You have been hired as project consultant by a hotel group, Viago group. The group prepares financial statements on a quarterly basis. you are required to provide consultancy to viago on two accounts, resulting in two tasks for you:

im only working on part 2

FN3140 Project PROJECT: FINANCE AND ACCOUNTING IN PROJECT MANAGEMENT Project Introduction: As a project management analyst or consultant, you will be required to employ financial and managerial accounting information for project-related decisions. In this project, you will be able to use and showcase similar skills of using financial information for decision making. In Part 1 of the project, you will help a heavymachinery industry make a business decision involving the selection of a supplier. In Part 2, you will recommend business strategies for a hospitality business and prepare a cash budget for the company's new line of business. Course Learning Objectives Covered: Analyze the role of accounting and finance in project management decision making. Analyze financial statements. Create operating and financial budgets. Calculate the impact of interest rates and the time value of money on the return of a project. PROJECT SUBMISSION P LAN Project Description/Requirements of Project Part Part Evaluation Criteria Project Assessment Preparation Checklist: Project Part 1: Part 1 To prepare for this assessment: The project rubric will Read Chapter 6 from your textbook, Accounting and be used to evaluate Finance for Non-Specialists. Pay close attention to this assessment. Example 6.1 (pp. 183-184), Example 6.2 (p. 199), and Example 6.3 (pp. 203-204), which showcase calculation and interpretation of financial ratios. Go through the lesson for Module 3, which demonstrates calculations and interpretations of financial ratios. 1 FN3140 Project Project Description/Requirements of Project Part Part Evaluation Criteria Title: Financial Accounting Skills You are considering Joints and Fixes Limited as a prospective supplier for your company, H. M. Industries. Joints and Fixes Limited manufactures nuts and bolts, which are sold to industrial users. The financial statements for years 2011 and 2012 are given: Abbreviated financial statements for 2011 Income Statements for the Year Ended 30 June 2011 ($) 2012 ($) Revenue 1,180 1,200 Cost of sales (680) (750) Gross profit 500 450 (200) (208) Depreciation (66) (75) Operating profit 234 167 (-) (8) Profit before taxation 234 159 Taxation (80) (48) Profit for the year 154 111 Operating expenses Interest Abbreviated financial statements for 2012 Statements of Financial Position as at 30 June 2011 ($) 2012 ($) 702 687 148 236 ASSETS Noncurrent Assets Property, plant, and equipment............................... Current Assets Inventories.............................. 2 FN3140 Project Project Part Description/Requirements of Project Part Evaluation Criteria Trade receivables................... 102 156 Cash......................................... 3 4 253 396 955 1,083 shares, fully paid).................... 500 500 Retained earnings................... 256 295 756 795 - 50 Trade payables......................... 60 76 Other payables and accruals.. 18 16 Taxation................................... 40 24 81 122 199 238 955 1,083 Total Assets EQUITY AND LIABILITIES Equity Ordinary share capital ($1 Noncurrent Liabilities Borrowings-Bank loan Current Liabilities Short-term borrowings (all bank overdraft)....................... Total Equity and Liabilities Dividends were paid on ordinary shares of $70,000 and $72,000 for the years 2011 and 2012, respectively. 3 FN3140 Project Project Description/Requirements of Project Part Part Evaluation Criteria Use the given information to: Calculate the following financial ratios for both 2011 and 2012 (using year-end figures for statement of financial position items): o Return in capital employed o Operating profit margin o Settlement period for trade receivables o Settlement period for trade payables o Inventory turnover period Comment on the performance of Joints and Fixes Limited from the viewpoint of considering supplying a substantial amount of goods to Joints and Fixes Limited on usual trade credit terms. Submission Requirements: Answer each problem in detail with a conclusion and results. Submit your answer in a Microsoft Excel file, showing step-by-step calculations. Due: Module 3 Grading Weight: 8% Project Assessment Preparation Checklist: Project Part 2: Part 2 To complete this assessment: The project rubric will 4 Read Chapter 7 from your textbook, Accounting and be used to evaluate Finance for Non-Specialists. Pay close attention to the this assessment. FN3140 Project Project Description/Requirements of Project Part Part Evaluation Criteria topic \"Using Contribution to Make Decisions: Marginal Analysis\" from pp. 254-261. Task 1 of this assessment will require you to employ a marginal analysis to make decisions. Go through the topic \"Preparing the Cash Budget\" from pp. 319-321 from your textbook, Accounting and Finance for Non-Specialists. This information will be useful in creating a cash budget, which is the second task of Project Part 2. Pay close attention to Example 9.1 and Activities 9.5 and 9.6. Go through the lessons for Modules 4 and 5, which demonstrate the application of marginal costing in decision making and the preparation of cash budget, respectively. Title: Management Accounting Skills You have been hired as project consultant by a hotel group, Viago Group. The group prepares financial statements on a quarterly basis. You are required to provide consultancy to Viago on two