General Scenario:

You are a management accountant trainee at a management accounting consultancy office, which has clients from various types and sizes of businesses with different consultancy needs and requirements. During your training period, you need to achieve different tasks and pass a particular exa.m in order to demonstrate and prove your ability and readiness that make you qualified to join this office as a full time management accountant.

Assignments Brief

Task 2: learning outcome 2

1. Scenario 1

A project requires an initial investment of 170,000 with an expected useful life of 8 years. The project will provide an annual cash flow of 30,000 per year with an annual discount rate of 10%. If you know that the accepted payback period for such this project is 6 years.

Instruction: evaluate the viability and the usefulness of this project by applying at least three capital budgeting techniques.

Scenario 2

The following table shows the relevant information regarding the process of producing a particular product for one of the local manufacturing business.

Instruction:

Use the given information to evaluate the business performance by applying a range of Management accounting techniques including:

2. Contribution Margin calculation.
3. Break-Even Analysis.
4. Target Profit Analysis
5. The Margin of Safety

Account	Balance	Units
Selling price	90
Variable cost /unit	65
Fixed cost	80,000
Target profit	90,000
Expected Sales		4000

Scenario 1

1-Payback Period

Definition:

Calculations:

Advantage	Disadvantage

Conclusion:

2-NPV

Definition:

Calculations:

Advantage	Disadvantage

Conclusion:

3-PI

Definition:

Calculations:

Advantage	Disadvantage

Conclusion:

Scenario 2:

1. Contribution margin

Definition:

Calculations:

1. Contribution margin per unit

2. Contribution margin ratio

Advantage	Disadvantage

Conclusion:

2. BEP

Definition:

Calculations:

3. BEP in units

4. BEP in pounds

Advantage	Disadvantage

Conclusion:

3. Margin of safety

Definition:

Calculations:

1. Margin of safety

2. Margin of safety %

Advantage	Disadvantage

Conclusion:

4-Target profit

Definition:

Calculations:

1-In units

2- in pounds

Advantage	Disadvantage

Conclusion: