unit 5 accounting principles assignment

Ask a question from expert

Unit 5 Accounting Principles - Part 1: Standards, Financial Statements and Budgets

Added on   2023-06-10

About This Document

   Added on  2023-06-10

End of preview

Want to access all the pages? Upload your documents or become a member.

Accounting Principles, Financial Statements, Budgets and Financial Ratio Analysis lg ...

Accounting principles, financial statements, budgets & ratio analysis lg ..., management accounting principles lg ..., management accounting and budgetary tools for financial management lg ..., unit 5 accounting principles - purpose, evaluation, branches, systems, ethics, regulations, cash budget lg ..., principles of financial management lg ....

Course Resources

Assignments.

The assignments in this course are openly licensed, and are available as-is, or can be modified to suit your students’ needs. Answer keys are available to faculty who adopt Lumen Learning courses with paid support. This approach helps us protect the academic integrity of these materials by ensuring they are shared only with authorized and institution-affiliated faculty and staff.

If you import this course into your learning management system (Blackboard, Canvas, etc.), the assignments will automatically be loaded into the assignment tool.

You can view them below or throughout the course.

• Module 0: Personal Accounting— Assignment: Creating a Budget
• Module 1: The Role of Accounting in Business— Assignment: Lopez Consulting
• Module 2: Accounting Principles— Assignment: Accounting Principles
• Module 3: Recording Business Transactions— Assignment: Recording Business Transactions
• Module 4: Completing the Accounting Cycle— Assignment: Completing the Accounting Cycle
• Module 5: Accounting for Cash— Assignment: Accounting for Cash
• Module 6: Receivables and Revenue— Assignment: Manilow Aging Analysis
• Module 7: Merchandising Operations— Assignment: Merchandising Operations
• Module 8: Inventory Valuation Methods— Assignment: Inventory Valuation Methods
• Module 9: Property, Plant, and Equipment— Assignment: Property, Plant, and Equipment
• Module 10: Other Assets— Assignment: Other Current and Noncurrent Assets
• Module 11: Current Liabilities— Assignment: Calculating Payroll at Kipley Co
• Module 12: Non-Current Liabilities— Assignment: Non-Current Liabilities
• Module 13: Accounting for Corporations— Assignment: Collins Mfg Stockholders’ Equity
• Module 14: Statement of Cash Flows— Assignment: Kachina Sports Company Cash Flows
• Module 15: Financial Statement Analysis— Assignment: Coca Cola FSA

Discussions

The following discussion assignments will also be preloaded (into the discussion-board tool) in your learning management system if you import the course. They can be used as is, modified, or removed. You can view them below or throughout the course.

• Module 0: Personal Accounting— Discussion: Winning the Lottery
• Module 1: The Role of Accounting in Business— Discussion: The Crafty Coffee Crook
• Module 2: Accounting Principles— Discussion: SoftSheets
• Module 3: Recording Business Transactions— Discussion: Baker’s Breakfast Bars
• Module 4: Completing the Accounting Cycle— Discussion: Closing the Books in QuickBooks
• Module 5: Accounting for Cash— Discussion: Counter Culture Cafe
• Module 6: Receivables and Revenue— Discussion: Maximizing Revenue
• Module 7: Merchandising Operations— Discussion: Inventory Controls
• Module 8: Inventory Valuation Methods— Discussion: LIFO, FIFO, Specific Identification, and Weighted Average
• Module 9: Property, Plant, and Equipment— Discussion: Cooking the Books
• Module 10: Other Assets— Discussion: Other Assets
• Module 11: Current Liabilities— Discussion: Current Liabilities
• Module 12: Non-Current Liabilities— Discussion: Off-Balance Sheet Financing
• Module 13: Accounting for Corporations— Discussion: Home Depot
• Module 14: Statement of Cash Flows— Discussion: Facebook, Inc.
• Module 15: Financial Statement Analysis— Discussion: Financial Statement Analysis

Alternative Excel-Based Assignments

For Modules 3–15, additional excel-based assignments are available below.

