MLO3: Identify and apply appropriate management accounting techniques to assist in management decision making
2024-09-06 15:17:44
AFE4001 Business Economics Assignment Sample
Submission Date and Time: Week 12 - 11th August, 2022
Expected Return of Feedback and Marked Work: 14 days from submission
Assignment Weighting: 50%
Word Count: 2,000
Learning Outcomes Assessed by this Assignment:
MLO3: Identify and apply appropriate management accounting techniques to assist in management decision making
MLO4: Make use of management accounting information to assess business performance.
Assignment Detail:
WAZ limited is a UK subsidiary of the Australian MMC Group. The company has been operating in the UK for the past 6 years. WAZ provides sporting equipment to a number of sporting activities such as Football, Racing, Running, Cycling, Tennis, and Swimming in the UK, USA, and Australia. For the past 6 years, WAZ has been a profit-making firm as it has retained its previous clients, in addition to capturing an increasing share of the market. However, the finance director of WAZ has recently got in touch with your professional management accounting consulting firm and has engaged your firm with the mandate to provide them with an explanation of the cash flow problem that WAZ Limited had been facing. One of the company’s products, a football helmet for the North American market, requires a special plastic. Last year, the company manufactured 16,000 helmets, using 140,000 kilograms of plastic in the process. The plastic cost the company £0.75 per kilo. However, according to the standard cost card, each helmet should require 120,000 kilograms of plastic, at a cost of £0.70 per kilogram.
Last year also the company manufactured 700 Ski using a total of 3,000 hours. Total actual cost is £13,500. However, the WAZ budgeted for 600 units of Ski at 4 direct labor hour per unit. Standard labor rate is £4.80 per hour. The company’s management wants to know the causes of these variances. Assessing the value of inventory has been the major problem faced by WAZ Ltd. In the past month, there has been a number of meetings in London and Australia where it has been agreed that WAZ Limited should use the best appropriate method to value their inventory each year.
The company is planning to expand and launch a new tennis rackets called V-Shaped with a selling price of £390 per racket. WAZ Limited plan to sell a total of 1200 units of V-Shaped for the same period. Total budgeted sales for each month are as follows: November 400, December 400 and January 400.
From their costs estimates, total fixed cost estimated to be £135,000 and it will be shared equally throughout the period. The variable cost is £130 per unit. The fixed costs are for the whole period, so they are not affected by the level of service. However, the variable costs will increase with services output (ie sales output multiplied with variable cost per product). Variable cost will be paid on the basis of 50% in the month of purchase and 50% the following month. Similarly, revenue from the sale of V-Shaped will be on the basis of 50% cash in the same month, and the remaining 50% credit to be paid the following month.
Required
You are required to write a well-researched and referenced management to the directors of WAZ limited in which the following points should be discussed.
• Provide a critical explanation on the different inventory valuation methods available for WAZ Ltd and their advantages and disadvantages. You should make recommendations for the company on the suitable valuation method to use.
• The importance/purpose/benefits of management tools such as Budgets. A computation of your cash budget for the first 3 months.
• A computation of variance analysis. The possible causes of these variances. You should also briefly comment on the use of standard costing and variance analysis to the company.
• Some other examples that show understanding of the relevant concepts.
Assignment Guidelines for Assignment Help
It is important that prior to you submitting your work, you read this and objectively assess your response against the rubric.
This will ensure that you have done enough to attain the marks you wish to achieve.
Layout
Your work should be word processed in accordance with the following:
• Font style, Arial, font size 12
• 1.5 line spacing.
• The page orientation should be ‘portrait’
• Margins on both sides of the page should be no less than 2.5 cm
• Pages should be numbered
• Your name should not appear on the script.
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