardboard TreadCushy shoe boxes.

12
Purchasing and suppliers

The main raw material inputs to the production process are:
•There are two types of yarn used by TreadCushy:

one made from wool and one made from wood pulp.
Yarn •Each type of yarn has a single supplier. Both
suppliers create their yarns in Keyland from natural
resources sourced sustainably in the country.
•Natural rubber in pellet form is sourced from three

Natural different suppliers: two in Asia and one in South
America.
rubber •All three of TreadCushy's natural rubber suppliers

are members of the World Federation Alliance of
Sustainable Sourcing.
•Since TreadCushy was founded, it has worked with
Sugar cane
TB Sweet Nature, a company based in South
America, to develop a composite made from the
waste product of sugar cane.
composite •TB Sweet Nature is TreadCushy's only supplier of
this composite which is used in the production of
shoe soles.
In addition, TreadCushy buys the following from a range of suppliers mostly based in Keyland:
o insoles made from caster beans;

o laces made from recycled plastic;
o cotton thread; and
o packaging made from recycled cardboard.
TreadCushy takes a conservative approach to raw materials inventory management and takes
advantage of bulk purchase discounts where possible. Payment terms granted by suppliers
range from 30 to 60 days.

13
Distribution Centre and logistics

The company has a Distribution Centre located 10 kilometres from the Production Facility.
The Distribution Centre includes a large warehouse for storage of finished goods inventory.
There is also an office from which all online sales and retail store logistics are managed.
The process in respect of online sales is as follows:
Goods received from

Pallets moved via forklift
Production Facility via the
trucks to Finished Goods
company's own delivery
Warehouse
vehicles on pallets
Order received from

Picking of goods by robots
customer and checked to
in the Finished Goods
ensure that customer has
Warehouse
paid
Picked goods sent to

Packing Hub and goods Goods packed in the
checked to order Packing Hub manually
manually
Orders despatched to
online customers via third
party courier services
Despatches to retail stores are carried out by an international logistics company.
TreadCushy takes a conservative approach to the management of finished goods inventory

at the Distribution Centre. This is to ensure the full range of designs, colours and sizes are
available for quick despatch to customers.

14
Retail stores
There are currently eight TreadCushy retail stores in Keyland, all located in major cities. There
are a further six retail stores in the capital cities of other European countries. Each store is
fitted out in the same way and displays the full range of our shoe designs. The retail stores
sell only the TreadCushy brand.
Each store has a Store Manager whose responsibilities include inventory control as well as
recruiting and training retail employees. Each Store Manager has a monthly sales target that
they are expected to achieve.
Each store has touchscreen monitors giving customers information about the benefits of using
natural resources such as wool, wood, caster beans and rubber as well as the science behind
the shoe designs.
Employees
TreadCushy had the following number of employees on 30 June 2021:
Number
Production Facility 284
Distribution Centre 124
Retail Stores 98
Head Office* 29
535
*Head Office includes the product development, finance and human resources teams.
Standard costing and budgets

The company operates a standard absorption costing system using departmental overhead
absorption rates based on either direct labour hours or machine hours for both variable and
fixed production overheads. Standard cost cards are produced for each shoe design and are
updated annually.
Budgets are prepared annually on an incremental basis. Managers have limited involvement
in budget setting and limited budget responsibility for their respective areas.

15
The industry
Global sales of athletic shoes
Global footwear sales in 2020 were K$180 billion, of which K$70 billion can be attributed to
sales of athletic shoes.
The market for athletic shoes is dominated by four major athletic shoes and clothing brands
that have a truly global presence. These four brands have operations across the world and
sell a full range of athletic shoes and clothing for both sport and leisure. The other brands that
sell athletic shoes can be categorised as either non-specialist or specialist, with the brand
incorporating athletic shoes and clothing or just athletic shoes. Specialist brands are typically
relatively small companies that focus on a niche within the market, such as athletic shoes
made from recycled materials or athletic shoes for specific sports. TreadCushy is an example
of a specialist athletic shoe only brand.
The K$70 billion of global sales of athletic shoes in 2020 were generated as follows:
Percentage of global sales of athletic shoes in 2020

4% 3%
4 major global athletic shoe and
12% clothing brands (67%)
Non-specialist athletic shoe and
clothing brands (14%)
Non-specialist athletic shoe only
14% brands (12%)
Specialist athletic shoe and clothing
brands (4%)
67%
Specialist sports athletic shoe only
brands (3%)
Of the K$70 billion of athletic shoe sales generated in 2020, approximately 50% relates to high
performance sports shoes (covering a wide range of sports) and 50% relates to casual athletic
shoes.
The global market for athletic shoes has grown by an average of 5% a year over the last 10
years and is expected to grow by 7% a year over the next 5 years. This is due in part to
increasing interest in health and fitness generally but is also driven by Millennials who see
athletic shoes as a fashion statement.