Module 3: Recording Business Transactions

• Module 3 Excel Assignment A
• Module 3 Excel Assignment B

Module 4: The Accounting Cycle

• Module 4 Excel Assignment A
• Module 4 Excel Assignment B
• Module 4 Excel Assignment C
• Module 4 Excel Assignment D

Module 5: Accounting for Cash

• Module 5 Excel Assignment

Module 6: Receivables and Revenue

• Module 6 Excel Assignment A
• Module 6 Excel Assignment B

Module 7: Merchandising Operations

• Module 7 Excel Assignment

Module 8: Inventory Valuation Methods

• Module 8 Excel Assignment A
• Module 8 Excel Assignment B
• Module 8 Excel Assignment C

Module 9: Property, Plant, and Equipment

• Module 9 Excel Assignment A
• Module 9 Excel Assignment B

Module 10: Other Assets

• Module 10 Excel Assignment

Module 11: Current Liabilities

• Module 11 Excel Assignment

Module 12: Non-Current Liabilities

• Module 12 Excel Assignment A
• Module 12 Excel Assignment B

Module 13: Accounting for Corporations

• Module 13 Excel Assignment A
• Module 13 Excel Assignment B
• Module 13 Excel Assignment C

Module 14: Statement of Cash Flows

• Module 14 Excel Assignment A
• Module 14 Excel Assignment B

Module 15: Financial Statement Analysis

• Module 15 Excel Assignment

Review Problems

There are also three unit review assignments and a final review. These reviews include a document which sets up the problems and an excel worksheet.

Unit 1 Review Problem (After Module 6)

• Review Problem Document

Unit 2 Review Problem (After Module 8)

Unit 3 review problem (after module 9), final review (after module 15).

• Assignments. Authored by : Cindy Moore and Joe Cooke. Provided by : Lumen Learning. License : CC BY: Attribution

BTEC Unit 5 Accounting Principles HNC Level 4 Assignment Sample, UK

Pearson BTEC Higher National Certificate in Business

The purpose of the BTEC Unit 5 Accounting Principles at HNC Level 4 is to provide students with a comprehensive understanding of the fundamental accounting principles that are essential for financial operations and effective decision making within organizations. Throughout this unit, students will gain both theoretical knowledge and practical skills in various financial and management accounting techniques.

By the end of the unit, students will be equipped to support senior colleagues in tasks such as budget preparation, analysis of financial statements, and interpretation of performance using financial ratios. Additionally, students will explore broader aspects of accountancy, including ethics, transparency, and sustainability. This unit serves as a foundation for students to progress to a higher level of study in the field of accounting.

Overall, the unit aims to develop students’ competence in financial reporting, control, and analysis, enabling them to contribute to an organization’s strategic formulation and implementation through the provision of accurate and relevant financial information.

Buy Non Plagiarized & Properly Structured Assignment Solution

Optimize Your Learning with Professional Writers for Unit 5 Accounting Principles  of BTEC HNC Level 4 in Computing.

At DiplomaAssignmentHelp.co.uk, we strive to optimize your learning experience by providing professional writers for Unit 5 Accounting Principles of BTEC HNC Level 4 in Computing. Our expert team is dedicated to assisting you with all types of assessments, including formative and summative assessments, ensuring comprehensive support throughout your academic journey.

Whether you need assistance with academic posters, displays, leaflets, PowerPoint presentations, recordings of interviews/role plays, work placement logbooks, reflective journals, workplace observation of practice, or assessment records, we have you covered. Our writers possess the necessary expertise to deliver high-quality solutions for a wide range of assessment formats.

Please note that the examples mentioned below are just a glimpse of the assessment types we can assist you with. When you order from us, we will provide you with customized solutions tailored to your specific requirements, ensuring plagiarism-free and exceptional work.

Choose DiplomaAssignmentHelp.co.uk to unlock your full potential and achieve academic success. Contact us today to avail of our professional writing services and take your BTEC HNC Level 4 in Computing journey to the next level.

Assignment Brief 1: Examine the context and purpose of accounting

Accounting plays a crucial role in the functioning of organizations by providing financial information that helps stakeholders make informed decisions. The context of accounting encompasses the economic, legal, and social environments in which businesses operate. It involves recording, classifying, summarizing, and interpreting financial transactions to generate useful reports and statements.

The purpose of accounting is to provide reliable and relevant information about an organization’s financial position, performance, and cash flows. This information aids various stakeholders in making important decisions. 

Internal users, such as management, use accounting information to plan and control business activities, assess profitability, and make strategic decisions. They rely on financial statements and reports to evaluate the company’s performance, identify areas for improvement, and allocate resources effectively.

External users, such as investors, creditors, and government agencies, utilize accounting information to assess the financial health of an organization. Investors rely on financial statements to make investment decisions, evaluate the profitability and growth potential of a company, and assess its risk profile. Creditors use financial information to determine creditworthiness and assess the ability of an organization to meet its financial obligations. Government agencies use accounting data to enforce tax regulations and ensure compliance with accounting standards.

In summary, accounting serves the purpose of providing financial information to internal and external users for decision-making, planning, control, and evaluation of an organization’s financial performance.

