Your Finance Director has asked you to provide a consultancy service to the newly appointed Profit Center manager responsible for the service contract business. Describe the advice you would give to assist the achievement of the financial target. Consider the following points,

1. The primary objective of the manager is to maximize the total profit that the three service contracts earn.
2. You discovered there is a shortage of labor (only 80% capacity could be utilized with the labor available)
3. The manager responded by looking more into profitable contract services only
4. The manager assumed the fixed overheads remained constant throughout the period

Recently Midal Water wants to expand its business and is looking for additional funds. The Procurement Policy states that the company should raise funds through equity rather than additional loans.

1. Critically review the principle of the policy and explain the benefit of gearing in the capital structure during a role play. Your Trainer/Assessor will play the role of the recently appointed Profit Centre Manager and will ask for your view on the Procurement Policy for the additional fund. Explain your suggestions to them.
2. List the points that you want to discuss in an agenda before the meeting.
3. Conduct research and prepare a PowerPoint presentation explaining the cost and benefits of procurement of additional funds in terms of equity and debt.

Your Trainer/Assessor will play the role of the recently appointed Profit Centre Manager and will ask for your view on the Procurement Policy for the additional fund. The time for this role play will be 10minutes, your presentation is to be uploaded into canvas.