BMAC 5203 Accounting

886 Words4 Pages
OUM BUSINESS SCHOOL

ASSIGNMENT SUBMISSION AND ASSESSMENT
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BMAC5203
ACCOUNTING FOR BUSINESS DECISION MAKING
MAY 2014
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INSTRUCTIONS TO STUDENTS

1. This assignment contains question that is set in English.

2. Answer in English only.

3. Your assignment should be typed using 12 point Times New Roman font and 1.5 line spacing.

4. You must submit your hardcopy assignment to your Facilitator and ON-LINE via the MyVLE. Refer to the portal for instructions on the procedures to submit your assignment on-line. You are advised to keep a copy of your submitted assignment and proof
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A reduction in selling price per car alarm to RM8 per alarm is expected to increase sales volume by 50%.
2. Materials costs per unit will remain unchanged, but 5% quantity discount will be obtained.
3. Hourly direct wage rates will increase by 10%, but labour efficiency will be unchanged.
4. Variable selling overheads will increase in total in line with the increase in sales revenue.
5. Variable production and distribution overheads will increase in line with the 50% increase in sales volume.
6. All fixed costs will increase by 25%.

You are required to do the following:
a) Prepare a budgeted profit statement for the year to 31 October 2014 showing total sales and marginal costs for the year and also contribution and net profit per unit.
(16 marks)
b) Calculate the break-even point for the two years and explain why the break-even point has changed. Comment on the margin of safety in both years.
(13 marks)
c) Calculate the sales volume required (using the new selling price) to achieve the same profit in 2014 and in 2013.
(3 marks)
d) A director comments that ‘with these figures, all we have to do to work out our budgeted profit is to multiply the net profit per unit by the units we want to sell”. Why is this statement incorrect?
(3 marks)

TASK 2
Investment appraisal
Objective
To enable the learner to evaluate and make choices

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