16
Sales channels for sports athletic shoes
Over the last 10 years consumer shopping habits have changed significantly. In 2010 only
10% of all athletic shoe sales were made online, with the other 90% made in retail stores. In
2020, online sales were 60% of total sales made.
Whether consumers buy their athletic shoes direct from the brand or from third party retailers
has also changed slightly over the same 10-year period. Increasingly brands have used direct
selling to consumers, either through their own online stores or their own dedicated retail stores.
This is illustrated below:
Percentage of global sales of athletic shoes

60%
50%
40%
30%
20%
10%
0%
Online - brands Online - sports Online - general Retail stores - Retail stores - Retail stores -
own website retailers website retailers website brands own sports retailers general retailers
2010 2015 2020
Manufacturing
The vast majority of athletic shoes are manufactured in Asia. All four of the major brands
outsource production as a means of keeping cost down.
However, over the past 10 years there have been a number of small companies proving that
manufacturing in-house can be profitable. One such example is TreadCushy.

17
Financial statements for the year ended 30 June 2021

TreadCushy
Statement of profit or loss for the year ended 30 June 2021
2021 2020
K$000 K$000
Revenue 67,740 59,120
Cost of sales (32,515) (28,970)
Gross profit 35,225 30,150
Selling, distribution and marketing costs (23,053) (21,585)
Administrative expenses (6,100) (5,440)
Operating profit 6,072 3,125
Finance costs (390) (390)
Profit before tax 5,682 2,735
Income tax expense (1,620) (805)
Profit for the year 4,062 1,930

18
TreadCushy
Statement of financial position at 30 June 2021
2021 2021 2020 2020

K$000 K$000 K$000 K$000
ASSETS
Non-current assets
Property, plant and equipment 8,924 9,200
Right of use assets 724 620
9,648 9,820
Current assets
Inventory 8,580 8,420
Other receivables 518 490
Cash and cash equivalents 4,314 802
13,412 9,712
Total assets 23,060 19,532
EQUITY AND LIABILITIES

Issued K$1 equity share capital 100 100
Retained earnings 9,188 7,126
Total equity 9,288 7,226
Non-current liabilities
Borrowings 4,600 4,600
Lease liability 542 433
5,142 5,033
Current liabilities
Trade and other payables 6,912 6,380
Tax liability 1,620 805
Lease liability 98 88
8,630 7,273
Total equity and liabilities 23,060 19,532

19
TreadCushy
Statement of cash flows for the year ended 30 June 2021
2021 2021
K$000 K$000
Cash flows from operating activities
Profit before tax 5,682
Adjustments
Depreciation for property, plant and equipment 1,640
Profit on sale of property, plant and equipment (13)
Depreciation on right of use asset 80
Finance costs 390
2,097
Movements in working capital
Increase in inventory (160)
Increase in other receivables (28)
Increase in trade and other payables 532
344
Cash generated from operations 8,123
Tax paid (805)

Interest paid (390)
Net cash inflow from operating activities 6,928
Cash flows from investing activities

Purchase of property, plant and equipment (1,431)
Proceeds on disposal of property, plant and equipment 80
Net cash outflow from investing activities (1,351)
Cash flows from financing activities

Dividend paid (2,000)
Repayment of lease principal (65)
Net cash outflow from financing activities (2,065)
Net increase in cash and cash equivalents 3,512
Cash and cash equivalents at the start of the year 802

Cash and cash equivalents at the end of the year 4,314

20
Budget information for the year ending 30 June 2022
Total budgeted gross profit
Casual Performance
Wool Wood Hill Flat Total
K$000 K$000 K$000 K$000 K$000
Revenue 29,580 16,660 9,840 17,760 73,840
Cost of sales (13,683) (8,297) (4,346) (7,310) (33,636)
Gross profit 15,897 8,363 5,494 10,450 40,204
Gross profit margin 54% 50% 56% 59% 54%
Budgeted sales
Casual Performance
Sales volume (pairs) 348,000 196,000 82,000 148,000 774,000
K$ K$ K$ K$
Average selling price per pair* 85.00 85.00 120.00 120.00
K$000 K$000 K$000 K$000 K$000