Assignment Brief 2: Prepare basic financial statements for unincorporated and small business organizations in accordance with accounting principles, conventions, and standards

To prepare basic financial statements for unincorporated and small business organizations, you would typically follow these steps:

• Gather financial information: Collect all relevant financial data, including transaction records, bank statements, invoices, receipts, and other supporting documents.
• Record transactions: Apply the double-entry bookkeeping system to record transactions in the appropriate accounts. This involves debiting and crediting accounts to reflect increases and decreases in assets, liabilities, equity, revenues, and expenses.
• Prepare trial balance: Create a trial balance by listing all the accounts and their balances to ensure that debits equal credits. This step helps identify any errors before proceeding to the financial statements.
• Create financial statements:
• Income statement (also known as profit and loss statement): Summarize the revenues and expenses over a specific period to determine the net income or net loss of the business.
• Balance sheet: Present the financial position of the business by listing its assets, liabilities, and owner’s equity at a specific point in time.
• Statement of cash flows: Report the cash inflows and outflows from operating, investing, and financing activities to provide information about the organization’s cash flow position.
• Apply accounting principles and conventions: Ensure that the financial statements adhere to generally accepted accounting principles (GAAP) or relevant accounting standards applicable to the jurisdiction. Follow accounting conventions, such as the accrual basis of accounting, unless otherwise specified.
• Review and finalize: Review the financial statements for accuracy and completeness. Make any necessary adjustments or corrections before finalizing them.

Please Write Fresh Non Plagiarized Assignment on this Topic

Assignment Brief 3: Interpret financial statements

Interpreting financial statements involves analyzing and understanding the information presented in the financial reports. Here are some key steps to interpret financial statements effectively:

• Review the income statement: Analyze the revenue and expense figures to assess the profitability and performance of the business. Look for trends and changes in revenue, gross profit margin, operating expenses, and net income over time.
• Examine the balance sheet: Evaluate the organization’s financial position by analyzing its assets, liabilities, and owner’s equity. Pay attention to liquidity ratios (e.g., current ratio) to assess the company’s ability to meet short-term obligations. Assess the debt-to-equity ratio and leverage to understand the company’s financial risk.
• Analyze the statement of cash flows: Assess the cash inflows and outflows from operating, investing, and financing activities. Look for positive cash flow from operating activities, as it indicates the business generates sufficient cash to support its operations. Analyze investing and financing activities to understand how the company is investing in assets and raising capital.
• Compare with industry benchmarks: Benchmark the financial statements against industry averages or competitors to gain insights into the company’s performance relative to its peers. Identify areas where the business outperforms or lags behind industry standards.
• Consider non-financial factors: While financial statements provide valuable information, they may not capture all aspects of a business’s performance. Consider non-financial factors, such as market conditions, industry trends, competitive landscape, and management expertise, to develop a holistic understanding of the organization’s financial health.
• Identify strengths and weaknesses: Use the financial statement analysis to identify the company’s strengths, such as high profitability, strong liquidity, or efficient asset management. Also, identify weaknesses or areas for improvement, such as low profitability, excessive debt, or slow inventory turnover.

Assignment Brief 4: Prepare budgets for planning, control, and decision-making using spreadsheets

To prepare budgets using spreadsheets for planning, control, and decision-making, follow these steps:

• Identify budgeting objectives: Determine the purpose and scope of the budget. Clarify whether it is for the entire organization, a specific department, or a particular project. Define the time period and the level of detail required.
• Gather relevant information: Collect historical financial data, sales forecasts, cost estimates, and other relevant information that will form the basis of the budget.
• Create a spreadsheet: Use spreadsheet software like Microsoft Excel or Google Sheets to build a budget template. Set up columns for different budget categories such as revenues, expenses, and capital expenditures.
• Estimate revenues: Based on sales forecasts, estimate the revenue for each period. Consider factors such as pricing, sales volume, market trends, and customer behavior.
• Determine expenses: Identify and categorize the various expenses associated with the business. Estimate the cost of goods sold, operating expenses, and other relevant costs. Consider historical data, market conditions, inflation rates, and any planned changes in operations.
• Incorporate non-financial factors: Consider non-financial factors that can impact the budget, such as changes in technology, industry regulations, or market competition. Factor in any known external influences that may affect the organization’s financial performance.
• Calculate subtotals and totals: Use formulas and functions within the spreadsheet to calculate subtotals and totals for each category. Ensure the calculations are accurate and linked to the appropriate cells.
• Review and adjust: Review the budget for accuracy, completeness, and alignment with organizational goals. Make necessary adjustments to ensure the budget reflects realistic expectations and objectives.
• Monitor and control: Once the budget is in place, regularly monitor and compare actual financial performance against the budgeted figures. Identify any significant variances and take appropriate corrective actions when necessary.
• Use for decision-making: Utilize the budget as a tool for decision-making. Assess the financial feasibility of new projects, evaluate the impact of strategic initiatives, and make informed decisions based on the budgeted financial data.

