BMAC5203 ACCOUNTING FOR BUSINESS DECISION MAKING SEPTEMBER 2023 SEMESTER SPECIFIC INSTRUCTION

2. Answer in English.

2. Submit your assignment ONCE only in a SINGLE file.

2. Submit your assignment ONLINE.

2. Submission date: xxx until xxx.

2. This assignment accounts for 100% of the total marks for the course.

ASSIGNMENT QUESTION QUESTION/TASK 1(50%): Task 1a: CLO3 OBJECTIVE: The purpose of this assignment is to enable learners to understand an organisations financial goals through the preparation of operating, financial, and cash budgets that together integrate into a business plan REQUIREMENT: Budgets and Budgetary Controls Question Alya Sdn Bhd. produces and sells granite pots and pans with glass lids to a Japanese company. Rushdi, the new manager, wants to keep an eye on the quarterly budgets for the third quarter ending 30 September 2023 to ensure that the sales targets can be met despite the current economic situation. As a result, the following data is available:

Budgeted sales:
POTS 60,000 units @$100 each	PANS 40,000 units @$125 each
Budgeted inventories:
	Beginning	Ending
Pots Pans Direct material (Granite) Direct material (Glass) Direct material (Handles)	20,000 8,000 32,000 kg 29,000 kg 6,000 units	25,000 10,000 36,000 kg 32,000 kg 7,000 units

Standard variable costs:

	POTS	PANS
Direct materials:
Granite	5kg @$8.00	$40.00	4kg@$8.00	$32.00
Glass	3kg @$5.00	15.00	3kg@$5.00	15.00
Handles	1 @$3.00	3.00
Total materials		58.00		47.00
Direct labour	2 hours @	24.00	3 hours @	48.00
Variable manufacturing overhead	$12.00		$16.00
	2 hours @	3.00	3 hours @	4.50
Total	$1.50	85.00	$1.50	99.50

Variable manufacturing overhead costs are $384,000 per quarter, while fixed factory overhead costs are $214,000 per quarter (including non-cash expenses of $156,000) and are allocated based on total units produced. Following is some financial information:

• The initial cash balance is $1.8 million.
• Sales are made on credit, with 50% collected in the current period and the remainder in the following period. The previous quarters sales totalled $8,400,000. There are no outstanding debts.
• Purchases of direct materials and labour costs are paid for in the quarter in which they are made.
• Manufacturing overhead expenses are paid in the quarter in which they are incurred.
• All selling and administrative expenses are fixed and paid in the quarter in which they are incurred. They are budgeted at $340,000 per quarter, including depreciation of

$90,000. Required: Prepare the following for the third quarter ending 30 September 2023:

2. Sales budget

Particula Pots Pans No. of units sold 60000 40000 Sale Price per unit 100 125 Total budgeted sales RM6000000 RM5000000

2. Production budget in units

particular pots pans Ending Inventories 2500 10000 Add number of units sold 6000 4000 Less beginning inventories 20000 8000 No. of units produced 65000 42000

2. Direct materials usage and purchase budget (Granite, Glass & Handles)

2. Direct labour budget

(Total 14 marks) Task 1b: CLO3 Question Following is some financial information:

• The initial cash balance is $1.8 million.
• Sales are made on credit, with 50% collected in the current period and the remainder in the following period. The previous quarters sales totalled $8,400,000. There are no outstanding debts.
• Purchases of direct materials and labour costs are paid for in the quarter in which they are made.
• Manufacturing overhead expenses are paid in the quarter in which they are incurred.
• All selling and administrative expenses are fixed and paid in the quarter in which they are incurred. They are budgeted at $340,000 per quarter, including depreciation of

$90,000. Required: Refer to the sales budget prepared in Task 1. Construct a cash budget for Alya Sdn. Bhd. for the third quarter ending 30 September 2023. (8 marks) (Total 8 marks) OBJECTIVE: To enable learners to utilise the Cost-Volume-Profit analysis in making informed decisions and cost-effective actions related to the products or services the business sells. REQUIREMENT: Cost-Volume-Profit analysis Task 1c: CLO2 Question Selasih Company is a manufacturer of aluminium restaurant containers. Due to the uncertain conditions in the Malaysian local market, Puan Atiqah, the owner of Selasih, believes an aggressive campaign is required next year. Therefore, the current year 2022 data is presented below and will be used in the campaign for the following year.

COST SCHEDULE
Variable Costs per Box		Fixed Costs per Month
	($)		($)
Manufacturing:		Manufacturing overhead	25,000
Direct materials	4	Selling and Administrative	110,000
Direct labour per unit	8	Total	135,000
Manufacturing overhead	3
Total	15

Puan Atiqah has set a sales target of $550,000 (22,000 units of the container) for 2023, which is 10% higher than the sales in 2022. For both years, the container is priced at $25 per year. Required:

2. Prepare a contribution margin income statement for the year 2022.

2. Calculate Selasihs break-even point in units and ringgit for the year 2022.

(5 marks) (6 marks)

2. Puan Atiqah believes that to attain sales in 2023. The company must incur an additional selling expense of $10,000 for advertising in 2023, with all other costs remaining constant. What will be the break-even point in $ sales for 2023 if the company spends the additional $10,000?

(4 marks)

2. Break-even analysis is of limited use to management because a company cannot survive by just breaking even. Do you agree with the statement? Explain.

