Associate Degree in Business Administration (ASBA) Assignment- FALL-2017 SYSCOMS
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Associate Degree in Business Administration (ASBA) Assignment- FALL-2017 SYSCOMS COLLEGE BUS 13200:Principles of Managerial Accounting Course CodeB Coordinator BUS 13200: Principles of Managerial Mr. Dilber J.S Assignment Strategy Covered CLO 120% of Total Marks he concepts of managemert acounting to various business aciviles and une hem in deaisin making 2 Bustrate the role of budgeting in 3. Evaluate managetial perlomances using the concept of Responsibility Accounting S. Re arange relevant costs using Inaremental Analysis in decislon making processes stuatons spreadsheets Explain rda does andcomp warunces Instructions -1. In order to achieve 20% of total Marks, the students must submit the Assignment. 2. All assignment works are focused on Learming outcomes and course objectives. 3. The students are asked not to copy the contents as it is from any other published resources. 4. All are expected to develop their leaming skill through doing it 5. The students must complete and submit heir assignment on or before the deadline given Student Name Student ID Assignment Given Date 09-10-2017 Date of Submission: 06-11-2017 Declaration that the piece of work submited by me, as response to the course work of this course,is hereby declare that the piece material, website or response of another candidate. has not been copied from any published Student's Signature: Coordinator's Comments &Date; of AcceptanceExplanation / Answer
1. Managerial accounting is the analysing , interpreting and reporting the data of business operations. This is also called cost accounting. The analysis enables the management in arriving at conclusions regarding the various actions that need to be initiated to enable it to achieve its goals. It helps in identifying the weaknesses in the operational management and corrctive actions to be initiated. It involves various activities like budgeting, constraint analysis, margin analysis to nam a few.
Budgeting involves the prepeariton of the management's plan of action for a future period keeping in mind the goals and analyzing the performance against the plan of action to note the deviations and the necessary action to be taken to correct the postion.
Constraint analysis helps in analysing the vaious constraints which arise in achieving the goals and ways to mitigate or eliminate the resulting deviations.
Margin analysis can also be called incremental analysis whereby the benefits and costs involved in stepping up the activities or changing from one process to another are measured which helps in taking decisons which help the management to achieve its goals.
2. Sales =5,600 dhs
Variable cost =3,200 dhs
Contribution (Sales - variabe cost) =2,400 dhs
Fixed cost =860 dhs
Profit (Cotribution - Fixed cost) =1,540 dhs
3. Cost Volume Profit analysis is the process of establishing the relationship between the cost of production , the level of production (Volume ) and the resulting profit (or loss) of the activities . This analysis helps the management to understand the behavoiur of the various cost elements and their effect on the profits generated by the business.
The analysis helps in establishing the break even point , i.e., the point where the total cost equals to revenue and the level of activity needed to achieve a desired level of profit.
There are some basic asumptions in CVP analysis:
a.The behaviour of costs and revenue are liniear throughout the relevant range of activity.
b. All costs can be classified ehtier as fixed or variable.
c. Changes in activity are the only factors that affect costs.
The components of CVP analysis are:
a.Level or volume of acivity.
b.Unit selling prices
c. Variable costs per unit
d. Total fixed costs.
4. Cost behaviour is the variation in cost with relation to the level or volume of activity. The costs are classified as (a) variable ,(b) fixed and (c) semi variable or mixed , depending on their behaviour with resepct to changes in the activity level.
(a) Variable costs are those costs which change direclty in proportion to the changes in the level of activity.
Examples of these costs are the direct material and direct labor. These costs increase when the production increases and decrease when the production decrease, i.e., they fully variable with resepct to the level of activity.
Fixed costs are those costs which are independent of the level of production. Depreciation,office salaries are examples of fixed costs.These are not dependent on the level of activity. These costs are also called period costs as these fixed for a period of time and may vary with time.
Semi variable or mixed costs are those costs which are fixed upto a level of activity and change at a higher level of activity.
5.
Sales 30,000 units @25dhs per unit 750,000 dhs
Variable costs @13 dhs per unit 390,000 dhs
Contribution (Sales - variable costs) @12 dhs per unit 360,000 dhs
Fixed costs 12,000 dhs
Profit 348,000 dhs
(a) PV ratio =Contribution / Sales = 360,000 / 750,000 = 48%
(b) Break even sales = Fixed costs / PV ratio = 12,000 / 48% = 25,000 dhs
(c) Margin of safety = Actual sales - Break even sales = 750,000 - 25,000 = 725,000 dhs
(d) Margin of safety % = Margin of safety / Sales = 725,000 / 750,000 = 97%
II. If the selling rpice is reduced by 11% , the new selling price will be $25 - 11% of $25 = $22.25
Sales 30,000 @22.25 dhs per unit = 667,500 dhs
Variable costs 30,000 @13 dhs per unit =390,000 dhs
Contribution 30,000 @9.25 dhs per unit =277,500 dhs
Fixed costs = 12,000 dhs
Profit = 265,500 dhs
(a) PV ratio =Contribution / Sales = 277,500 / 667,500 = 42%(rounded off)
(b) Break even sales = Fixed costs / PV ratio = 12,000 / 42% = 28,571 dhs
(c) Margin of safety = Actual sales - Break even sales = 667,500 - 28,571 = 638,929 dhs
(d) Margin of safety % = Margin of safety / Sales = 638,929 / 750,000 = 95.7%
III. Sales for achiving the same level of profit
Original profit = $348,000 dhs
Fixed costs =$12,000 dhs
Sales required to achieve the desirec profit = (Fixed costs + desired profit ) / PV ratio = (12,000+348,000) / 42%
= 85,714 dhs.
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