Spreadsheets provide a flexible and efficient way to create, modify, and analyze budgets. They allow for easy adjustments, “what-if” scenarios, and the ability to track actual performance against the budgeted figures.

Pay & Get Instant Solution of this Assignment of Essay by UK Writers

Order plagiarism-free assignment help for Unit 5 Accounting Principles HNC Level 4 course at the last minute!

At the last minute and in need of plagiarism-free assignment answers for your Unit 5 Accounting Principles HNC Level 4 course? Look no further! Diploma Assignment Help, the best assignment help provider in the UK, is here to assist you. 

With our expertise in delivering top-notch BTEC HNC Level 4 Business assignment solutions , we ensure that you receive high-quality and original work that meets your academic requirements. Our dedicated team of professionals possesses in-depth knowledge of accounting principles, allowing them to deliver accurate and well-researched solutions for your assignments.

We understand the time constraints and pressures students face, which is why we offer timely assistance. Our HNC assignment help service in the UK ensures that you receive your completed assignments before your deadline, allowing you ample time to review and submit them.

Whether you require help with business assignments , assistance with specific topics within accounting principles, or guidance on structuring and formatting your work, our experienced team is equipped to handle it all.

Don’t stress about your last-minute assignment anymore. Contact Diploma Assignment Help today and let us take care of your Unit 5 Accounting Principles HNC Level 4 assignment while you focus on other priorities.

Recent solved questions

• M21061 Financial Reporting Assignment Answer UK
• M30262 Taxation Assignment Answer UK
• M30265 Advanced Global Financial Management Assignment Answer UK
• M30264 Advanced Financial Reporting Assignment Answer UK
• M30266 Dissertation Assignment Answer UK
• M30267 Independent Study Project Assignment Sample UK
• BTEC Unit 1 Business and the Business Environment HNC Level1 Assignment Sample UK
• BTEC Unit 2 Marketing Processes and Planning HNC Level 4 Assignment Sample, UK
• BTEC Unit 3 Human Resource Management HNC Level 4 Assignment Sample, UK
• BTEC Unit 6 Managing a Successful Business Project HNC Level 4 Assignment Sample, UK

• [email protected]

Unit 5 Accounting Management Assignment

Introduction

Management accounting assignment is held responsible for managing the organisational activities as well as their funds in effective manner. To manage their activities they prepare different policies. BRUNEI Co. follows the budgeting process to manage their liquid funds that helps in balancing their cash flows. Different budgeting methods will be discussed and utilised. They will make their performance evaluation with the use of variance analysis.

A. Explain why organisations use budgeting (LO 1.1; 1.2)

• Budgeting: It is the process of allocating the available resources in effective manner for the purpose of optimum utilisation. It also make inclusion of forecasting related to income and expenditure. There are various benefits due to which organisation follow the budgeting process such as:
• Manage cash flows: It helps in effective forecasting that helps in estimating requirement of funds and also estimate the expenses ratio. With the use of this estimation information they make adequate level of balance in their cash flows (inflows and outflows) (Ya & A, 2012).
• Decision making: With the help of the estimating they gather effective set of information that get utilised for decision making process. With the use of this information they took decisions related to the use of available finance as well as made expenses accordingly.
• Setting benchmark: With the use of budget results they set the effective benchmark for their department. By following these benchmarks they control their mismanagement of available resources (Ya & A, 2012).
• Evaluate performance: It also get utilised for the purpose of making evaluation of their performance. In order or make performance evaluation they compare their actual outcomes with their budgeted outcomes. With the help of attained variances the evaluate their performance as they attain favourable results or adverse results.
• Allocate resources properly: Budgeting process renders adequate requirement of the resources that helps in allocated resources properly. On the basis of the requirement they allocate and utilise their available resources in order to get desired outcomes.
• Proper communication:  Management make effective communication with the use of the prepare budget in order to process the activities accordingly. They set effective benchmark for the purpose of processing and executing their activities in effective manner (Anessi-Pessina, et. al., 2016).

