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

SubmissionFormat:

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’ ‘Stone 101’
Forecasted Sales (Units) 9,500 2600
Selling price per unit in RO 400 300
Ending inventory required (units) 2,870 100
Beginning inventory (unit) 270 95

B. Information for the FY 2020 of Standard material cost per unit and labour cost per hour:

RO
Material ‘A’ 2.8
Material ‘B’ 5
Direct labour 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:

Finished product
‘Pebble 101’ ‘Stone 101’
Material ‘A’ in Units 20 9
Material ‘B’ in units 6 10
Direct labour in hours 20 25
 D. Information for the FY 2020 of Direct Material
Material ‘A’ Material ‘B’
Beginning inventory (unit) 9,500 9,000
Ending inventory required (unit) 20,200 2,700

E. Factory overhead budget information for the FY 2020

Department 1 Department 2
RO RO
Budgeted variable overheads rates
(Per direct labour hours)
Indirect materials 0.4 0.3
Indirect Labour 0.4 0.4
Power (Variable Portion) 0.25 0.2
Maintenance (Variable Portion) 0.06 0.2

Budgeted fixed overheads

Depreciation 35,000 30,000
Supervision 35,000 20,000
Power (fixed portion) 20,000 600
Maintenance (Fixed portion) 21,400 899

F. Non-manufacturing overheads budgeted Information for the FY 2020:

Information of Estimated non-manufacturing

overheads: RO
Stationary etc. (Administration) 2,000
Salaries sales 28,500
Salaries office 8,000
Commissions 25,000
Car expenses (Sales) 6,500
Advertising 30,000
Miscellaneous (Office) 4,000
TOTAL 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 RO RO RO
Receipts from customers 650,000 700,000 880,000 846,250
Payments:
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
I. Budgeted balance sheet for the previous year ended 2019 was as follows:
RO RO RO
Non-current assets:
Land 262,772
Building and equipment 523,000
Less: Depreciation 63,750 459,250 722,022

Current assets:
Stock of finished goods 136,500
Stock of Raw materials 71,600
Debtors 82,250
Cash 9,500 299,850

Less current liabilities

Creditors 72,200 227,650
Net assets 949,672

Equity: Represented by shareholder’s interest:

700,000 ordinary shares of RO 1 each 700,000
Reserves 249,672
Equity 949,672

J. Actual Statements of financial position as at 31st Dec

Amt in RO

2019 2018
Non•current assets (carrying value) 390,000 360,000
Current assets
Inventory 90,000 63,000
Receivable 102,000 53,200
Cash 65,000 70,000
Total Assets 647,000 546,200

Equity and Liabilities

Ordinary share capital ($100 per share) 389,000 356,000
Reserves 60,000 66,600

Non•current liabilities
10% Loan notes 120,000 60,000
Current liabilities
Accruals 42,000 33,600
Trade payables 36,000 30,000
Total Equity and liabilities 647,000 546,200
K. Actual Statements of profit or loss for the year ended 30th Dec

Amt in RO

2019 2018
Sales 320,000 224,000
Cost of sales 204,800 140,000
Gross profit 115,200 84,000
Administration expenses 48,960 24,640
Distribution costs 7,600 5,440
Operating profit 58,640 53,920
Interest 8,000 4,000
Profit before taxation 50,640 49,920
Taxation 2,200 1,000
Profit after taxation 48,440 48,920

Other relevant information:

L. Benchmarks – Average data for companies similar to XYZ Company

Ratios for financial year ended 31st Dec Benchmark

Gross profit ratio 38%
Operating profit margin 15%
Return on Capital Employed (ROCE) 13%
Current ratio 2.2:1
Quick ratio 1.5:1
Inventory days 40 days
Receivables days 45 days
Payable days 50 days
Gearing ratio 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

2019 2018
Sales revenue 310,000 230,000
Cost of sales 204,900 100,000
Administration expenses 48,600 24,540
Distribution costs 7,400 5,600
Interest 8,200 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)
Learning Outcomes and Assessment Criteria
Pass Merit Distinction

LO3 Explain the use of planning tools used in management accounting

P4 Explain the advantages and M3 Analyse the use of different

disadvantages of different types of planning tools and their
planning tools used for budgetary application for preparing and D3 Evaluate how planning tools
control. forecasting budgets. for accounting respond
appropriately to solving financial
LO4: Compare ways in which organisations could use management problems to lead organisations to
accounting to respond to financial problems sustainable success.
P5 M4 Analyse how, in responding
Compare how organisations are to financial problems,
adapting management accounting management accounting can lead
systems to respond to financial organisations to sustainable
problems. 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

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 Date:
signature:
ASSESSMENT RECORD SHEET – FORMATIVE FEEDBACK
Programme BTEC HND BUSINESS LEVEL 5 Learner name
Mr. Gnanendran,
Planning tools used in management
Assignment title Assessor name Ms. Sujata Suresh,
accounting
Dr. Roslin Lazarus
Targeted learning
Unit no. & title Unit 5 Management Accounting aims/assessment LO 3 and LO 4
criteria
First Submission
Deadline Date submitted

Targeted Criteria
Assessment comments
criteria achieved

LO 3

LO 4

General comments

I certify that the evidence submitted for this assignment is the learner’s own. The
Assessor
learner has clearly referenced any sources used in the work. I understand that false
declaration
declaration is a form of malpractice.
Assessor signature Date

Date of feedback to
learner
Resubmission
authorisation Date
by Lead Internal Verifier*
* 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.
ASSESSMENT RECORD SHEET - RESUBMISSION – SUMMATIVE FEEDBACK
Deadline Date submitted
Targeted Criteria
Assessment comments
criteria achieved
P4
P5
M3
M4
D3

General comments

I certify that the evidence submitted for this assignment is my own. I have clearly
Learner
referenced any sources used in the work. I understand that false declaration is a form of
Declaration
malpractice.
Learner signature Date

I certify that the evidence submitted for this assignment is the learner’s own. The learner
Assessor
has clearly referenced any sources used in the work. I understand that false declaration is
declaration
a form of malpractice.
Assessor signature Date

Date of feedback to
learner