General Coursework Guidance

Each Groups data is different, do not use another Groups data!

Remember that depending on your choices and decisions not ALL data is necessary.

An analysis of the raw data of your assigned business for February 2022. Please note that some of the figures are quoted in months and others in years. You should be calculating PER MONTH. Complete your analysis using the businesss typical method for allocating overheads

GROUP 8 REPORT DATA

Business Introduction

Memorabilia Mementos Ltd. (MM) is an internationally trading geek brand with multiple lines of products. This year three of their products in their main line of t-shirts have been flagged for a routine review of costs for February 2022.

Typically, MM uses Traditional costing techniques based on Machine Hours to distribute its overheads between products. However, they are questioning if this is the best method to continue with based on this analysis.

They provide you with the following product information for February 2022:

I demand a trial by combat. T-shirts

Number of Units	14,000
Selling Price	12.00
Direct Material Usage (Code):
Cotton	2m
Elastic	0.3m
Decoration	0.8m
Direct Labour Hours	0.8
Units per Machine Setup	100
Hours in each Machine Department:
Department A	0.6
Department B	0.2
Department C	0.2
Units per Quality Inspection	100

Who wants to be king? T-shirts

Number of Units	13,000
Selling Price	7.50
Direct Material Usage (Code):
Cotton	1m
Elastic	0.3m
Decoration	0.5m
Direct Labour Hours	0.5
Units per Machine Setup	200
Hours in each Machine Department:
Department A	0.2
Department B	0.1
Department C	0.2
Units per Quality Inspection	100

Easy peasy, lemon squeezy. T-shirts

Number of Units	14,000
Selling Price	10.00
Direct Material Usage (Code):
Cotton	2m
Elastic	0.3m
Decoration	1m
Direct Labour Hours	0.5
Units per Machine Setup	100
Hours in each Machine Department:
Department A	0.8
Department B	0.1
Department C	0.1
Units per Quality Inspection	100

Costs of the Company

Material Costs

Materials are supplied by the main factorys supplier in bulk. They have agreed to keep their prices fixed until April 2022.

The current rate for materials is as follows:

Material Code	Cost per Metre.
Cotton	1.20
Elastic	0.10
Decoration	0.25

Labour Costs

Direct Labour is 8.50 per hour.

Managers are paid a fixed salary of 30,000 per annum. There are four managers assigned to work with these products.

Couriers handle the deliveries of supplies and products from the factory to both the storage unit and the customers. The couriers are paid a fixed salary of 15,000 each, there are two couriers currently working associated with these products.

Office staff are currently paid a fixed salary of 18,000 a year and there are two handling these products within the office building.

Machine Department Costs

The following costs are the total estimates for the month in the Machine Departments:

Activity	Estimated Cost
Set Up Machines	2,000.00
Machining	7,000.00
Inspections	4,000.00

Building Costs

MM has three different and separate buildings, a factory, a storage facility, and a main office space. All costs have already been broken down to their relevant amounts based on floor space required for the products under review. All equipment was bought in bulk to secure a bulk purchase discount and all equipment depreciates in a straight line over 10 years, this is also considered the expected lifespan of the equipment. Each buildings costs are as follows:

Factory Costs:

Annual Rent	60,000.00
Equipment Purchase Price	60,000.00
Year of Equipment Purchase	2014

Storage Costs:

Annual Rent	24,000.00
Equipment Purchase Price	1,200
Year of Equipment Purchase	2013

Office Costs:

Annual Rent	2,400
Equipment Purchase Price	1,800
Year of Equipment Purchase	2019

Inhouse Costs

MM Ltd has one service department in the main factory to maintain the machinery in the machine departments. This service department has estimated 20,000 of annual costs associated with these products, plus an extra 4,000 for the machine in the back corner of the factory has begun to stall mid-production a couple of times a week.

Outsourced Costs

MM has a standing contract with Marketing Ltd. for their marketing needs. The associated costs of the contract for these products are agreed on a yearly basis for 24,000. Currently their renewal is due in May. The contract is for the yearly amount to be paid equally per month.

MM also outsources their HR requirements with HR Needs Ltd. Annually this costs MM 144,000, however, only one quarter of this cost is considered applicable to these products. The contract is for the yearly amount to be paid equally per month.

Additional Considerations

Target Profit should be 10% of each Products Sale Value.

Required:

• Contribution per Product
• Profit Volume Ratio per Product (per and Overall Profit)
• Break Even Point per Product (Units and Sales Value)
• Margin of Safety per Product (Units and Percentage)
• Target Profit Analysis per Product (Units)