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Report For The Ceo & Sales Director Of Upnor Ltd

Satisfactory Essays

BA/BSc Accounting and Finance
Performance Management – Autumn 2014
(PAA304/PA302)

Report for the CEO & Sales Director Of Upnor Ltd
Assessment of current and future role of management accounting and strategic management accounting (by Godwin. Asante & Barnaby. Offei)

Module Leader: Roy Ringham
Lecturer: Matthew O’Hara
Greenwich School Of management

Date for submission: 12am, Friday 28th November, 2014

Student Number
Godwin Asante: 27483
Barnaby Offei: 23835

Table of Contents

⦁ Introduction 3
⦁ Background 3
⦁ Discussion points raised by CEO 3
2.1 A) Break-even point 3
2.2 The Accountant Breakeven Chart 3
2.3 The Economist breakeven chart 4
2.4 B) Fixed cost 5 …show more content…

The main issues confronted by mangers of organisations such as Upnor Ltd is deciding which approach - the ‘Economist’ or the ‘accountants’ way of analysing cost is more appropriate when doing the sales budget. With this being said it’s hoped this report will be of use during the decision making process.
1.1 BACKGROUND
Cost-Volume-Profit (CVP) analysis often referred to as the “what if analysis” is a managerial accounting technique associated with the volume of sales, the product costs as well as its effects on the operating profit of an entity. It is also said to be a powerful tool in finance - past researchers have justified this statement like Islam et al, 2005 in their journal on accounting techniques for Chinese managers. CVP analysis displays how the operating profit is affected by alterations in the following – “variable costs, fixed costs, selling price per unit and the sales mix of two or more different products” (Drury, 2005). A powerful function of the CVP analysis is the breakeven point, margin of safety and the contribution margin to mention just a few. However the CVP analysis can only be used based on the following assumptions – that is:
⦁ All

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