SOLUTION: College of Banking Financial Studies Budgeted Information & Financial Statement Paper

College of Banking and Financial Studies
Assignment Brief – BTEC
Higher National Diploma in Business (Level 5)
Student Name /ID Number
Unit Number and Title
Unit 5 Management Accounting
Academic Year
Spring 2019 -2020
Unit Assessors
Mr. Gnanendran, Ms. Sujata Suresh, Dr. Roslin Lazarus
I. V. Name
Dr. Niranjan Shetty , Member , LIVT
Assignment Title
Planning tools used in management accounting
Issue Date
4th March 2020
Submission Date
For Formative feedback: 3rd April 2020
For Summative feedback: Within 7 days of giving formative feedback
Date
Submission Format:
ASSIGNMENT:
1. The submission is in the form of an individual numerical/written report.
2. This should be written in a concise, formal business style using single spacing and font size 12.
3. You are required to make use of headings, paragraphs and subsections as appropriate, and all work must be
supported with research and referenced using the Harvard referencing system.
4. Provide working notes wherever required.
5. The document must be submitted to Turnitin in word document.
6. Please provide a bibliography using Harvard referencing system if you referred any sources for theoretical
parts or questions.
7. The numbers/numerical statements and calculations must be neatly/clearly shown so that the assessor assess
the work of the learner appropriately.
8. The recommended word limit is 2000-2500 words, although you will not be penalised for exceeding the
total word limit.
9. The file must be saved in the format: student ID-MA-Formative -A1, for formative submission and student
ID-MA-Summative -A1.
10. In case of extenuating situations, the relevant college policies apply.
Unit Learning Outcomes:
LO3 Explain the use of planning tools used in management accounting
LO4: Compare ways in which organisations could use management accounting to respond to financial
problems.
1
Assignment Brief and Guidance:
Case Scenario
XYZ Company manufactures and sells two different brands of electronic products, known as ‘Pebble 101’ and
‘Stone 101’. ‘’Pebble 101’is produced in department 1 and ‘Stone 101’ in department 2. The business has a
capital investment of more than RO 700,000, with 450 employees working in manufacturing and administrative
units of the company. The financial statements of last two years (FY 2019 & FY 2018) of XYZ Company has
revealed an overall decline in sales, profitability and liquidity position. The directors of XYZ Company are
concerned about this sudden decline in the performance and prospects of the Company.
You have recently joined as a trainee management Accountant in XYZ Company and are now a part of the
Management Accounting team.
Directors want company’s management accounting team to prepare functional & master budgets for the
Financial year 2020, calculate relevant financial ratios considering benchmarks, key performance indicators
and budgetary targets, identify variances for last two financial years , apply relevant strategic planning tools ,
financial governance to monitor strategy, management accounting skill sets and effective strategies and
systems and compare the ways in which Company can respond to financial problems effectively and
efficiently.
XYZ Company’s budgeted information (FY 2020) & financial statements of last two years (FY 2019 & FY
2018) are given below: A. Sales Budget information for FY 2020.
Finished product
‘Pebble 101’
9,500
400
2,870
270
Forecasted Sales (Units)
Selling price per unit in RO
Ending inventory required (units)
Beginning inventory (unit)
‘Stone 101’
2600
300
100
95
B. Information for the FY 2020 of Standard material cost per unit and labour cost per hour:
Material ‘A’
Material ‘B’
Direct labour
RO
2.8
5
4
Overhead is recovered on a direct labour hour basis.
C. Information for the FY 2020 of the standard material and labour usage for each product is as
follows:
‘Pebble 101’
20
6
20
Material ‘A’ in Units
Material ‘B’ in units
Direct labour in hours
2
Finished product
‘Stone 101’
9
10
25
D. Information for the FY 2020 of Direct Material
Material ‘A’
9,500
20,200
Material ‘B’
9,000
2,700
Department 1
RO
Department 2
RO
0.4
0.4
0.25
0.06
0.3
0.4
0.2
0.2
35,000
35,000
20,000
21,400
30,000
20,000
600
899
Beginning inventory (unit)
Ending inventory required (unit)
E. Factory overhead budget information for the FY 2020
Budgeted variable overheads rates
(Per direct labour hours)
Indirect materials
Indirect Labour
Power (Variable Portion)
Maintenance (Variable Portion)
Budgeted fixed overheads
Depreciation
Supervision
Power (fixed portion)
Maintenance (Fixed portion)
F. Non-manufacturing overheads budgeted Information for the FY 2020:
Information of Estimated non-manufacturing
overheads:
Stationary etc. (Administration)
Salaries sales
Salaries office
Commissions
Car expenses (Sales)
Advertising
Miscellaneous (Office)
TOTAL
RO
2,000
28,500
8,000
25,000
6,500
30,000
4,000
104,000
G. Opening cash balance is RO 9500 for the financial year 2020
H. Cash flows Budgeted Information for the FY 2020 are as follows:
Quarter 1
Quarter 2
Quarter 3
Quarter 4
RO
650,000
RO
700,000
RO
880,000
RO
846,250
Materials
300,000
320,000
250,000
336,996
Payment for wages
303,406
330,000
360,000
235,094
Other costs and expenses
30,000
25,000
218,004
333,409
Receipts from customers
Payments:
3
I. Budgeted balance sheet for the previous year ended 2019 was as follows:
RO
RO
Non-current assets:
Land
Building and equipment
Less: Depreciation
523,000
63,750
459,250
Current assets:
Stock of finished goods
Stock of Raw materials
Debtors
Cash
136,500
71,600
82,250
9,500
299,850
RO
262,772
Less current liabilities