B. Explain the administrative procedures used in the budgeting process. (LO 1.1; 1.2)

The administrative procedures having three steps process that get utilised in budgeting process. Below three steps get discussed such as:

• Appoint budget officer: Budget officer is such authorised body that put adequate level of control over budgeting process. He/she can be elected preferentially or from the members of their budget committee. He plays a channel role or mediator among the budget committee and managers & employees. They effectively deal with the problems or issues raised so that they make effective changes in their budget well before time. He is responsible for making effective communication in context to budget.
• Budget committee: It is a team of authorised persons that engaged into supervision of budgeting process. Member form every department get included in budget and these get selected on the basis of their designations and experiences. They also get termed as coordinator. They effectively measure the organisational performance by conducting variance analysis and if they get adverse results they search reasons for it. They also engage into approving budgets and after this they send it to management accounting department for the preparation of "Budget Manual" (Anessi-Pessina, et. al., 2016).
• Prepare budget manual: It is such document that explain the prepared budget in a documented form. It make inclusion of all the details related to different division and processes. It shows the deadlines for attaining the desired results and departments follow them in effective manner. It also make segregation of the liabilities among the authorised personals after which they attain responsibility to make communication related to the budget among their employees and make them motivated so that they attain it effectively (Anessi-Pessina, et. al., 2016).

C. Describe the stages in the budgeting process (including sources of relevant data, planning and agreeing draft budgets and purpose of forecasts and how they link to budgeting). (LO 1.1; 1.2)

Budgeting process is denoted as strategic management tool and it get utilised for forecasting and decision making. Below are the stages involved in budgeting process such as:

• Follow organisation structure: It make inclusion of the goals and objectives, vision and missions of the organisation.
• Forecast revenue and expenditure: Make forecasting in context to revenue and expenditure. For this purpose make use of adequate sources.
• Budgeting technique: Make use of optimum budgeting technique such as zero based or incremental or any other. Their management utilise best suitable technique.
• Allocate the resources: It is necessary to allocate the resources in adequate manner as it results into proper utilisation of resources.
• Follow government policies: Management need to follow all the implied policies in order to make the budget most effective and efficient (Morozov, 2013).
• Budget approval: It is 2nd step where prepared budget need to be approved from the budget committee. Budget committee is such authorised body that approve the budget prepared by their management. The make effective analysis and if it is not prepared accordingly they must reject it. They make effective alternations or amendments before approving prepared budgets.
• Budget execution: It is the 3rd step where approved budget get executed in effective manner. Budget manual is required for the purpose of making effective communication among different department. Effective changes are made in the approved budget also with any change in their market (Morozov, 2013).
• Budget evaluation: It is the last and final step of budgeting process where worthiness of prepared budget get evaluated. It can be termed as audit of the budget where variances get calculated. If the variances are favourable then it can be termed as successful budget otherwise different reasons get measured. Benchmark or standards get set in order to make adequate use of their budgets (Morozov, 2013).

a) Explain and illustrate with examples classifications used in the analysis of the product/service costs including by function, direct and indirect. Fixed and variable, stepped fixed and semi variable costs. (LO 2.1)

• Function cost: It is such part of cost that get segregated as per the requirement of the activity. It also denoted as activity based cost.
• Direct and indirect: The cost that have direct relation with the product and its absence impact its profitability directly. Cost of material is production process having direct relation. The cost that have indirect relation with the product and its absence is having indirect impact over its profitability. Depreciation over machinery having indirect relation in production process (Brook, 2012).
• Fixed and variable: The cost which remain same from the starting point to the end point termed as fixed cost. Rent is best suitable example.. The cost that keep on varying with the change in activity is denoted as variable cost. Material cost is best suitable example.
• Stepped fixed: The cost which is fixed for a group but it is variable for different cost. Maintenance cost is best suitable example (Brook, 2012).
• Semi variable: The cost which is fixed from starting to an extent after which it become variable. Electricity bill is best suitable example (Brook, 2012).

b)Calculate the fixed and Variable cost using the high low method and justify your reason of application. (LO 2.1)

Given data:

Formula: Variable cost per unit = Total cost (high cost - low cost) / Total units (High level unit - low level unit)

Per unit variable cost = (88,100 - 44,100) / (7,100 - 3,100)

= 44,000/4000 = £11 per unit (Liou, 2011)

Calculation of fixed and variable cost using high low method such as: -

At high level

At low level

Analysis:  In the above tables variable and fixed cost get calculated in order to segregate the semi-variable cost of organisation. Previous years costs as well as units get utilised for the purpose of making calculation with the use of high low method. In calculation high and low costs as well as units get utilised (Liou, 2011).

a. Demonstrate and discuss the effect of absorption and marginal costing on inventory valuation and profit determination. (LO2.1 & 2.2)

BRUNIE Co. follow two costing methods for making inventory evaluation and profit determination such as:

• Absorption costing: - This costing method emphasis over inclusion of all available costs whether it is variable (direct cost) or fixed cost (indirect cost) as well as all other overhead costs.
• Marginal costing: - This costing method emphasis over the inclusion of all variable costs but didn't make inclusion of fixed costs. Only direct cost is utilised for calculation (Srithongrung, 2010).

