1. a)

Management accounting is division of bookkeeping which deals with dimension, examination and clarification of financial material so as to be castoff to aid directors to essential judgments to excellently achieve corporation’s operations. The branch tends to scrutinize several procedures and other operative metrics in command to render facts into detailed material which may be leveraged.

For managerial accounting to achieve its goals it always apply different techniques which includes; the verge enquiry which is disturbed through the increment welfares or improved creation. Constraint analysis is another technique which involves the production lines of business identity. Capital costing is worried with the breakdown of material essential to style the indispensable verdicts correlated to investment outflows. The other practice is the portfolio estimation and creation appraisal which contains the identifications and investigation of the authentic expenses connected with the concern yields and portfolio (Singhvi, N.M. and BODHANWALA, J.R., 2018, 233-243).

There are various brands of administration accounting structures which comprises of catalogue management cost accounting scheme price optimization and the job quotation, all with several accounting purposes rudiments and purposes. On cost accounting scheme or appraisal coordination is a kind of outline smeared by the organization in order to inexact the cost of its invention to be used in roster assessment and productivity scrutiny and cost regulator.

Portfolio administration denotes to method of governing and administration the gathering use and packing of diverse workings which can be smeared by the conglomerate in fabrication of possessions they sell. Job appraisal denotes to division of business charge to each discrete item or sets of its merchandises price optimization structure (Singhvi, N.M. and BODHANWALA, J.R., 2018, 233-243).

b)

Cost plus valuing is a pricing approach in which the retailing rate is gritty by tallying a specific quantity of hike to a unit artefact cost. This is a very simple cost based pricing strategy used in setting prices of certain goods and services. With plus pricing, direct cost material is firstly added then the direct labor cost and finally overheads are determined or how it costs the company in offering of its products and services (Singhvi, N.M. and BODHANWALA, J.R., 2018, 233-243). Value based pricing is a strategy of setting business prices primarily based on the customers perceived value of product and services. This is always a customer value pricing focused on based on the customer believes and the worth of the products.

Teaser pricing stratagems is built on the notion of enticing in customs with a limited low-priced or free yields or amenities and then fractious vending the products at a higher price which are the premium evaluating high truncated assessing and the hurt trailblazer rating (Singhvi, N.M. and BODHANWALA, J.R., 2018), 233-243).

c)

Selling at a given fringe fee or even below that given fringe fee maybe endorsed in extra ordinary locations for instance;

1. When the company has an intention of eliminating other competitors from the business environment.
2. When the inventories has piled up and with necessarily drifts are there in the arcade prominent to a plunge in their prices.
3. When one of the products is to be hosted into the arcade or a standing one is to be made to be more prevalent.
4. In dealing with perishable goods which are probable to perish by the route of time hence adoption of the strategy.
5. When catalogues has been piled up and failing drifts are present in the arcade prominent to a fall in the arcade price per share.

d)

Advantages of budgeting according to Zou, T., Zeng et al., (2019, pp. 619-633)

1. Enhance improved harmonization of events and altered fragments of the economy.
2. Leads to better allocation of funds and better considerate the errands and objective by workforce.
3. Aids in essential of métiers and flaws of which the article can have the ability and time to concentrate.
4. Surges the possibility that the establishment goalmouths and purposes can be increased.

Disadvantages of budgeting

1. Leads to nirvana of one detached while the further metrics are exacerbated
2. There exists a lower flexibility
3. Results are represented to the administration also late to partake any impact on the business firm
4. Staff can be demonstrated if the bulls set are also diverse or excessively calm to complete.

e)

Benchmarks are done by firms operating in a given competitive environment will always tend to visit each other to have an overview of the operations. Many a time they are done on an official reports by notifying the other firm on the visit. It helps most of the firm to learn on their weaknesses and what they are missing in the competition (Nastasiea, M. and Mironeasa, C., 2019, 353-360). Key concert dials measures and reflects on the association accomplishment or the advancement in relative to a given detached, its determination is to man the growth toward achieving the deliberate objectives which are mostly linked in the stratagem map.

Fiscal key performance indicators exist mostly grounded on the pay statements or balance sheet apparatuses and may similarly explosion vagaries in the deals progress as a company or in outflow category. Non-financial key recital gages stand among the other procedures recycled to access the events that a society view as imperative in obtaining its ideas (Nastasiea, M. and Mironeasa, C., 2019, 353-360).

