QUESTION 1 Today is 2" January 2022 and you have received an email from the Finance and Accounts Manager, Miss Farra Amber. From : Finance and Accounts Manager Sent : 2" January 2022 Subject : Performance report for the year 2021 Dear Management Accountant, Good day! I will be attending a meeting on the 6" January 2022 at 3 pm. Based on the forecasted figures and previous year's financial statement, can you please email me the performance report for the year 20217 Please include explanations on overall performance and the advantages of using flexible budgetary control system over static budget. I have heard about a few techniques of budgeting. Some of them seem useful for our company. Currently, we are applying the zero-based budgeting in order to forecast our future costs, however it is time consuming Are there any other techniques that we can apply? Can you please find some information about other techniques and its pros and cons so that I can highlight in the meeting? Hope to receive a prompt reply from you. Sincerely, Miss Farra Amber Finance and Account Manager Required: As the management accountant of Marvel Getaways, evaluate the company's overall performance for the year ended 31 December 2021 using the feedforward concept. (Prepare the performance report and show all workings) (6 marks) Briefly explain FOUR (4) advantages of using flexible budgetary control system over static budget. (4 marks) iiij Discuss TWO (2) types of budgeting techniques. Your answer should include the explanation on advantages and disadvantages of budgeting techniques. (6 marks) (Total: 16 marks)QUESTION 2 Today is 10 January 2022 and you have received the following email from Miss Farra Amber. From : Finance and Accounts Manager Sent : 10 January 2022 Subject : Analysis on tour package Dear Management Accountant, Thank you for the prompt reply in providing the performance report for 2021. During the previous management meeting, the Sales and Marketing manager, Ms Emmy had highlighted that there has been a decreasing demand for certain tour packages for the past few years due to Covid-19 pandemic. The management team is now considering eliminating the tour package that appears to be unprofitable. After careful analysis, I noticed that perhaps it will be feasible for the company to just focus on the private and solo tour instead of the group tour due to the net operating losses recorded. Kindly refer to the following Statement of Profit or Loss of tour package for the year 2021. Group Tour Private Solo Tour Total Tour Sales 50,000 125,000 75,000 250,000 Variable costs 30,000 50,000 25,000 105,000 Contribution margin 20,000 75,000 50,000 145,000 Fixed costs: Salaries 8,000 29,500 12,500 50,000 Advertising 6,500 1,000 7,500 15,000 Utilities 1,000 500 500 2,000 Depreciation-office 2,000 1,000 2,000 5,000 equipment Depreciation-motor 4,000 10,000 6,000 20,000 vehicle Insurance 500 2,000 500 3,000 General administrative 6,000 15,000 9,000 30,000 28,000 59,000 38,000 125,000 Net operating profit / (8.000] 16,000 12,000 20.000 (loss)Continuation.. Based on the statement above and the information as per discussed by the management team with regards to dropping the said tour package, I will need your help to prepare a comparative Statement of Profit or Loss to show effect on company's profitability. Kindly comment based on your findings and please help to explain qualitative factors to be considered when deciding to eliminate the tour package. Sincerely, Miss Farra Amber Finance and Account Manager Required: Prepare a comparative Statement of Profit or Loss to show the effect on the Marvel Getaways profitability if group tour is dropped. (9 marks) ii. Advise Marvel Getaways whether they should drop or continue the group tour. (2 marks) ifi. Briefly explain TWO (2) qualitative factors to be considered when the company is considering dropping the tour package. (4 marks) (Total: 15 marks)QUESTION 3 Today is 13 January 2022 and you have received the following email from Miss Farra Amber. From : Finance and Accounts Manager Sent : 13 January 2022 Subject : Request for information on pricing strategies Dear Management Accountant, Good day! Earlier today I had a lunch meeting with Mr Ritz, our IT Manager, We were discussing about the effect of the Covid-19 pandemic on our travel and tourism industry. He emphasized that the most important strategy for survival is to co-exist with technology. Having said that, travel and tour agencies like Marvel Getaways must exploit technologies and align with the evolving technologies if we wish to retain and attract new customers. Interestingly, Mr Ritz proposed on the idea of setting up virtual tourism. He explained that in the tourism industry, virtual reality (VR) has been most commonly used as a marketing tool for quite some time now. Fuelled by technological developments, internet usage worldwide and closely linked with the concept of smart tourism, virtual tourism activities are now seen in many parts of the travel and tourism industry. He further added that travel operators and tourist attractions have been using VR as a means of promoting virtual reality tourism and thus, hoping that the VR experience will entice tourists and bring in new business. In its simplest form, virtual tourism may comprise of a video of a tourism destination. The 'tourist' watches the video, utilising their hearing and sight senses through use of a headset or simulator. To come up with virtual tourism video contents and software application, the management has agreed that we will need to sit down and discuss with Marvel Productions S/B, another wholly owned subsidiary of Marvel Isus Bhd to provide us with a quotation before we agree on the transfer price set. As pricing is very important, please kindly advise the implications when using marginal cost and full cost-plus mark-up as transfer price. Not forgetting, to also include notes on some pricing strategies that we can implement once the package has been successfully developed and so that our business can remain sustainable whilst achieve a competitive advantage over others. Sincerely, Miss Farra Amber Finance and Account ManagerRequired: i. Briefly explain FIVE (5) common pricing strategies that Marvel Getaways can use to determine price of the virtual tourism package. Your answers should include both advantages and disadvantages of each strategy. (10 marks) Propose one appropriate pricing strategy to be used by Marvel Getaways considering the current economic conditions with relevant justifications. (5 marks) Briefly