For inventory valuation and profit determination they make use of the marginal costing as they include all the variable costs for their calculation without inclusion of fixed cost as it is not incurred directly over the production of their product. It helps in focusing over the direct costs that has fluctuations on the other hand fixed cost having same nature during whole process. There is effective level of differentiation among the marginal costing and absorption costing for the purpose of profit determination such as: -

• High level of profits get extracted in absorption costing when there is increase in the inventory level.
• As per the marginal costing method organisation attain higher profits when their inventory level decreases.
• When inventory level remain fixed or didn't show any change it results into similar profit (Srithongrung, 2010).

b. Differentiate between Job costing, Batch costing, Process costing and Service costing. (LO2.2)

Differentiation shows in below table such as:

c. Prepare a profit and loss statement for each area, East and West, and in total, on an absorption costing basis.  (LO2.2 & 2.3)

Profit and loss account for area East and West such as:

Working notes: Cost apportionment

d. Prepare a profit and loss statement for West only, using marginal costing, showing the relevant information for each product and the total profit or loss in that area. (LO2.2 & 2.3)  

Profit and loss account for west only such as:

Working notes: Cost Apportionment

Get assignment help from full time dedicated experts of locus assignments.

a) Advise the BRUNEI CO. with supporting figures as to whether to cease production of A and D. (LO 2.4)

Calculation of contribution without A & D:

Calculation of contribution made by A & D:

Analysis:  BRUNEI Co. management propose to close down the production of Product A & D as it is considered that they lead to loss situation. As per the results of the profit calculation without inclusion of A & D results that Product B is yielding loss whereas Product E yields only minor profit. With the inclusion of Product A & D it is clearly observed that they are not attaining huge profits but they didn't attain loss and with the help their sales they easily meet out their expenditure and earn adequate level of profits for their business. Now it is suggested that they need not to close down the production of Product A & D (Libby & Lindsay, 2010).

b) Based on the above figures, calculate

(i) the contribution to sales ratio, based on the sales mix of the four products above. (lo 2.4).

Calculation is in below table such as:

(ii) The break-even point in £000.  (LO 2.4)

Breakeven point = Total fixed cost / contribution to sales ratio

Total fixed cost = 600

Contribution to sales ratio = 0.1957

= 600/0.1957 = 3,065.806

Breakeven point = £3,605.806 (Pollack, 2014)

(iii) The required sales in £000 to earn a profit of £200,000.  (LO 2.4)

Targeted sales = Total fixed cost + targeted profit/ contribution to sales ratio

Targeted profit = 200

= 600 +200/ 0.1957

= 800/0.1957= 4,087.742

Required sales = 4,087.742 (Pollack, 2014)

c) If labour is paid at a rate of £10 per hour and labour is restricted to 98,000 hours, state, with supporting figures, the combination of products (in £000) that would maximise profit for the period.  (LO 2.5) 

Product mix: -

d) If a further 8,000 hours become available, calculate the increase in profit that would arise. (LO 2.5)

If there is an extra 8,000 Hrs. available then the profit will arise by: -

8,000 hrs. * 0.71 = £5,714.29

Increase in profit is by £5,714.29 (Alino & Schneider, 2012)

a) Board of BRUNEI CO. Ltd wants you explain the differences between these budgeting methods and to advise which one will be more appropriate to which type of business (LO 3.1)

• Incremental:  The management of BRUNEI Co. make use of their previous year's information or figures for the purpose of preparing their budget for current year. In previous year budget they made effective changes on the basis of required improvements, current trend as well as changes in the market. These changes shows increment in their budget and with this effect budget get known as incremental budget (Kurunmäki & Miller, 2011).
• Zero based:  The management of BRUNEI Co. prepare the budget with the fresh figures no information related to their previous year get utilised. They are not allowed to make use of previous year's figures for preparing their current year budget. New organisation follows this method for preparing their budget (Kurunmäki & Miller, 2011).
• Fixed:  The management of BRUNEI Co. prepare budget report for one time and it get followed by them for a longer time period. There is no change is made into it and most of the time it provide rigidity among organisation.
• Flexible:  The management of BRUNEI Co. prepare budget in the starting of the year and make effective changes into it for the purpose of attain desired results from it. With the use of this method management as well as organisation attain high level of flexibility and helps in attaining desired benefits from it (Easterday & Eaton, 2012).

b) You are required to perform the below listed tasks help the board of BRUNEI CO. understands the cash flow and how they can be managed to improve efficiency within the Working Capital:

(i) calculate the amount of direct materials purchases in each of the month of july, august and september. (lo 3.2).

