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N40P Accounting And Finance

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Questions:

Task 1 Management accounting for managers

Individually identify a specific manager (i.e. CEO, Retail unit manager, HR manager, etc), and identify at least three decisions for which the manager of the business need management accounting information. For each decision discuss how accounting information can be helpful. In your discussion, you should refer to specific management accounting techniques or methods.

Refer to at least 3 academic sources in your discussion; one of them must be the core text book.

Task 2  Ratio analysis

Q3.4 Digby plc (amended), Ch. 3, Proctor (2012):

The following are extracts from the profit and loss accounts and balance sheets of Digby plc:

Profit and loss account (£m)

 

2006

2005

2004

Sales

3000

2000

1000

Cost of goods sold

1950

1240

600

Gross profit

1050

760

400

Operating expenses

760

590

330

Operating profit (profit before interest and tax)

290

170

70

Debenture interest

16

13

8

Profit before tax

274

157

62

Taxation

96

55

22

Profit after tax

178

102

40

Preference dividend

10

10

10

Equity dividend

60

30

10

Retained profit

108

62

20

Balance sheet at 31 December (£m)

 

2006

2005

2004

Fixed assets

330

302

250

Current assets

 

 

 

Stock

250

170

120

Debtors

190

140

80

Cash

20

10

20

Less: Current liabilities

 

 

 

Creditors

140

110

70

Less: Non-current liabilities

160

130

80

Net assets employed

490

382

320

 

 

 

 

Equity capital

200

200

200

Retained profit

190

82

20

Preference dividend

100

100

100

 

490

382

320

Requirement: 

Calculate relevant ratios and working capital cycle for three years, and analyse Digby’s liquidity, capital structure, profitability and working capital management during the three-year period (clearly show your workings and state any assumptions you make).

Refer to at least 2 academic sources in your discussion, one of them must be the core text book.

(250 words for analysis.  Ratio calculations will not be part of word count, although you are required to include the ratio calculations in your portfolio)

Task 3 Costing methods

Discuss why overhead recovery is the most difficult part of cost recovery, and how the modern Activity Based Costing (ABC) approach has improved recovery of overheads compared to traditional costing methods such as absorption costing.

Refer to at least 3 academic sources in your discussion, one of them must be the core textbook.

Task 4 – Budget creation and analysis

Task 5 – variance calculation and analysis and behavioural aspects of budgeting

  1. Tasty restaurant has the following results for December 2015:

 

Budget

Actual

Number of meals

20,000

24,000

 

£

£

Price per meal

10

10.6

Food cost

      60,000

      74,400

Labour cost

      70,000

      72,000

Variable overheads

      10,000

      12,000

Fixed overheads

        6,000

        6,200

Required:

Note: part a to d are not part of word count, but they are required to be included in your portfolio.

  1. Calculate the flexed budget.
  2. Calculate the sales price variance.
  3. Calculate the overall cost variances for materials, labour, variable overheads and fixed overheads
  4. Calculate the sales quantity variance
  5. Comment on the variances calculated and suggest what extra information might be needed for more detailed analysis. Refer to at least 2 academic sources in your discussion, one of them must be the core text book.
  1.   Behavioural aspects of budgeting are often ignored, but are extremely important.

Critically analyse the above statement.

Refer to at least 2 academic sources in your discussion, one of them must be the core text book.

Task 6 short-term decision making using variable costing techniques  

Marie and Peter Bridge run a business, MPB Ltd, manufacturing and selling sets of the popular French game, boules. The boules are turned from aluminium, packaged in a neat carrying case and sold for £22 a set. The raw materials cost £8 a set and each set takes 20 minutes of turning by skilled operatives who are paid £9 an hour. The fixed costs of the business are £480,000 a year. This year, they plan to produce 80,000 sets.

Required:

  1. Calculate:
    1. The variable cost of a set of boules;
    2. The absorption cost of a set of boules;
    3. The breakeven point;
    4. The profit or loss if 80,000 sets are sold.
  2. A large French champagne house has asked MPB Ltd if it will produce 5,000 boule sets for a worldwide promotion. Each set has to be engraved with the French company’s logo and the carrying case must bear its brand name. the extra work involved in this will cost £2.50 a set. It has offered to pay a total of £75,000 for the order.

Should MPB accept this offer? Provide your recommendation based on your calculation.

  1. A Chinese company has proposed to MPB that it should manufacture the finished boule sets in China and supply them to MPB for £14 delivered. This price would apply to the first 50,000 sets, but after this it would reduce to £10 a set. MPB appreciates that this would change its function to trading only and it would be able to eliminate its manufacturing facilities, saving £180,000 a year.
    1. Advise MPB whether or not it should accept this proposition. Clearly show your calculations.
    2. Discuss additional issues MPB should consider carefully before accepting this proposition. Refer to at least 2 academic sources in your discussion.

