Kindly answer every questions as detailed as possible please I'm begging you this is due July 15 12:00 am Philippine time... Please this is an individual project, and it will determine my grade

MANAGEMENT ACCOUNTING GROUP CASE Special Term, School Year 2014-2015 Panda Motors Panda Motors is a small company that produces motors for specialized equipment sold primarily to research laboratories and a major Philippine defense contractor. The operation is family owned and has been in business for 15 years. The company produces and sells three motors, named Motor 5, Motor 10, and Motor 15. Benedict was recently hired as an accountant and reports to the controller, Mel. Benedict has been performing routine types of accounting work, but he would like to become more involved in cost control and in analyses to help the managers make decisions. Recently, he performed a cost-volume-profit analysis of the company's three products, as shown below. The analysis was based on data from last year's accounting records. Prior Year Data Sales at capacity (units) Actual volume (units) Price per unit Total revenue Variable cost per unit Total variable cost Fixed costs Operating profit Ratios: Variable cost to sales Contribution margin ratio Utilization of capacity Breakeven point: Units Revenues Aggregate 300,000 250,000 P113.60 P28,400,000 P85.60 P21,400,000 P6,000,000 P1,000,000 Motor 5 Motor 10 Motor 15 120,000 P140.00 P16,800,000 P125.00 P15,000,000 P900,000 P900,000 80,000 P120.00 P9,600,000 P62.50 P5,000,000 P4,500,000 P100,000 50,000 P40.00 P2,000,000 P28.00 P1,400,000 P600,000 P0 75.352% 24.648% 83.333% 89.286% 10.714% 40.000% 52.083% 47.917% 26.667% 70.000% 30.000% 16.667% 214,286 P24,342,857 1 Benedict asked Mel for an opportunity to present his CVP analysis at the next weekly managers' meeting. Mel had used CVP in the past, but had not formally presented it to the managers. She asked Benedict if he had updated the prior year's information for expected changes. Benedict said he had thought about doing that, but did not know where to get that kind of information. Mel suggested that he bring his laptop to the meeting and ask for updated information from the managers at the meeting. The following managers attended the meeting: Mrs. Tigress, Manufacturing Manager Mr. Po, Sales Manager Mr. Mantis, Purchasing Department Manager Mrs. Viper, Research and Development Manager Mr. Shifu, Engineering Manager Mr. Tai Lung, Vice President Mel introduced Benedict to the people he had not already met, and then the meeting began. Benedict's presentation was the last item on the agenda, and Mel finally introduced him and explained Benedict's interest in cost control and analysis. Benedict distributed copies of his CVP data and chart. He described the calculations and explained how the chart indicated a profitable year, if the volume of sales activity continued as it had in the past. He explained that he had not had time to update the information and would like others at the meeting to give him information that would improve his projections. Following are the comments at the meeting. Mrs. Tigress, Manufacturing Manager: You know, Benedict, the sales department estimates that unit sales should increase next year. And we're at over 80% capacity now. I'm not sure about the exact size of the increase, but I know that we'll be pushing the limits of our capacity, at least. Benedict: Once we estimate the sales volume, I can just put that into my projections and we'll know a lot more about next year's profits. 2 Mrs. Tigress: Here's the problem, though. If we increase production above 90 percent of capacity, we'll need to invest more to operate the plant. We're already planning to buy equipment that will increase fixed costs by at least P25,000 a month. In addition, at 90 percent of plant capacity we'll face bottlenecks, and production might slow down some. And from your data, it looks like Motor 15 is not really profitable. What if we drop it? That would ease the capacity problems. Benedict: Well, I'm not sure exactly what will happen if we drop Motor 15. I've just spread the fixed costs across the units using an allocation. I'm not sure how fixed costs would change if we drop Motor 15. Mr. Po, Sales Manager: Why do you want to drop Motor 15? Motor 5 is the product with slowing sales. I expect it to drop by at least 20,000 units next year. But we ought to pick up that 20,000 and maybe another 25,000 from Motor 15 production. Motor 10 sales haven't changed for a while and should continue to remain pretty stable. Benedict: Well, I'll make those changes. Mr. Po: Wait, there's more. We've been thinking about changing the price for Motor 15. I think we're suffering from reputation problems with that motor. Some of our customers have asked if we're maintaining our usual quality at that low price. My sales people seem to think that we could increase the price by 25% and still increase sales. Mr. Tai Lung, Vice President: As long as you're considering possible changes for next year, let's see what I can add to the picture. First, it seems that taxes aren't considered here. We always give the government about 30% of our profits. And then we'll need to keep some money back for reinvestment. We've got to buy that equipment to increase capacity, and that will require another P500,000, at least. Second, the union wants a raise for the production crew. Our variable costs will probably increase by at least 5%. If we give those people an increase, we'd better be thinking about raises for management, too. We