The amount of direct materials purchases in each of the month is as follows such as:

(ii) Prepare the cash budgets for July, August and September. (LO 3.1, 3.2 and 3.3)

Cash budget for the three months such as July, August and September is as follows such as:

(iii) Describe briefly the advantages of preparing cash budgets. (LO 3.1, 3.2 and 3.3)

The advantages of preparing cash budgets are as follows:

• Cash in hand get managed in effective manner.
• It build savings habit.
• Unnecessary expenses get minimised.
• Financial awareness get increased among management.
• The balance between cash inflows and cash outflows get managed in effective manner.
• It reduces the chances of getting out of liquid funds.
• It make the organisation's liquid position strong (M Peter 2010).

(iv) Assess and advise the Board for any changes which should be made to improve the cash flow variances. (LO 3.4)

• Analysis over the prepared cash budget:  As per the prepared budget it get analysed that there is effective level of increase among revenues and expenditure. But the difference is the rate of speed of increase in revenues is bit slower as compare to increase in expenditure. Management need to maintain the balance between the cash inflows as well as cash outflows. For this purpose they need to increase the level of their revenue earning capacity as well as slow down the increment of their expenditure. With the effect of it they become able to manage their cash (M Peter 2010).
• Recommendations to improvements such as:  Management need to lower down their prices but have to increase their product qualities to increase their sales.

They need to shorten the time period for their debt collection to increase the level of their revenues earned. There is requirement of enhancing their credit policy for the purpose of better cash inflows. They need to restrict the unnecessary spending that results into huge savings. In order to lower down the ratio of salaries and wages they need to hire skilled labour that helps in making effective savings (M Peter 2010).

(i) Prepare a flexed budget and calculate the total variances (LO 4.1, 4.4)

Flexed budget as well as calculation of total variances is in below table such as:

(ii) analyse each of the cost variances clearly identifying possible causes of these variances and recommend corrective action for the identified variances (LO 4.2, 4.3)

a. Materials

c. Variable overheads

d. Fixed overheads

e. Sales variance

e. Prepare a statement reconciling the budgeted profits to the actual profit

Reconciliation statement of the variances such as:

(iii) Report these findings to the board in accordance with identified responsibility centres. (LO 4.5)

To, The Board of Directors, BRUNEI Co. Subject: - Report on variances Date: - XX-XX-XXXX Sir/Madam, This report is represented in order to aware about the overall performance of the organisation. The results of variance analysis showcase that different requirements require adequate level of improvements. These variances get utilised for the effective decision making and for these variances different departmental managers are responsible such as:

Conclusion: Management of BRUNEI Co. need to emphasis over their performance enhancement. On the basis of calculated variances management need to put emphasis over improving the performance of the different department as per their variance level. Management need to focus over motivated their employees so that they perform their efficiently. From: Management Accountant (Pilleboue, et. al., 2015)

(a) Calculate, both in number of units sold and sales value, the (LO 5.1):

(i) Breakeven point

Breakeven point = Total Fixed cost / Contribution per unit

Total fixed cost = salaries & wages + rent & rates + other fixed costs

= £260,000 + £75,000 + £345,000

Total fixed cost = £680,000

Contribution per unit = Per unit selling price - Per unit buying price

Per unit selling price = £68

Per unit buying price = £53

Contribution per unit = £68 - £53 = £15

Breakeven point = £680,000/ £15 = 45,333.33 units

Breakeven point = Fixed cost/ PV ratio

Fixed cost = = £260,000 + £75,000 + £345,000 = £680,000

PV ratio = Per unit contribution / Selling price per unit * 100

= £15/ £68 * 100 = 22.06%

= £680,000 / 22.06%  = £3,082,502

Breakeven point = £3,082,502 (Simakov, et. al., 2015)

(ii) Margin of safety

Margin of safety = Total sales - breakeven point

Total sales = 56,000 * 68 = £3,808,000

Break-even point = £3,082,502

Margin of safety = £3,808,000 - £3,082,502 = £725,498

Margin of safety = £725,498 (Simakov, et. al., 2015)

(b) Calculate the shop’s profit or loss if 40,500 pairs of shoes were sold during a year. (LO 5.1)

In the below table calculation of profit or loss over sale of 40,500 pairs of shoes such as:

With the sales of the 40,500 pairs of shoes there will be  loss of £72,500 (Li, et. al., 2014)

(c) Calculate how many pairs of shoes would need to be sold if a sales commission of £2per pair of shoes was paid in addition to other costs and the owner required a net profit of £180,025. (LO 5.1)

Formulae of revised sales = Total fixed cost + desired profit / revised contribution

Fixed cost = £680,000

Desired profit = £180,025

Revised contribution = £15 - £2= £13/ unit

Revised sales = (£680,000 + £180,025) / £13 = 66,156 units.

