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财务规划和控制考试助攻 ACCT40415代写

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Examination Paper

ACCT40415-WE01 : Financial Planning and Control

Take home exam

Duration: TWO HOURS

Word/Page Limit: 3,000 words

Instructions to Candidates:    Answer ONE question from Sections A and B. All questions carry equal marks.

 

Section A (Answer ONE question from this section)    财务规划和控制考试助攻

1.

Rissa  Ltd manufactures  school trousers  for children  aged 4  to 6  years old.  Sales are  made directly to high street retailers. The Managing Director of the company has been complaining on the declining sales trend.  According to her, profit for the year  has been the lowest in  15 years. The forecast for next year indicates that  the present deterioration in profits is likely to continue. The company requires a profit of £80,000 to remain in the business. The Managing Director has completed this review and passes the proposals on to you for  evaluation and recommendation, together with the profit and loss account for the last year.

Rissa Ltd Profit and Loss Account

(£) (£) (£)
Sales revenue

(100,000 trousers

at £10)

1,000,000

 

Factory cost of

goods sold:

Direct materials 100,000
Direct labour 350,000
Variable factory

overheads

60,000

 

Fixed factory

overheads

220,000 730,000
Administration

overhead

140,000
Selling and

distribution

overhead:

Sales commission

(2% of sales)

20,000

 

Delivery costs

(variable per unit

sold)

50,000

 

Fixed costs 40,000 110,000 980,000
Profit 20,000

There are three proposals for consideration:

i. To proceed based on  analyses of market research studies  that indicate the demand for the trousers would increase by 40 percent with 10 percent reduction in selling price.     财务规划和控制考试助攻

ii. To proceed with an enquiry made by the Marketing Director on a mail order company’s deal with the possibility of purchasing 50,000 units annually if the selling price is right. The mail order company would transport  the trousers to its warehouse, and no sales commission would  be paid on  these sales  by Rissa Ltd.  However, if an  acceptable price can be negotiated, Rissa Ltd would be expected to contribute £60,000 per annum towards the cost of producing the mail order catalogue. It would also be necessary for Rissa Ltd to provide  special additional packaging at a cost  of £0.50 per trouser. The Marketing  Director  considers  that  existing  sales  of  the  Rissa  Ltd  would  remain unchanged at 100,000 units, based on a selling price of £10 if the mail order contract is undertaken.

iii. To proceed based on  a view held by the Marketing  Director that sales may increase to the  maximum capacity  of 160,000  trousers provided  there is  a 10  percent price reduction with additional national advertising campaign of £30,000.

Required:    财务规划和控制考试助攻

You  are required  to  write a  report  to the  Managing  Director with  recommendations  of your analysis which should include all the relevant workings on the three proposals above, based on the following outlines:

a. The calculation of break-even sales value based on the last year’s account.

b. A  financial evaluation of proposal (i) including its profit projection, and a calculation of the number of units Rissa  Ltd would be required to sell at  £9 each to earn the target profit of £80,000.

c. A calculation of  the minimum prices  that would have  to be quoted  to the mail order company in proposal (ii),  first, to ensure that Rissa Ltd  would at least break even on the mail order contract,  secondly, to ensure that the same  overall profit is earned as proposal (i) and, thirdly, to ensure that the overall company’s target profit is earned.

d. A  financial evaluation of proposal (iii) to include its profit projection.

(50 marks)

 

财务规划和控制考试助攻
财务规划和控制考试助攻

2.

Due  to the pandemic  and the slowing  down of business,  the management  of Swiss Ltd  have decided to halt their production.  The management team has specifically asked  you to evaluate the impact of the halt in production on the company’s cash flow.

The following data has been made available:

Month 1 Month 2 Month 3
Budgeted sales 400 units 500 units 400 units
Budgeted production 600 units 400 units Nil

The halt  will commence at  the beginning of  month 3  and it should  be assumed that  it will continue for at least four months. Sales will continue to be made during the period of the halt until inventory of finished  goods are exhausted. Production will  stop at the end  of month 2. The current inventory level of finished goods is 600 units. Inventories of work in progress are not carried.