discuss the implications when management of Marvel Productions S/B and Marvel Getaways S/B use the following cost-based approaches for transfer pricing: a. Marginal cost b. Full cost-plus mark-up (4 marks) (Total: 19 marks) (Grand total: 50 marks)BUSINESS DILEMMA Managing travel is not an easy task. Business travel involves several different stakeholders with different interests to defend. Travel managers need to develop relationships with travelers, with decision-makers in their own organizations (who are also frequent travelers themselves), with suppliers (airlines, train companies, hotel chains, etc.) and other travel agencies. All these relationships involve both mutual interests and potential conflicts. For travel agencies, crisis situations are escalating for two additional reasons. The first includes the growing tendencies of airlines to reduce and sometimes eliminate the commissions paid to agents. The second trend includes the growing popularity of internet- based reservation systems, which are a more accessible and sometimes less expensive alternative to the traditional travel agent. This obviously creates a dilemma for travel managers, who generally want their travelers to use the travel agency for all reservations to control travel behavior and travel volumes. As long as travel agents receive significant commissions from the airlines, based on sales volume, they also have an interest in selling expensive tickets. Previously, the general perception was therefore that travel agents were acting in the interest of the suppliers concerning their clients. Today, travel agents receive most of their income from their clients, their business concepts include assisting their corporate clients in their travel management work, and their role has largely become to act in their clients' interest. Furthermore, the Covid-19 pandemic had hit international travel hard. Thus, a more daunting question now concerns Covid-19 is will markets return to normal once the community completes their Covid-19 vaccines? Globally for the travel industry, it will take some time for them to be able to run smoothly again. With travel restrictions being applied, no one knows for certain how long it is going to take before groups can travel abroad again. It is important to note that, travel, like any activity that involves coming into contact with other people from different households, is not risk-free even after full vaccination. Good news as revealed by the World Health Organization, is that having the required number of doses and giving time for the vaccines to take effect significantly reduces one's risk of becoming seriously ill and spreading the virus to others. They highlighted that even with a full course of vaccination, all travelers must continue to adhere to social distancing, masking, and hand- washing guidelines whether their trips are domestic or international. Travel and tour agencies like Marvel Getaways are also severely affected due to the pandemic. In a recent management meeting, it was highlighted by the Finance and Accounts Manager that certain tour packages were poorly performing and had contributed to the decreasing in profit. The management is in the midst of considering eliminating tour package that is reported to be unprofitable. The following information was discussed by the team with regards to the consideration for dropping the said tour package (Group / Private / Solo): 1- The salaries represent salaries paid to employees working directly on the tour package. All the employees working in the tour package would be discharged if the package is dropped.2. The advertising represents advertisement and marketing that are specific to each tour and are avoidable if the tour is dropped. 3. The utilities represent utilities cost for the entire company. The amount charged to each tour is an allocation based and is not avoidable if the tour is dropped. 4 The depreciation represents depreciation on office equipment and motor vehicle used to process the tour package. The office equipment and motor vehicle will have no resale value if tour is dropped. 5. The insurance is for the tour package. If tour is dropped, the insurance will decrease accordingly. 6. The general administrative represent the cost of accounting and general management expense which are allocated to each tour. These costs will not change if the tour is dropped. 7. The variable cost of the group tour will be eliminated by 100% if this tour is dropped. MARVEL GETAWAYS S/B FINANCIAL MATTERS: SOME KEY HIGHLIGHTS Extracted Financial Statement Marvel Getaways Son Bhd Statement of Profit or Loss for the year ended 31 December 2021 2020 RM RM Revenue 556,500 350,000 Cost of sales (11 1,300) (70,000) Gross profit 445,200 280,000 Selling expenses (27,163) (23,700) Administrative expenses (259,260) (155,400) Finance costs (5,000) (5,000) Profit before tax 153,777 95,900 Taxation (26,142) (16,303) Profit for the year 127,635 79,597Manrl Forecast There are 3 main products of Marvel Travel & Tour which consist of ticket sales, tour packages and hotel accommodation booking. Forecast Yearly Sales according to the respective product are as follows: Products 2021 (RM) 2022 (RM) Ticket sales 218,300 193,300 Tour Package 130,300 102,900 Hotel accommodation 83,200 72,200 The ticket sales are basically commission received from several airlines, bus and train companies in Malaysia. The costs associated with the forecasts sales of each product are as follows: Products 2021 (RM) 2022 (RM) Ticket sales: Airline 13,900 18,800 BUS 13,400 12,300 Train 11,300 16,800 Tour Package: Group Tour 14,300 14,100 Private Tour 13,100 12,900 Solo Tour 11,800 1,800 Hotel Accommodation 8% from its revenue 8% from its revenueThe selling expenses consists of variable and fixed expenses. The fixed portion of selling expenses amounted to RM 8,000 and the variable selling expenses is estimated to be 5% of the total forecasted yearly sales. The administrative expenses are estimated according to certain number of overhead and consists of: Overhead 2021 (RM) 2022 (RM) Rental 10,000 10,000 Depreciation of vehicles 25.500 25,500 Wages and salaries 144,600 139,300 Depreciation of office 10,500 10,500 equipment General administrative 14.400 13,500 expenses RELEVANT NEWS ON TRAVEL AND TOUR INDUSTRY https://www.thestar.com.my/lifestyle/travel/2021/03/10/malaysia-recorded-039massive- drop039-of-834-in-tourist-arrivals-in-2020 https://www.thestar.com.my/lifestyle/travel/2021/03/09/039revenge-tourists030-to-boost- domestic-travel-sector-says-tourism-malaysia-dg