Task 7– CVP analysis using spreadsheet

  • Create a spreadsheet using information from the following. The spreadsheet is required to include the current situation and alternatives, and a breakeven chart in Excel to illustrate the current situation.
  • Make written comment concerning the alternatives and your recommendations to the management. Refer to at least 2 academic sources

Scenario:

Mehta Ltd has a subsidiary, Pluto Ltd, which sells scooters for children. Pluto Ltd is providing the following information about their current operations and three alternatives it is considering: 

Current situation

The selling price is £30.00, with a variable cost per unit sold of £21. The expected number of units sold is 350,000.  Fixed costs are currently £1,400,000.

Option 1

This option is an expansion of the operation, which allows the volume of sales to be increased, but additional fixed costs are incurred.  The selling price remains at £30.00 and the variable costs at £21, however the volume of sales will increase to 430,000 and the fixed costs would be £1,900,000.

Option 2

This is an adaptation of the product, making a cheaper alternative product for the market.  The selling price would drop to £24; the variable costs are £14.  The number of customers will increase to 490,000, with the fixed costs at £1,900,000.

Option 3

This is an adaptation of the product, making a superior quality product for the market.  The selling price would increase to £40 and the variable costs would increase to £31.  The number of customers would decrease to 270,000 and fixed costs would remain at £1,400,000.

Example Format:

INPUT SCREEN

Current Situation

Option 1

Option 2

Option3

Selling Price

 

 

 

 

Variable cost per unit

 

 

 

 

Fixed Costs

 

 

 

 

No. of units sold

 

 

 

 

OUTPUT SCREEN

 

 

 

 

Contribution per unit

 

 

 

 

No. of units sold

 

 

 

 

Sales Revenue

 

 

 

 

Variable Costs

 

 

 

 

Contribution margin

 

 

 

 

Fixed costs

 

 

 

 

Operating Profit

 

 

 

 

Total costs

 

 

 

 

BEP in units

 

 

 

 

Margin of Safety in units

 

 

 

 

Margin of safety %

 

 

 

 

SUMMARY OUTPUT SCREEN

 

 

 

 

Operating Profit

 

 

 

 

Operating Profit %

 

 

 

 

BEP in units

 

 

 

 

Margin of Safety in units

 

 

 

 

Margin of safety %

 

 

 

 

Task 8 – Long-term decision making using investment appraisal techniques 

Note: calculations are not part of word count, but are still required to be included in your portfolio. Written element of this task will be equivalent.

Mehta Ltd has £45,000 to spend on capital investment projects. It is currently evaluating three projects, Alpha, Beta and Charlie. The initial capital outlay is on a piece of machinery that has four-year life. Its cost of capital is 9%.

 

Alpha

 

Beta

 

Charlie

Initial outlay

(45,000)

 

(22,500)

 

(22,500)

 

Inflows

Outflows

 

Inflows

Outflows

 

Inflows

Outflows

Year

£

£

 

£

£

 

£

£

1

54,000

36,000

 

37,500

24,000

 

24,000

12,000

2

54,000

21,000

 

27,000

16,500

 

19,500

9,750

3

48,000

39,000

 

25,500

18,000

 

18,000

9,000

4

6,000

7,500

 

4,500

6,000

 

9,000

9,000

Required:

  1. Calculate the following for each project. Clearly show your workings:
    1. The payback period
    2. The accounting rate of return
    3. The net present value
    4. The internal rate of return

Based on your calculations and with reference to at least 2 academic sources, discuss how Mehta Ltd should utilise its capital of £45,000. Clearly justify your recommendation.

Task 9  – performance measurement

The assessment task is divided in two parts. Part 1 requires you to conduct research around the topics given below and prepare annotated bibliography. Part 2 requires attending the seminar discussion.

Topics:

  1. Purpose of Balanced Scorecards and their subsidiary benefits and objectives. Use examples.
  2. What are performance measures, and why a common set of performance measures CANNOT be used by different sectors, e.g. manufacturing, service and not-for-profit sectors?

Part 1

For the topics given above  you need to prepare an annotated bibliography containing at least ten sources (five for each topic). Present the bibliography using the Harvard system of referencing.  For each reference add a maximum of one paragraph explaining how it adds to the discussion of the topic. Annotated bibliography in this context should consist a full reference, followed by brief paragraph of 3-4 lines showing relevance of the article to the topic. 

Part 2

Attend seminar discussions – during the class you will be given a sheet to enclose with your portfolio to confirm your contribution to the seminar discussions.

It is important to carry out your own independent research into the topic.  You will be expected to identify the key authors on each topic. 

Task 10– pricing decisions

With reference to a particular product, critically compare and contrast “cost-plus pricing” approach with “target pricing” approach.

Refer to at least 3 academic sources in your discussion.

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My Assignment Help (2021) Accounting And Finance [Online]. Available from: https://myassignmenthelp.com/free-samples/n40p-accounting-and-finance/methods-of-management-accounting.html
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My Assignment Help. Accounting And Finance [Internet]. My Assignment Help. 2021 [cited 22 September 2021]. Available from: https://myassignmenthelp.com/free-samples/n40p-accounting-and-finance/methods-of-management-accounting.html.


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