You have been asked to carry out an analysis of next years figures for two of the groups businesses to support decision-making. You are required to: Analyse breakeven data from the information about ABC Production Limited provided in Appendix 2. You should calculate breakeven and give an explanation of what this means for the business Analyse the cash position of Active Sport Gym and Leisure Shop from the information in Appendix 3. You should prepare the cash budget and give an explanation of what this means for the business Extension activity To achieve a Merit, your analysis must also include an assessment of the implications of changes in costs and revenue on the breakeven and cash budget, using examples related to the breakeven analysis and cash budget you have prepared. To achieve a Distinction, your analysis must also include an evaluation of the usefulness of management accounting techniques to support business success.

ABC Production Ltd produces sports bags. Its costs and sales for the year ended 31 December were as follows: The selling price and all costs were at a constant rate throughout the year. To improve profit for the next year, the following changes are planned: (i) Units to be sold to increase by 10% (ii) Selling price to be maintained at the current price (iii) Wages to be increased by 3% per unit (iv) Material costs to be reduced by 5% per unit, this being achieved by changing from a local supplier to an overseas supplier (v) Variable overheads to be reduced by 0.45 per unit (vi) Fixed costs to increase by 7500 per annum Prepare a three-month Cash Budget for Active Sport Gym and Leisure Shop to estimate the cash balance at the end of April from the following information. The projected Bank Account balance on 1 January is 32180 Projected Shop Sales Figures: Credit customers pay one month after the month of sale. Projected Gym Takings: January - 22 400 February - 22 400 March - 10% increase on February April - 500 increase on March Estimated Purchases: All purchases are on credit and suppliers are paid one month after goods are bought. December - 3000 January - 500 less than December February 10% increase on January March - Same as February April - 12% increase on March Expenses: Wages are 11000 per month. A 5% wage increase is expected from 1 April. Light and Heat is 550 per month. An 8% increase is expected from 1 March. Maintenance is carried out three times a year - February, June and October. This costs 55500 per year. General expenses are estimated at 30000 per year, paid every 2 months starting in February