The selling price of the product is  £60, and the budgeted manufacturing cost is made up as follows:

(£)
Direct materials 15
Direct wages 7
Variable overheads 8
Fixed overheads 18
Total £48

Direct wages are regarded as a variable cost. The company operates a full absorption costing system, and the fixed overhead absorption rate is based upon a budgeted fixed overhead of £9,000 per month. Included in the total fixed overheads is £700 per month for depreciation of equipment. During the period of the halt, direct wages and  variable overheads would not be incurred and the cash expended on fixed overheads would be reduced by £1,500 per month.    财务规划和控制考试助攻

The current inventory of raw materials is worth £7,500; it is intended that these stocks should increase to £11,000 by the end of month 1 and then remain at this level during the  period of the halt.  All direct materials  are paid  for one  month after they  have been  received. Direct wages are paid one month  in arrears. It should be assumed that all  relevant overheads are paid as soon as the expense is incurred. All sales are on credit, 70 percent of the sales value is received in cash  from the debtors at the end  of the first month after  the sales have been made and the balance at the end of the second month.

The current  amount outstanding  to material  suppliers is  £8,000 and direct  wage accruals amount to £3,200. Both  will be paid in month  1. The current balance owing  from debtors is £31,200, of which £24,000 will be received during  month 1 and the remainder during month 2. The current balance of cash at the bank and in hand is £1,000.

Required:   财务规划和控制考试助攻

You are required to write  a report to the company’s management team on the  evaluation of the impact of the halt in production on the company’s cash flow. Your analysis should include all the relevant workings based on the following outlines:

a. A cash  budget for months  one to  six showing the  balance of  cash at  the end  of each month together with a suitable analysis of the receipts and payments during each month.

b. Discuss  any  matters  arising  from  the  cash  budget  which  should  be  brought to  the management’s attention.

c. Explain why the reported profit figure for a period does not normally represent the amount of cash regenerated in that period.

(50 marks)

 

Section B (Answer ONE question from this section)   财务规划和控制考试助攻

 1.

Digi Ltd participates in a highly competitive industry. To meet this competition and achieve profit goals,  the  company has  chosen  a  decentralised form  of  organisation.  Each  manager of  a decentralised investment centre  is measured based  on profit contribution, market  penetration, and return on investment. Failure to meet the objectives established by  corporate management for these measures has not been acceptable and  usually has resulted in demotion or dismissal of an investment centre manager.

An anonymous survey of managers in the company revealed that the managers feel the pressure to compromise their personal ethical standards to achieve the corporate objectives. For example, at certain plant  locations there were pressures  to reduce quality control  to a level which  could not assure that all  unsafe products would be rejected.  Also, sales personnel were encouraged to  use  questionable  sales  tactics  to  obtain  orders,  including  gifts  and  other  incentives  to purchasing agents.   财务规划和控制考试助攻

The Chief Executive Officer  is disturbed by the findings.  In his opinion, such behaviour  cannot be condoned by the company. He concludes that  the company should do something about this problem.

Required:

As the management accountant of  the company, you have been asked  by the Chief Executive Officer to write a report to the company based on the following outlines:

a. Identify at least four stakeholders in this situation.

b. Discuss any  potential ethical implications, conflicts, or dilemmas in the above situation.

c. Provide suggestions  for the company  to reduce the  pressure placed on managers  and any potential ethical conflicts.

(50 marks)

 2.

In the Beyond Budgeting report produced by CIMA (2007), it is argued that traditional budgeting is in  need  for serious  revision. Discuss  five limitations  of traditional  budgeting practices  and provide five improvements that can be made to facilitate better planning and control.

(50 marks)

财务规划和控制考试助攻
财务规划和控制考试助攻

 

 

 

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