Creditors
Net assets
72,200
Equity: Represented by shareholder’s interest:
700,000 ordinary shares of RO 1 each
Reserves
Equity
722,022
227,650
949,672
700,000
249,672
949,672
J. Actual Statements of financial position as at 31st Dec
Amt in RO
2019
390,000
RO‘000’
2018
360,000
RO‘000’
Current assets
Inventory
Receivable
Cash
Total Assets
90,000
102,000
65,000
647,000
63,000
53,200
70,000
546,200
Equity and Liabilities
Ordinary share capital ($100 per share)
Reserves
389,000
60,000
356,000
66,600
120,000
60,000
42,000
36,000
647,000
33,600
30,000
546,200
Non-current assets (carrying value)
Non-current liabilities
10% Loan notes
Current liabilities
Accruals
Trade payables
Total Equity and liabilities
4
K. Actual Statements of profit or loss for the year ended 30th Dec
Amt in RO
2019
320,000
RO‘000’
204,800
115,200
48,960
7,600
58,640
8,000
50,640
2,200
48,440
Sales
Cost of sales
Gross profit
Administration expenses
Distribution costs
Operating profit
Interest
Profit before taxation
Taxation
Profit after taxation
2018
224,000
RO‘000’
140,000
84,000
24,640
5,440
53,920
4,000
49,920
1,000
48,920
Other relevant information:
L. Benchmarks – Average data for companies similar to XYZ Company
Ratios for financial year ended 31st Dec
Gross profit ratio
Operating profit margin
Return on Capital Employed (ROCE)
Current ratio
Quick ratio
Inventory days
Receivables days
Payable days
Gearing ratio
Benchmark
38%
15%
13%
2.2:1
1.5:1
40 days
45 days
50 days
30%
M. XYZ Company – Budgeted information for the financial year 2019 & 2018, no change in actual units
& budgeted units produced and sold:
Amt in RO
Sales revenue
Cost of sales
Administration expenses
Distribution costs
Interest
2019
310,000
204,900
48,600
7,400
8,200
2018
230,000
100,000
24,540
5,600
4,100
As a member of Management accounting team of XYZ Company, you are required to evaluate how planning
tools for accounting respond appropriately to solving financial problems to lead organization to sustainable
success.
(For details refer to Grades given in page 6 of the assignment)
5
Learning Outcomes and Assessment Criteria
Pass
Merit
Distinction
LO3 Explain the use of planning tools used in management accounting
P4 Explain the advantages and
disadvantages of different types of
planning tools used for budgetary
control.
M3 Analyse the use of different
planning tools and their
application for preparing and
forecasting budgets.
LO4: Compare ways in which organisations could use management
accounting to respond to financial problems
P5
Compare how organisations are
adapting management accounting
systems to respond to financial
problems.
M4 Analyse how, in responding
to
financial
problems,
management accounting can lead
organisations
to
sustainable
success.
6
D3 Evaluate how planning tools
for accounting respond
appropriately to solving financial
problems to lead organisations to
sustainable success.
LEARNER ASSESSMENT SUBMISSION AND DECLARATION
When submitting evidence for assessment, each learner must sign a declaration confirming that the
work is their own.
Please list the evidence submitted for each task. Indicate the page numbers where the evidence can
be found or describe the nature of the evidence (e.g. video, illustration).
Task ref.
Evidence submitted
Page numbers or
description
1
2
Additional comments to the Assessor:
Learner declaration
I certify that the work submitted for this assignment is my own. I have clearly referenced any
sources used in the work. I understand that false declaration is a form of malpractice.
Learner signature:
Date:
7
ASSESSMENT RECORD SHEET – FORMATIVE FEEDBACK
Programme
BTEC HND BUSINESS LEVEL 5
Learner name
Assignment title
Planning tools used in management
accounting
Assessor name
Mr. Gnanendran,
Ms. Sujata Suresh,
Dr. Roslin Lazarus
Unit no. & title
Unit 5 Management Accounting
Targeted learning
aims/assessment
criteria
LO 3 and LO 4
First Submission
Deadline
Targeted
criteria
Date submitted
Criteria
achieved
Assessment comments
LO 3
LO 4
General comments
Assessor
declaration
I certify that the evidence submitted for this assignment is the learner’s own. The
learner has clearly referenced any sources used in the work. I understand that false
declaration is a form of malpractice.
Assessor signature
Date
Date of feedback to
learner
Resubmission
authorisation
by Lead Internal Verifier*
Date
* All resubmissions must be authorised by the Lead Internal Verifier. Only one resubmission is possible per assignment, providing:

The learner has met initial deadlines set in the assignment, or has met an agreed deadline extension.

The tutor considers that the learner will be able to provide improved evidence without further guidance.
● Evidence submitted for assessment has been authenticated and accompanied by a signed and dated declaration of authenticity by the learner.
**Any resubmission evidence must be submitted within 15 working days of receipt of results of assessment.
8
ASSESSMENT RECORD SHEET – RESUBMISSION – SUMMATIVE FEEDBACK
Deadline
Targeted
criteria
Date submitted
Criteria
achieved
Assessment comments
P4
P5
M3
M4
D3
General comments
Learner
Declaration
I certify that the evidence submitted for this assignment is my own. I have clearly
referenced any sources used in the work. I understand that false declaration is a form of
malpractice.
Learner signature
Assessor
declaration
Date
I certify that the evidence submitted for this assignment is the learner’s own. The learner
has clearly referenced any sources used in the work. I understand that false declaration is
a form of malpractice.
Assessor signature
Date
Date of feedback to
learner
9

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