FNSACC503 Manage Budgets and Forecasts sample assignment

Instructions

For this assessment task you are required to review several case studies and complete the tasks outlined. You can use the Internet, books, magazines and other resources suggested by your trainer/assessor to help with completion of these tasks.

Resources required for this assessment

• Research materials such as books, internet, magazines, workplace documentation etc.
• Access to a computer to create relevant reports or spreadsheets
• Calculator

Case Assignment 1

Ari has a cab business. He recently expanded his business by including the provision of limousines in NSW. Ari’s management accountant has provided the following information on monthly revenues and costs in NSW. The Cab division has monthly revenues of $3,475,000, while the Limousine division generates revenues of $375,000.

Expenses of $2,656,750 were allocated to divisions based on the number of kilometres travelled. Ari has heard about Activity Based Costing and wants to know what benefits it could provide so he has obtained the following monthly information on expenses for NSW:

Ari has identified that the main activity cost areas include salaries, vehicle costs and booking fees.

1. Identify the appropriate cost pools and calculate the appropriate driver rates for the activities listed above.

You may wish to use the following table in your answer

1. Using ABC costing, prepare a product line profitability report. Show all workings in your answer and ensure you have reconciled data to ensure accuracy of calculations.
2. Discuss two (2) key observations identified from your calculations?

Case Assignment 2

Grace Aged Care (GAC) builds and runs aged care centres. As GAC runs on very tight budgets, a fixed construction cost for each centre of $250,000 is set. Once GAC raises $300,000 they commission construction on the next centre.

Recently, GAC’s CFO undertook a project to determine variances to the standard construction budgets set.  Projects are expected to be completed in 26 weeks and use the following standards.

Recently GAC completed construction on a new centre in Ballarat in regional Victoria, the following actual information was obtained:

• The project commenced on 1 June and was completed 32 weeks later.
• GAC decided to purchase all materials from the same supplier. GAC purchased 75,000 bricks at a total cost of $36,000 and 2,000 square metres of timber for $32,000.
• GAC purchased the required pre-fabricated walls were purchased for $80,000.
• The balance of project costs, including other fixed costs of $47,500 totalled $58,000.
• Overall labour costs on the project were $70,000 for 1,250 hours of labour, with an even split of hours between builders and specialists engaged.

In relation to the Ballarat construction project you will need to complete the following tasks. Ensure you check all data for accuracy and reliability prior to submission.

1. Calculate the total direct materials price and efficiency variances
2. Calculate the total labour price and efficiency variances
3. Calculate the project overhead variance

Case Assignment 3

Majestic Enterprises manufactures microchips for computers. A market survey shows that a 10% reduction in price will result in a 30% increase in sales with variable costs per unit remaining unchanged. On the other hand, an investment of $30,000 in machinery would reduce variable costs by $3 a unit.

1. Determine the sales volume and break-even point for each option given Majestic currently sells 10,000 units @ $20 each, has variable costs of $80,000 and fixed costs of $40,000. Ensure you have checked all calculations for accuracy prior to submission.
2. Using the current information provided in a) as the budget for month 1 and the additional information below, complete the 12 month budget for Majestic Enterprises. Ensure you have checked all calculations for accuracy prior to submission.

Sales expected to rise monthly by 10%

Variable costs to increase by 5% per month to the 6th month and then stabilise.

Fixed costs to remain stable for the first 9 months then record an increase of $10,000.

Admin expenses of $5,000 to be incurred in the first month with a 2% increase per month.

Case Assignment 4

Serra Industries is a fine food company producing burgers and sausages. It has 300 staff who work 8 hours a day, 5 days a week for 50 weeks. The demand for burgers and sausages does not exceed 50,000 and 150,000 kilos annually. Fixed factory overheads are applied on the basis of direct labour hours @$1 per hour.

The details per kilo of each product are as follows:

What is the maximum profit and most profitable mix of products?

Case Assignment 5

Organic Food Stars Pty Ltd, (“OFS”) is a small company that imports, manufactures and wholesales organic foods. OFS products are minimally processed and contain no artificial additives. In a world with growing interest in premium quality foods, OFS invests heavily in research and is building a reputation for its quality goods.

OFS has invested heavily in Research and Development (R&D). The R&D annual budget is $20 million for the current year. It employs a senior food scientist, five junior scientists and two administration staff. The goal of the R&D department is to develop high quality new products that are then tested and found to be acceptable for human consumption by an external quality testing agency. The agency provides specific feedback on the products and has even rejected products in the past. A rejected product results in high additional costs or severe losses to OFS.

Identify two (2) key KPI’s for the Board to consider for each of the internal process and the learning and growth quadrants of the balanced scorecard for the R&D department.