 Basic financial statements: from interpretation to analysis  The usefulness of these statements to aid management decisions  Techniques used for costing and pricing decisions

1 | P a g e
Pathway: International Year 1 – Business
Module title: Business Accounting
(Re-Sit) Assessment 1 – 2020 (February Cohort)
Module Aims: Aims to focus on
 Basic financial statements: from interpretation to analysis
 The usefulness of these statements to aid management decisions
 Techniques used for costing and pricing decisions
Assessment method: Individual Report (From the given Case Study),
Weighting: 40%
Word length: 1500 words
Submission Deadline: 16/09/2020
Learning outcomes being assessed:
 Critically examine the needs of different users (internal & external) of accounting
information.
 Display critical understanding of the role of budgeting within a business.
 Calculate business costs by applying the theory of cost behaviour and break even
analysis and evidence this by writing a business report.
2 | P a g e
Re-Sit Assignment Brief for Assessment 1 – Business Accounting (February Cohort)
Celebration of Success:
You have successfully completed your studies at Coventry University, London, where you
obtained a first class honours degree. Because of your good performance your parents have
decided to reward you with a lavish party. They have invited families, friends and
neighbours to celebrate the event together. Some of the invitees are excited about your
performance and qualification, and are considering to send their wards to the same
university. Most of them are business entrepreneurs and would cherish an opportunity to
hear from you about some of the things you studied on your accounting course at university
and their relevance to their businesses. You have the opportunity to sell yourself to some of
the wealthy entrepreneurs who would be willing to offer you attractive positions in their
business organisations.
Your parents have accordingly asked you to prepare a report to be presented to the
business entrepreneurs during a special moment of the graduation event. You will only
present highlights of the report during the presentation time. However, a full report is
required to be handed to each of the entrepreneurs to take home for study. The report
should address questions about each of the following topics:
(i) Providing information for planning and decision making, and
(ii) Providing information for control and performance evaluation purposes.
Already Completed Analysis:
Whist studying you worked with some management accounting firms and managed to have
the following uncompleted analysis in your personal records that you can complete and use
to explain how businesses and their stakeholders might benefit from such analysis
performed by management accountants.
(A) Providing information for planning and decision making
– Uncompleted Cost Volume Profit (Breakeven) Analysis Table (refer to appendix A)
– Uncompleted Production Cost Budget (refer to appendix B1)
– Uncompleted Cash Budget (refer to appendix B2)
(B) Providing information for performance evaluation and control purposes.
– Uncompleted Budgetary Control Statement (refer to appendix C)
3 | P a g e
Required:
You are required to complete all the uncompleted analysis in Appendices A, B and C, and
use the information to prepare a report to be given to the wealthy business entrepreneurs
when you meet with them. Focus on the following in your report:
1. You are to explain (a) what Cost Volume Profit (CVP) Analysis is, and (b) the use and
importance of CVP Analysis.
2. You are to explain what a variable production cost budget is as well as the benefits
of having production cost budget in place.
3. You are to explain what a cash budget is as well as the benefits of having a cash
budget in place.
4. You are to explain what a budgetary control statement is as well as its usefulness.
Note: You should use information in the analysis you have completed and others
supplied (refer to the appendices) to support your discussion. The report should
explain how businesses and important stakeholders may benefit from some of the
analysis performed, for example managers, shareholder/owners, employees,
lenders, suppliers and potential business partners.
Suggested word limits: Allow between 250 and 325 words to address each of the
four (4) numbered issues.
4 | P a g e
APPENDICES:
Appendix A: CVP Analysis
Standard variable production cost per unit
Cost elements Quantity/Hours Price/Rate
(£)
Cost per unit
(£)
Direct material 15 kg per unit £10 per kilogram 150
Direct labour 3 hours per unit £30 per direct
labour hour
90
Variable production
overheads
£5 per direct
labour hour
15
Variable production cost per unit 255
Contribution per unit
Selling price 355
Fixed costs within the relevant range is £200,000. Should the business expand its capacity
fixed costs will increase by £50,000.00.