usually give bonuses based on profits and set aside maybe P500,000 for that. In addition, maybe we need to revisit the way that we give bonuses to the sales force. They get their salaries, plus a commission per unit based on price. Maybe we should base their bonus on the contribution margin they bring in, instead of sales. Third, I guess it's time to change our product emphasis. No one seems to know which motor is most profitable. The sales staff are just responding to demand and not really pushing any of our motors. Right now Motor 5 is still covering its costs, but if we produce more of Motor 15, it's likely that Motor 5 will become a loser for us. Maybe it's time that we drop it. Can you incorporate these changes right now? 3 Mel: Thanks, Mr. Tai Lung. I thought we'd get a good discussion going about future plans once Benedict made his presentation. This CVP approach is something that we haven't used before, but as you can see, you've all got information to share. Benedict will need some time to rework his analysis with this new information, but I'm sure he can get a revision out to us by tomorrow morning. It seems that Benedict's presentation is based on some important assumptions. Most of the questions that were raised were really about those assumptions. It might help us all if Benedict lists those assumptions so that we can see how they influence the analysis. Then, he'll have to incorporate the increase in unit sales and see what's going on with individual product lines. Also, let's see how things change with changes in product mix, and we may want to drop Motor 5. Benedict will have to incorporate price changes and consider taxes, investment, and raises. Then he can look at the effect of product emphasis. That should about do it. Once we get Benedict's revised analysis, we can all take a look at the numbers and think about them for a few days. We'll meet again next week. Benedict can bring the laptop, and we can do some \"what if\" analysis on the spot. As she was leaving, Mrs. Tigress said, \"Benedict, before we meet next time, go down to the production floor and get information. It's a waste of time for all of us to meet just to give you information. And send the CVP out ahead so we can think more about changes that could occur next year. Also, bring a computer projector so we can all see how any changes affect overall results, then we can make plans for the next period with better information, and we'll not be caught off guard so often. Benedict was annoyed that Mel hadn't told him to go down to the production floor and over to marketing earlier. He also realized that he should have thought about bringing a projector. When he asked Mel about it, she said, \"Sometimes when we're introducing a new type of analysis, people need to understand how important their information is to us. Today several people contributed important pieces of information that affect the accuracy of our results. Next time you go out to ask for it, they'll know that they need to give us their best estimates. Otherwise, they might just give us something off the top of their heads because they don't want to take time from other tasks. Required: A. Describe the assumptions implicit in Benedict's calculation of the breakeven point. (List the general assumptions of CVP analysis, and then apply those assumptions specifically to this case.) B. Using the information given to Benedict during the meeting, prepare a revised CVP analysis. Use a spreadsheet designed to allow you to perform sensitivity analyses. Explain the various decisions you made for volumes, selling prices, costs, and sales mix. 4 C. Calculate the margin of safety in revenues and the operating leverage. D. Does it appear that the company should drop any of its motors? Explain. E. Perform the following sensitivity analyses: 1. At what level of operations will the investment in capacity be covered, ignoring the anticipated increase in labor costs and salaries? 2. At what level of operations will the company be able to meet union demands, ignoring any bonuses for management? 3. At what level of operations will the company be able to increase capacity and give laborers and management raises? 4. How much can the company spend on new investments for additional capacity, above the planned level of investment? F. Explain how and why biases might affect the CVP analysis for this company. G. Suppose you are Benedict, and you would like to obtain more information to improve the quality of your CVP analysis. List several pieces of information you would like to obtain. For each piece of information, explain its usefulness and identify where you might obtain it. H. How might the managers of Panda Motors use CVP analysis? Identify several different types of decisions they might make and explain how CVP analysis could be useful for each decision. Paper size: Letter (8.5\" x 11\") Margins: o Top: 1\" o Bottom: 1\" o Left: 1.5\" o Right: 1\" Font and font size: Times New Roman 12 Paragraph and alignment: Justified Line Spacing: Single Covering Page should include: o Names of the group members (alphabetically arranged with seat numbers) o ACCTBA3/ACTMANA Section o Date Submitted o Submitted to (Name of Professor) Number of pages (excluding the covering page): o Minimum: 5pages o Maximum: 8 pages o Note: Insert page number except on the cover page Deadline: Upon discretion of Faculty or o MW class: July 13, 2015 (Monday) o TH class: July 14, 2015 (Tuesday) Please be reminded of the Student Handbook policy on \"Academic Honesty\". 5