In the below table above revised sales is tested whether it is correct or not such as:

The revised sales of 66,156 units results into attaining a additional profit of £180,025. (Li, et. al., 2014)

(d) Calculate how many pairs of shoes would need to be sold to breakeven if an advertising campaign costing £25,000 was undertaken while, at the same time, selling prices were increased by 10%. (LO 5.1 and 5.2)

There is increment in selling prices by 10% so new selling price is = £68 + (£68* 10%) = £74.8

New contribution = New selling prices - Buying prices

= £74.8 - £53 = £21.8

New fixed cost = £680,000 + £25,000 = £705,000

New breakeven point = (£705,000 / £21.8) = 32,340 units or 32,339.45 units

If there is increase in selling price by 10% and fixed cost get increased by £21.8 as advertising campaign then the new break-even point is 32,339.45 units (Li, et. al., 2014).

(e) Recommend and justified appropriate action to improve the financial performance of Indo Ltd in order to improve its profitability using the answers in part d. (LO 5.2)

The calculation made in the above sections helps in analysing that break-even point get decreased with the increase in the selling price. Earlier the breakeven point was 45,333.33 units that get reduced to 32,339.45 units by increasing the selling price by 10% only. By increasing selling price they recover their incurred cost at rapid pace. Breakeven point is at par situation in which organization didn't get losses nor earn profits. When the breakeven point is low then organisation having chance to earn high profits and vice-versa. So it recommended to increase their selling process along with adopt the marketing campaign (Li, et. al., 2014).

Get Complete Solution From Best Locus Assignment Experts.

It is concluded that BRUNEI Co. utilised different budgeting method to make adequate use of their available finance. They make cost classification in order to make best utilisation of their cost. They make different use of their prepared budget such as they evaluate performance, extract useful information in their decision making process and many more. They follow the prepared budget in order to process the activities systematically and as per their desired level. In the end they perform variance analysis for the purpose of evaluating their performance so that they make improvements in their processing.

Alino, N.U. & Schneider, G.P. 2012, "Conflict reduction in organization design: budgeting and accounting control systems", Academy of Strategic Management Journal, vol. 11, no. 1, pp. 1. Anessi-Pessina, E., Barbera, C., Sicilia, M. & Steccolini, I. 2016, "Public sector budgeting: a European review of accounting and public management journals", Accounting, Auditing & Accountability Journal, vol. 29, no. 3, pp. 491-519. Brook, D.A. 2012, "Budgeting for national security: a whole of government perspective", Journal of Public Budgeting, Accounting & Financial Management , vol. 24, no. 1, pp. 32. Butt, M. 2010, "Variance analysis", Accounting, Auditing & Accountability Journal, vol. 23, no. 6, pp. 816-816. Easterday, K.E. & Eaton, T.V. 2012, "Double (accounting) standards: a comparison of public and private sector defined benefit pension plans", Journal of Public Budgeting, Accounting & Financial Management, vol. 24, no. 2, pp. 278.

Delivery in day(s): 4

• Number of views: 647
• PRICE : £90.00

Share this Solution

Other Assignments

Computing Skills Assignment Help

Delivery in day(s): 5

Organisational Behaviour Assignment Help

Delivery in day(s): 3

Business Law Assignment

International Management Assignment Help

Business Law Assignment Help

Related solutions.

Unit 9 Management Accounting Costing and Budgeting Assignment

Unit 9 Management Accounting Assignment

Unit 9 Management Accounting Solution

Unit 9 Management Accounting Assignment Sample

Unit 2 Managing Financial Resources and Decisions Sample Assignment

• Unit 5 Management Accounting

Other Solutions

Unit 6 Business Decision Making Assignment Help

Business Strategy Assignment Solutions

Managing Business Activities to Achieve Results Assignment Help

External Business Environment Assignment Help

Contemporary Issues in Travel and Tourism Assignment Help

Business Environment Assignment - British Airways