(a) CVP schedule (for different levels of activity)
Budget type No
production
Breakeven
units
Budgeted
units (3,500)
Maximum
capacity units
(6,000)
7,500
units
Fixed Costs
(£)
200,000 200,000 200,000 200,000 250,000
Total
Variable
Costs (£)
Total Cost (£)
Total
Revenue (£)
Total
Contribution
(£)
Total Profit
(£)
(b) Margin of Safety units =
(c) Margin of Safety percentage =
5 | P a g e
Appendix B: Budgets:
Appendix B1: Variable Production Cost Budgets
Quantity/
Hours
Price/
Rate per
unit of
resource
(£)
Cost per
unit of
production
(£)
Budgeted
production
units
Resource
quantities
for units
budgeted
Budgeted
cost
(£)
Direct
materials
3,500
Direct
labour
3,500
Variable
production
overhead
3,500
Total variable production cost budget 3,500
Appendix B1: Cash Budget
Q1 Q2 Q3 Q4 Total
RECEIPTS FROM (INFLOWS):
CASH SALE (60%) 60,000 72,000 120,000 180,000 432,000
1 MONTH CREDIT SALES (40%) 40,000 40,000 48,000 80,000 208,000
ADDITIONAL CAPITAL 40,000 – – – 40,000
TOTAL INFLOWS
PAYMENTS (OUTFLOWS):
PURCHASES 40,000 50,000 90,000 120,000 300,000
PURCHASE OF EQUIPMENT 180,000 – – – 180,000
ADMIN. 5,000 5,000 6,000 10,000 26,000
WAGES / SALARIES 10,000 12,000 14,000 16,000 52,000
TOTAL OUTFLOWS
NET CASH FLOW
[SURPLUS/(DEFICIT)]
OPENING BALANCE 35,000 35,000
CLOSING BALANCE
6 | P a g e
Appendix C:
(i) Budgetary Control Statement
Cost element Budgeted cost
(3,500)
Flexed cost
(4,500 units)
Actual cost
(4,500 units)
Variance
Direct materials
Direct labour
Variable
production
overhead
Total variable
production cost
budget
(ii) Flexed budget (4,500 units)
Quantity/
Hours
Price/
Rate per
unit of
resource
(£)
Cost per
unit of
production
(£)
Actual
production
units
Resource
quantities
for units
produced.
Flexed
cost
(£)
Direct
materials
Direct
labour
Variable
production
overhead
Total variable production cost budget
7 | P a g e
(iii) Actual Cost (4,500 units)
Quantity/
Hours
Price/
Rate per
unit of
resource
(£)
Cost per
unit of
production
(£)
Actual
production
units
Resource
quantities
for units
produced.
Actual
cost
(£)
Direct
materials
Direct
labour
Variable
production
overhead
Total variable production cost budget
(iv) Actual information
Production/Sales 4,500 units
Direct material usage 17 kilogrammes per unit of product
Direct material price £11 per kilogramme of direct material
Direct labour hours 3 hours per unit of product
Direct labour rate £25 per direct labour hour
Variable production overhead £4.50 per direct labour hour
————————————————————————————————————————
END OF CASE STUDY INFORMATION!
————————————————————————————————————————
8 | P a g e
General Guidelines:
A. Task Guidelines:
 The report will be individually assessed based on the above information and then
scored against the report writing assessment grid – Please see the Module
Handbook.
 Start with an introduction and end with a conclusion.
 Include subheadings to distinguish between different parts of the discussions.
 Show BE charts relevant to the study in the main report.
 Show calculations in the appendices.
 Include references in the appendices part.
B. Course work submission requirements:
 Use Coventry reference for both in-text and final reference list.
 Word count is excluded for Overview, headings and introduction of
the course works.
 Give proper highlights /captions in every paragraph in each answer to make it clear
 keep a cover page and a reference list in your submission. When submitting your
document, use the following descriptors:
 Assignment Title: module code+Your Name+the name of your assessment title (e.g.
MPP1JoeBlogsAssignmentTitle)
 Document name: moduleshortcode+AcademicYear+AssessmentType+YourName
(e.g. MPP12015ReportJoeBlogs)
C. Important notes regarding the submission:
You will be allowed to submit your assignment after the submission deadline. Note,
however, that usual penalties will apply unless you have applied for and received
concessions.
D. Submission Guidance in TURNITIN:
 The document will be submitted online via TURNITIN. TURNITIN will be used for two
purposes as follows:
 Originality/plagiarism checking: you will be allowed to upload your document as
many times as you like until the submission date to perform your own plagiarism check
in addition to the checking that will be performed by tutors marking your assignment.
 eFeedback which is available via TURNITIN’s Grade mark – this will include intext
comments and summary comments.
9 | P a g e
See https://www.turnitin.com/divisions/higher-education for help on submitting your work
and interpreting your feedback. This contains an overview of TURNITIN, a guide to using
TURNITIN through blackboard and information relating to copyright and data protection
which you MUST read so that you understand your rights.
Recommended Resources: Please refer to the Module Handbook.
Grading Criteria: Refer to module handbook.