2)

Overhead absorption rate = (Estimated FOH /estimated material costs)

Estimated material costs

A              B              C             Total

30,000    20,000      8,000        58,000

(500*9)  + (12* 250) + (1,000*16) = 23500

Total overheads = (Overhead absorption rate * actual material cost of the activity)

Rate = (23,500/5,800)*100%

= 39.7%

3)

Cost of one unit

Marginal cost = change in costs/ change in quantity

Direct material                          400,000

Direct labor                               240,000

Indirect cost                               300,000

Total cost                                    900,000

Units produced       20,000

Charge per unit =whole cost/total entities produced

940,000/20,000

Cost per unit         = 47

b)

Selling cost   =   @50

Unit of sales = 20,000

Total cost     = 1,000,000

Total contribution = 1,000,000-900,000

Profit         = 60,000

Unit contribution

Direct material       20                                      contribution per unit

Direct labor            12                                                 = 2350

Indirect cost           15

Total cost per unit 47

4)

Refreshment             @10 person* 15 =150

Speakers fees                                                                                   250

Lunch                          @15 person*15 = 225

Insurance                                                                                           95

Information pack           @5 person*15 = 75

Hire of lecture theatre                                                                        80

Advertising                                                                                         75

Breakeven point   = F / (P-V)

Q is the breakeven quantity                                Q = 500/ 50-47

F is the full static cost                                                =167

V is fickle cost per unit

P peddling price or inflow

1. profit or loss if attendance was 15

Total income      150 + 225 + 75 = 450

Total expenses   250 + 95 + 80 + 75 = 500

Loss = (income – expenses) 500-450

= 50

1. profit or loss if attendance was 30

Total income            (10*30) + (15*30) + (5*30)      = 900

Total expenses        250 + 95 + 80 + 75                   =500

Profit = (income –expenses)

900-500

=300

5)

1. a) Potential profit if the order is not accepted

Sales                        3000*12                              36,000

Direct labor                                                        (3,000)

Direct material                                                    (6,000)

Factory indirect expenses                                    (9,000)

Production cost                                                    (18,000)

Fixed overheads                                                    (3,000)

Total costs                                                             (21000)

Profit                                                                      15,000

Potential profit if the order is accepted

Sales                             2700*12                         32,400

Second sales                 300*6 = 1800                34,200

Direct labor                                                         (3,000)

Direct material                                                    (6,000)

Factory indirect expenses                                    (9,000)

Production cost                                                    (18,000)

Fixed overheads                                                   (3,000)

Total costs                                                            (21,000)

Profit                                                                     13,200

The management should not accept the offer since the sales would reduce not only in quantity but also in the amount of income collected. The difference from the profit if the order was taken than if it was not taken. The profit anticipated from the sales of all units will surpass the profit when the customer buys 300 units at an half the price hence the company should not accept the deal since it will lead to a lower profit realization (Hallam, A., 2017, 123-130).

6)

a)

• the marginal cost per pair

Marginal Cost= Change in Cost / Change in Quantity

Change in Cost of production = (12,500*7.5) + (12,500*5.50)

= 162,500

Change in quantity = (12,500 – 0) = 12,500

Marginal cost per pair = (162,500/12,500)

= £ 13

• the absorption cost per pair

Absorption Cost per pair = (Raw materials per pair + Direct Labor per pair + Fixed cost per pair)

= (7.50 + 5.50 + (150000/12500)

= £ 25

• the break-even point (in pairs of boots)

Break-even point = Total Fixed cost / (selling price per unit- Variable cost per unit)

Total fixed cost = 150,000

= (150,000/ (30-13))

= £ 8,824 Pairs

• the profit or loss if 12 500 pairs of boots or sold

Profit or loss = Total revenue – Total cost

= (12,500*30) – ((12,500*13) + 150,000)

= 375,000 – 312,500

= £ 62,500

b)

Expected Annual revenue = 12,500 * 20

= 250,000

Expected Annual Cost      = (12,500 * 13) +150,000)

= 312,500

Expected profit/Loss        = (250,000 – 312,500) = -62,500

Loss                                   = £ 62,500

The offer should not be accepted since it will result in a loss

c)

Cost for 10,000 pairs if the deal is accepted = 20*10,000

= 200,000

Cost for 10,000 pairs if the deal is not accepted

= (10,000 *13) + 150,000

= 280,000

Amount saved if the deal is accepted = (280,000 – 200,000) = £ 80,000

The deal should be accepted since it will save on cost

Yes, the company should consider other factors such as the company meeting legal requirements to take up production, the reputation of the company and the impact on The Last Company Ltd.’s reputation or any going concern issues with the company. These factors will are as crucial as the financial aspects and should be considered before accepting the deal.