Revenue 29,580 16,660 9,840 17,760 73,840
Budgeted cost of sales
Casual Performance
Sales volume (pairs) 348,000 196,000 82,000 148,000 774,000
K$ K$ K$ K$
Average cost of sales per pair*:
Raw materials 17.65 19.45 24.20 22.60
Direct labour 9.70 10.42 13.64 12.48
Variable production overheads 2.39 2.49 3.03 2.86
Fixed production overheads 9.58 9.97 12.13 11.45
Total 39.32 42.33 53.00 49.39
K$000 K$000 K$000 K$000 K$000

Cost of sales 13,683 8,297 4,346 7,310 33,636
*The average selling price and average cost of sales per pair, are the averages across all
designs in each of the product ranges. For Performance shoes, there are three distinct ranges
of design: Basic, Regular and Elite.

21
Example standard cost card
Casual Wool: Design TC210: Size 40 per pair

Standard
Quantity / hours price / Standard Standard
rate cost cost
K$ K$ K$
Materials:
Yarn 0.10 kg 30.00 3.00
Sugar cane composite 0.16 kg 15.00 2.40
Natural rubber 0.20 kg 20.00 4.00
Other components 7.80
Packaging 0.60
Total 17.80
Direct labour:
Weaving 0.025 hours 20.45 0.51
Moulding 0.055 hours 20.45 1.12
Cutting & Stitching 0.32 hours 20.45 6.54
Lasting & Finishing 0.10 hours 20.45 2.05
Total 10.22
Variable production overheads:

Weaving 0.025 machine hours 28.40 0.71
Moulding 0.05 machine hours 12.60 0.63
Cutting & Stitching 0.32 labour hours 1.94 0.62
Lasting & Finishing 0.10 labour hours 4.64 0.46
2.42
Fixed production overheads:

Weaving 0.025 machine hours 114.80 2.87
Moulding 0.05 machine hours 50.60 2.53
Cutting & Stitching 0.32 labour hours 7.75 2.48
Lasting & Finishing 0.10 labour hours 18.56 1.86
9.74
Total production cost 40.18

22
Notes on standards and budget preparation
1. Standards are reviewed and updated annually for any known changes.
2. Normal raw material losses are included in the standard cost of each product.
3. All direct labour overtime premium is treated as variable production overhead. Idle time
is not budgeted for.
4. Production overheads are allocated and apportioned to cost centres and absorbed
based on either direct labour hours or machine hours. There are four production
overhead cost centres for weaving, moulding, cutting & stitching and lasting & finishing.
Each production cost centre has its own variable and fixed production overhead
absorption rates.
5. Budgeted selling prices include an allowance for planned discount promotions.

23
Articles
Business Today
1 October 2021 No. 1,223
TreadCushy: So, what’s It is clear from my interview with

Sophia that she is passionate
the secret? about the impact that the

TreadCushy brand has on the
environment. All the resources
used in a pair of TreadCushy
shoes are either sustainably
sourced from nature or are
recycled. Keeping manufacturing
in-house, means that Sophia and
her management team can limit
wastage and ensure that the
production process is as
environmentally friendly as it can
be.
Over the last 10 years,

TreadCushy has managed to tap
into growing consumer awareness
on all matters related to
It’s the business that just seems to keep growing.
sustainability. Not only that,
From humble beginnings and the sale of its first pair
through its clever designs, it has
of shoes in 2010, the last 3 years have seen
created shoes that are seen as
revenue growth averaging 15% a year: a
“cool”. And, that’s another reason
phenomenal rate of growth in a market which is
for its success: whether you are
dominated by major international brands. So, what’s
16 or 60, TreadCushy shoes are
the secret of TreadCushy’s success?
increasingly the shoes to be seen
in.
In an interview with Sophia Grigg, TreadCushy’s
Managing Director and co-founder, she states that
The future looks bright for this
there is no secret. For her, the success of the brand
company. With new product
is a result of giving consumers what they want: an
ranges in the pipeline and
athletic shoe made from natural materials that is
continued focus on quality and
both stylish and comfortable at the same time. The
sustainability, Sophia is confident
company works hard on keeping designs fresh and
that TreadCushy can continue to
is one of the few athletic shoe brands that keeps its
compete with the major brands!
manufacturing in-house. Even the fabric from which
the shoe uppers are made is woven at
TreadCushy’s Production Facility.

