PLEASE NOTE:
- This assignment is the alternative assessment adopted to assess the second semester of ITA4005-B.
- The maximum word count for this assignment is 1500 excluding references.
- This assignment accounts for 100% of the grades in the second semester and 50% of the overall grades on the module AFE4005-B.
- Please attempt all questions clearly showing all workings where needed.
- Please be aware that your work will be submitted through Turnitin. You must only submit your own work including correct citations and references for any external materials used in your work.
Question 1
- Identify and discuss differences between Financial Accounting and Management Accounting.
(20 marks)
- Explain briefly what action management can take to manage different scarce resources. Please include at least two different scarce resources in you answer.
(20 marks)
- Smarty Co started operations on 1st January 2020 manufacturing and selling smart pens. They have gathered following expected information for the year 2020:
Selling price (per unit) £69
Direct materials (per unit) £9.50
Direct labour (per unit) £3.00
Other costs are estimated for the year 2020 based on the expected sales of 45,000 units. These costs are given below:
| Fixed Costs | Variable Costs | ||
| Operating Costs | 190,000 | 550,000 | |
| Marketing Costs | 270,000 | 600,500 | |
| Storage Costs | 130,000 | 42,000 | |
| Administration Costs | 100,000 | – |
For the year 2020, you are required to calculate:
- the expected profit or loss
(2 marks)
- breakeven point in units and sales revenue
(2 marks)
- margin of safety in units and % change
(2 marks)
- the profit/loss if the selling price is reduced to £65 and sales quantity increases by 20%
(2 marks)
- the revised break-even point in units for (d)
(2 marks)
- explain the importance of computing break-even point for a Smarty Co.
(10 marks)
(Total 60 marks)
Question 2
- Discuss the importance, for an organisation, of preparing a cash budget and undertaking effective treasury management.
(20 marks)
- Alphabet Co has three production departments A, B, and C and one service department S. Alphabet Co are preparing their annual budget for the final quarter of 2020. Planned overhead costs for the quarter are as follows:
| Overheads | £ | Absorption basis |
| Supervision | 12000 | Direct Labour Hours |
| Depreciation | 15000 | Machine value |
| Insurance | 5000 | Machine value |
| Rates and Rent | 30000 | Floor area |
| Other bills | 2500 | Floor area |
The following information is available for each department:
| Absorption basis | A | B | C | S |
| Machine Value (£) | 5000 | 2500 | 3500 | 1500 |
| Budgeted Direct Labour hours | 1000 | 500 | 1500 | 1000 |
| Floor Area Occupied (Square metres) | 1500 | 400 | 500 | 100 |
Of the total overhead costs allocated to service department S, 20% is charged to A; 40% to B; and the remainder is charged to C.
Required:
- Prepare an overhead analysis sheet showing the total overhead cost budgeted for all four departments. You must show all your workings clearly.
(18 marks)
- Allocate the services department S costs to all production departments.
(2 marks)
(Total 40 marks)
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