7)

a)

Fixed cost per week = (20 + 100 + 10 + 70 + 80)

= £ 280

Contribution per Guest per night = Selling price – Total variable cost

= 16 – (3+ 1 + 2)

= £ 10

b)

Number of Guest to break-even = Total fixed cost / contribution per guest per night                                                           = 280/ (10)

= 28 Guests per night

c)

Profit or loss = Total revenue – Total Cost

= (16 * 42) – ((42* 6) + 280)

= 672 – 532

= £ 140

8)

1. Budgeted sales

= (195 * 110) = £ 21,450

1. Budgeted cost of sales

= (195* 51) = £ 9,945

1. Budgeted gross profit

= (21,450 – 9,945) = £ 11,505

1. Sales volume profit variance

= (185 – 195) * 110 = – £ 1,100

1. Sales price variance

= (105 – 110) = – £ 5

1. Direct materials variance

= (2,550/200) – 16 = – £ 3.25

1. Direct labor variance

= (5,100/200) – 25 = £ 0.5

1. Variable production overhead variance

= (2,100/200) – 10 = £ 0.5

1. Fixed production overhead variance

= (6,600/200) – 32 = £ 1.00

• Standard cost operating statement

The variance in direct labor cost is an increase of £ 0.5 which may be caused by an increase in wages while the variance for direct material cost is -£ 3.25 which could be caused by efficient utilization of raw material.

9)

1. Opening statement of affairs as at January 1^st.

2. Cash flow forecast for six months ended June 30^th.

3. A forecast trading and profit and loss account for the six months ended June 30^th.

4. A forecast balance sheet as at that date

References

Hallam, A., 2017. Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School. John Wiley & Sons.

Nastasiea, M. and Mironeasa, C., 2019. Key Performance Indicators in Small and Medium Sized Enterprises. Total quality management, 1(2).

Singhvi, N.M. and BODHANWALA, J.R., 2018. Management Accounting: Text and Cases. PHI Learning Pvt. Ltd.

Zou, T., Zeng, H., Zhou, Z. and Xiao, X., 2019. A three-dimensional model featuring material flow, value flow and organization for environmental management accounting. Journal of Cleaner Production, 228, pp.619-633.

Tutor’s notes

• The question asks to you to produce an information pack. Its object is to promote understanding to those that have no knowledge of management accounting. The contents are too technical.  It needs to read like the information in the study pack but using your own words supported by British sources (not American). You need to follow the instructions and supporting material given out in class.
• Before you attempt this question you need to have completed the practice question in the study pack. The model question and answer is on page 20, 21 and 22.  You will see that the answer consists of an overhead absorption table (top of page 22) and a unit cost table (bottom of page 22).  Your answer needs to look like this.  I suggest you study the model question and answer and then complete the question for Tubular Products Ltd on page 23.  Copy out the worksheet at the bottom of the page and use the information at the top to apportion the overheads.  You can do this handwritten.
• The Profit of £60 000 is correct however, other aspects of your answer need to be worked on. Before you attempt the question I want you to study the model question and answer on the first 2 pages of the handout I gave out on Marginal Costing and Contribution Analysis.  I then want you to complete EFG Ltd on page 3.  You do this handwritten.
• You will need to do this question again.  Before you do, study the model question and answer on pages 4 and 5 and complete the practice question on page 6 (AMO Ltd). Do this handwritten.
• Your answer is not correct. Before you attempt the question again study the handout (pages 7, 8 and 9, XYZ Ltd) and complete the practice question on page 10 – MNO Ltd. Do this handwritten.
• and 7 I will give you feedback on this once you have completed the above and resubmitted the assignment questions.

8) In an earlier email I said that this question need not be answered.

9) This answer needs to be resubmitted.  Before you do complete the exercise ‘B Smith’ at the bottom of page 45 of the study pack.  Make sure it follows the same format as the model question and answer on page 44 and 45.  Do this handwritten.

Once you have completed all the handwritten exercises you can photograph them and attach them to an email and return to me. Leave the written question (client 1) till later. Focus on the exercises