24
Running Weekly
17 October 2021 No. 450
Running shoes:
what are the
next new
things?
Smart tech has already
revolutionised the way that we
monitor how we exercise. Through
devices that we can wear on our
wrist or arm, it’s now easy to track
our heart rates and our fitness It’s not only running shoes that are changing. With
progress on our mobile devices. the abundance of running shoe designs available
in the market today, it’s often difficult to choose a
Smart tech in running shoes is a pair which suits our running style. More and more
newer invention but is starting to runners are turning to gait analysis (which involves
make traction in the market. Prices running on a specialist treadmill that scans running
of running shoes with smart tech action) before making a purchase.
embedded into the sole of the shoe
are falling, as the leading brands Whether we over- or under- pronate when we run
(and some lesser-known brands) really matters when it comes to selecting what can
find ever more efficient ways to be an expensive pair of running shoes. The good
produce such shoes. This can only news is that increasingly athletic shoe companies
be good news for us! seem to be more aware of this. Just last month one
of the big four worldwide brands launched an in-
store gait analysis service, free as long as you
purchased a pair of shoes. How’s that for customer
service?

25
Tax regime in Keyland
• The corporate income tax rate to be applied to taxable profits is 30%.

• Unless otherwise stated below, accounting rules on recognition and measurement are
followed for tax purposes.
• The following expenses are not allowable for tax purposes:
o accounting depreciation
o amortisation
o impairment charges
o entertaining expenditure
o donations to political parties
o taxes paid to other public bodies.
• Tax depreciation allowances are available on all items of plant and equipment
(including computer equipment) at a rate of 25% per year on a reducing balance basis.
A full year’s allowance is available in the year that the asset is acquired. Tax
depreciation allowances are not available for property assets.
• Tax losses can be carried forward indefinitely to offset against future taxable profits
from the same business.
• Sales tax is charged on all standard rated goods and services at a rate of 20%. Tax
paid on inputs into a business can be netted off against the tax charged on outputs
from that business. All businesses are required to pay over the net amount due on a
monthly basis.

26

Treadcushy: Cgma Operational Case Study Examination November 2021-February 2022 Pre-Seen Material

Uploaded by

Copyright:

Available Formats

Treadcushy: Cgma Operational Case Study Examination November 2021-February 2022 Pre-Seen Material

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Treadcushy: Cgma Operational Case Study Examination November 2021-February 2022 Pre-Seen Material

Uploaded by

Copyright:

Available Formats

CGMA Operational Case Study Exam - November 2021–February 2022 Pre-seen material

CGMA Operational Case Study Examination

© CIMA 2021. No reproduction without prior consent

© CIMA 2021. No reproduction without prior consent

© CIMA 2021. No reproduction without prior consent

Extracts from the TreadCushy website:

What’s special about our athletic shoes?

Made from 100% natural or

We use yarn made from sustainably

Made in Keyland at our own

Created with both comfort

© CIMA 2021. No reproduction without prior consent

Where can I buy a pair of TreadCushy athletic shoes?

Step 1: Pick from:

One of our retail Our online store, Our shopping app,

Step 2: Choose either:

Wool Wood Hill Flat

© CIMA 2021. No reproduction without prior consent

Sophia Grigg, Managing Director, is one of the co-

Harry Blanc, Product Development & IT Director,

Oleg Scragg, Production Director, has been in post

Jack Tang, Sales & Distribution Director, has been

Emily Queda, Finance Director, has been in post since

Sara Gomez, Human Resources Director, has been

© CIMA 2021. No reproduction without prior consent

Production, Sales & Distribution and Finance teams

Head of Head of Raw Head of Head of

Sales & Distribution:

Sales & Distribution

© CIMA 2021. No reproduction without prior consent

© CIMA 2021. No reproduction without prior consent

Other information about company operations

© CIMA 2021. No reproduction without prior consent

The production process

© CIMA 2021. No reproduction without prior consent

Design and prototype

© CIMA 2021. No reproduction without prior consent

© CIMA 2021. No reproduction without prior consent

Purchasing and suppliers

•There are two types of yarn used by TreadCushy:

•Natural rubber in pellet form is sourced from three

rubber •All three of TreadCushy's natural rubber suppliers

•Since TreadCushy was founded, it has worked with

o insoles made from caster beans;

© CIMA 2021. No reproduction without prior consent

Distribution Centre and logistics

The process in respect of online sales is as follows:

Goods received from

Order received from

Picked goods sent to

Despatches to retail stores are carried out by an international logistics company.

TreadCushy takes a conservative approach to the management of finished goods inventory

© CIMA 2021. No reproduction without prior consent

Standard costing and budgets

© CIMA 2021. No reproduction without prior consent

Global sales of athletic shoes

Percentage of global sales of athletic shoes in 2020

© CIMA 2021. No reproduction without prior consent

Sales channels for sports athletic shoes