accounts, resulting in two tasks for you: Task 1 You have been asked to review the performance of the group's hotel in Scotland. You have in front of you the results for this year (based on some actual results and some forecasts to the end of this year): Quarter Sales Revenue ($) Profit/ Loss ($) 5 1 400 (280) 2 1,200 360 FN3140 Project Project Part Description/Requirements of Project Part Evaluation Criteria 3 1,600 680 4 800 40 Total 4,000 800 Additional Information: o The total estimated number of guests (guest nights) for this year is 50,000, with each guest night being charged at the same rate. o The results follow a regular pattern; there are no unexpected cost fluctuations beyond the seasonal trading pattern. For next year, an increase in unit variable cost of 10 percent and a profit target for the hotel of $1 million is anticipated. These need to be incorporated into the hotel's plans. Help the management at Viago by: o Calculating the total variable and total fixed cost of the hotel for this year. Show the provisional annual results for this year in total, showing the variable and fixed costs separately. Also, show the revenue and cost per guest. o Determining: The required revenue rate per guest to meet the profit target, if there is no increase in guests for the next year. 6 FN3140 Project Project Description/Requirements of Project Part Part The number of guests required to meet the profit target, if the required revenue rate per guest is not raised above this year's level. Task 2 Viago is also planning to launch a memorabilia chain by the name Memories Unlimited. The new business will start production on 1 April, but sales will not start until 1 May. Planned sales for the next nine months are as follows: Months Sales Units May 500 June 600 July 700 August 800 September 900 October 900 November 900 December 800 January 700 The additional information available includes: o The selling price of a unit will be a consistent $100 and all sales will be made on one month's credit. 7 Evaluation Criteria FN3140 Project Project Part Description/Requirements of Project Part o It is planned that sufficient finished goods inventories for each month's sales should be available at the end of the previous month. o Raw materials purchases will be such that there will be sufficient raw materials inventories available at the end of each month to meet precisely the following month's planned production. This planned policy will operate from the end of April. o Purchases of raw materials will be on one month's credit. o The cost of raw material is $40 a unit of finished product. o The direct labor cost, which is variable with the level of production, is planned to be $20 a unit of finished production. o Production overheads are planned to be $20,000 each month, including $3,000 for depreciation. o Nonproduction overheads are planned to be $11,000 a month, of which $1,000 will be depreciation. o Various noncurrent (fixed) assets costing $250,000 will be bought and paid for during April. o Except where specified, assume that all payments take place in the same month as the cost is incurred. 8 Evaluation Criteria FN3140 Project Project Part Description/Requirements of Project Part o Evaluation Criteria The business will raise $300,000 in cash from a share issue in April. Based on the given data, draw the cash budget for Memories Unlimited. Task 3 A subsidiary of Viago, Lip Smackers Ltd., deals in baked goods. In recent months, the business has been under pressure from its suppliers to reduce the average credit period taken from three months to one month. As a result, the directors approached the Oscar bank to ask for an increase in the existing overdraft for one year, to be able to comply with the suppliers' demands. The most recent financial statements of the business are as follows: Statement of Financial Position as of May 31 ASSETS $ Noncurrent Assets Property, plant, and equipment 74,000 Current Assets Inventories at cost Trade receivables 198,000 3,000 201,000 Total Assets 275,000 EQUITY AND LIABILITIES Equity $1 ordinary shares 9 20,000 FN3140 Project Project Part Description/Requirements of Project Part General reserve Evaluation Criteria 4,000 Retained earnings 17,000 41,000 Noncurrent Liabilities Borrowings: Loan notes 40,000 repayable in just over one year's time Current Liabilities 162,000 Trade payables 10,000 Accrued expenses 17,000 Borrowings: Bank overdraft 5,000 Taxation 194,000 Total Equity and Liabilities 275,000 Abbreviated Income Statement for the Year Ended May 31 Sales revenue Operating profit 38,000 Interest charges (5000) Profit before taxation 33,000 Taxation 10 $740,000 (10,000) FN3140 Project Project Description/Requirements of Project Part Part Profit for the year Evaluation Criteria 23,000 A dividend of $23,000 was paid for the year. Additional information: o The loan notes are secured by personal guarantees from the directors. o The current overdraft bears an interest rate of 12 percent a year. Answer the following questions for Lip Smackers: o Identify and state the major factors that a bank would take into account before deciding whether to grant an increase in the overdraft of a business. o In your opinion, should the bank grant the required increase in the overdraft for Lip Smackers Ltd.? Submission Requirements: Answer each problem in detail with a conclusion and results. Submit your answer in a Microsoft Excel file, showing step-by-step calculations for each task. Due: Module 5 11 FN3140 Project Project Part Description/Requirements of Project Part Grading Weight: 12% 12 Evaluation Criteria