Cost Analysis for Blunkham plc's Computerised Accounting Software Solutions

Year End Results for September 2021

Blunkham plc sells a range of computerised accounting software solutions to small businesses in the UK. Sales are recorded in the month in which the software is installed on the clients’ machines and Blunkham plc provides three months of telephone-based customer support from that date. You are the management accountant of the company and have been asked to examine a number of issues relating to costs in the business.

You have collected the following data related to the operations of the business for the year to 30th September 2021;

Blunkham plc is currently preparing its budget for the year to 30th September 2022 and wishes to produce an equation that describes the behaviour of each of its costs. Each of the three equations will take the form y = a + bx, where y is the total cost at an activity level of x invoiced sales, a is the fixed cost and b is the rate of variable cost.

The company has asked you to make a presentation to the staff liaison committee which consists of a wide range of employees from the business, most of whom have little understanding of accounting terminology or practices.

You are required to prepare but not to deliver a Powerpoint presentation to the committee that addresses the following questions;

• What is the role of a management accountant; how and why does it add value to an organisation like Blunkham plc (4 marks)? You should make your answer as specific as possible to the organisation from the limited information that you have been given.
  You should use one slide to answer this question.

• What do the cost behaviours of the three costs look like (9 marks)? You should provide one slide for each cost (three slides in total) that shows;
  • The y = a + bx equation from the data provided above
  • The coefficient of determination in each case, and
  • A chart of each of the cost behaviours, including the regression line and the original data points.

• What do your findings tell you about the cost behaviours at Blunkham plc (12 marks)? You should give specific suggestions about why the costs behave as they do and discuss any significant variations that you have found between the data and your equation. You should produce one slide for each cost (three slides in total). You may make whatever assumptions you feel necessary in your discussions but you should state clearly what these assumptions are.

Numerical answers – including charts - should be given to two decimal places only (marks will be deducted if you do not adhere to this requirement).

You should submit your slides and notes using the Powerpoint software and your presentation should consist of no more than seven slides in total. Notes for each slide should not exceed 100 words. No introductory slide is to be provided and your name should not appear on your work. This task is worth 25% of the marks for this module and marks will be awarded for clarity of the presentation and addressing your audience as well as the quality of your answers to the questions given. No credit will be given for simply reproducing the lecture notes. You should not use a font size of less than 20point on your slides.

There will be a Moodle forum for you to ask questions relating to this assessment and lecturers/tutors will not discuss the assessment criteria outside of this forum. The forum is principally for queries relating to clarifications and questions such as ‘Is this right?’ will not be answered for obvious reasons!