(5 marks) (Total 20 marks) OBJECTIVE: To enable learners to explain ethical behaviour to managers and management accountants. REQUIREMENT: Ethical behaviour for managers and management accountants Task 1d: CLO1 Question Asma is a junior management accountant at Flower Cloth Ltd. Asma is tasked with compiling a cost-benefit analysis report on whether the company should purchase an expensive new machine from Radi Ltd, where her brother has been promoted to sales manager. Unfortunately, Asma kept the news of her brothers new job a secret from the rest of the Flower Cloth community. As a result, Asma overstates the qualitative benefits of the new machine while understating its costs to assist her brother in making his first sales as the companys new sales manager. Required: Discuss why and how Asma has deviated from the standards of ethical conduct. (8 marks) (Total 8 marks) QUESTION/ TASK 2 (50%): OBJECTIVE: To enable learners to use variance analysis to benchmark performance and further control organisational output, efficiency, and sustainability. REQUIREMENT: Standard Costing & Variance Analysis Task 2a: CLO3 Question Razi Company is a leather belt manufacturer based in Kelang, Selangor. For the most recent period, the company estimated 400 units of production. The following are the standard unit costs:

Leather Belt	Standard cost per unit ($)
Direct material (2m at $1.50 per meter) Direct labour (1.5 hours at $6 per hour) Variable production overhead (1.5 hours at $3.40)	3.00 9.00 5.10
	17.10

The budgeted and actual units produced for this period were 400 units. The costs incurred per unit are as follows.

Leather Belt	Actual cost per unit ($)
Direct material (2.1m at $1.60 per meter) Direct labour (1.4 hours at $6.50 per hour) Variable production overhead (1.4hours at $3.10)	3.36 9.10 4.34
	16.80

Required: Calculate the following variances based on the information provided and indicate whether they are Favourable (F) or Unfavourable(U). Explain the reasons for each of the variations that occurred.

2. Material price variance

2. Material usage variance

2. Direct labour rate variance

2. Direct labour efficiency variance

2. Variable overhead spending variance

2. Variable overhead efficiency variance

(4 marks) (4 marks) (4 marks) (4 marks) (4 marks) (4 marks) (Total 24 marks) OBJECTIVE: To enable learners to identify the relevant costs and benefits from costs and revenue information available in the financial database to aid timely decision-making. REQUIREMENT: Short term decision making Task 2b: CLO2 Question Ruby Airlines allows its passengers to join the Ruby Express Club, which entitles travellers to use the Clubs facilities at any Malaysian airport during their flight. In addition to a private lounge and restaurant, club members receive discounts on food and beverages and access to a small health spa. Like many other airlines worldwide, Ruby Airlines has seen its profits decline due to the COVID-19 pandemic movement restriction. The Club, in particular, has demonstrated a pattern of consistent loss. The recent statement follows:

Sales revenue	$150,000
Variable expenses: Food and beverages Personnel Variable overhead	(70,000) (40,000) (25,000)
Contribution margin	15,000
Fixed expenses: Club building Depreciation Supervisory salary Airport fees General overhead (allocated)	(30,000) (25,000) (15,000) (10,000)
Profit (loss)	(65,000)

If the Club is no longer operating, its variable expenses can be avoided. On the other hand, Ruby will continue to own the club building. If the Club closes, the supervisory staff will no longer be employed. Ruby will no longer be responsible for the airport fee. Required: Decide on whether Ruby should discontinue the club operations. Demonstrate your calculation. (14 marks) (Total 14 marks) OBJECTIVE: To enable learners to utilise financial ratios as a mechanism to evaluate a firms financial performance and identify areas for making decisions for improvement REQUIREMENT: Financial Statement Analysis Task 2c: CLO1 Question Refer to the following financial statements of Rara Sdn. Bhd. for the years 2022 and 2021: Rara Sdn. Bhd Balance Sheets 31 December (in millions)

	2022	2021
Assets
Current assets
Cash	$460	$444
Accounts receivable (net)	1,188	1,190
Inventories	1,132	1,056
Other current assets	247	225
Total current assets	3,027	2,915
Property (net)	3,281	3,128
Other assets	5,593	5,804
Total assets	$11,901	$11,847
Liabilities and Stockholders Equity
Current liabilities	$3,313	$3,184
Long-term liabilities	6,826	6,509
Stockholders equity common	1,762	2,154
Total liabilities and stockholders equity	$11,901	$11,847

Rara Sdn. Bhd Income Statements For the year ended 31 December (in millions)

	2022	2021
Net sales	$13,198	$12,397
Cost of goods sold	7,750	7,108
Gross profit	5,448	5,289
Selling and administrative expenses	3,472	3,299
Income from operations	1,976	1,990
Interest expense	233	248
Other (income) expense, net	11	0
Income before income taxes	1,732	1,742
Income tax expense	503	502
Net income	$1,229	$1,240

Required: Analyse Raras financial statement. Include the following ratios for 2022 and discuss your findings (2021 values are provided for comparison):

2. Current ratio (year 2021 0.92:1)
4. Inventory turnover (year 2021 7.2 times)
6. Debt to assets ratio (year 2021 82%)
8. Return on assets (year 2021 10.8%)
10. Profit margin (year 2021 10.0%)
12. Return on common stockholders equity (year 2021 56%)

(12 marks) (Total 12 marks) [GRAND TOTAL: 100 MARKS]

Attachments:

somali-1.docx