Accounting For Decision Makers

Please read the attached file Section A Multiple Choice Questions Section B is Scenario Based Section C is Short Answer Questions Maximum 600 words only for three questions with definitions You must follow the Marking Scheme which is really an crucial part of the Assignment Must Follow Generic Assessment Criteria….
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MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
STUDENT NAME
STUDENT ID
DUE DATE: 24 May 2018
Coursework 50% – Assignment
__________________________________________________
Module Title
Accounting for Decision-Makers
Module Number
MBA7001
____________________________________________________
April 2018 Session- Gulf College Oman
Student Guidance, Instructions and Marking Scheme
This coursework consists of ‘THREE’ sections: A, B, C.
NB: Answer All Questions
Section A (20%) = 20 multiple choice questions worth 1 marks each.
Section B (50%) = 5 scenario-based questions worth 10 marks each.
Section C (30%) = 3 short answer questions worth 10 marks each.
Page 1 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
Assignment Aim:
This assignment’s objective is to facilitate student’s
understanding of practical financial and management
accounting principles and in order to bridge the gap between
theory and practice from a management decision-making
perspective.
Assessments ( MBA 7001)
Coursework
50%
Assignment
Examination
50%
2.5 Hours Exam
Assessm
ent
Breakdo
wn
Assessmen
t Type
MBA 7001
Accountin
g For
Decision
Makers
Due
Date
Coursewor
k (50%)
Written
Assignment(50%)
24/5/18
Examinati
on (50%)
2.5 Hours Writtent
Examination (50%)
28
/06/18
Page 2 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
Mapping – Learning Outcome Assessment Matrix (MBA 7001)
Module Descriptors Learning Outcomes:
NO
Coursework
(50%)
Exam
(50%)
At the end of this module students should be able to:
1
Demonstrate a critical understanding of, and
evaluate, balance sheets and income
statements
2
Interpret the financial data commonly provided
by accountants to managers
x
3
To understand cost classification and
behaviour in short-term decision making
x
4
Prepare & interpret cash budgets as part of
budgetary control
x
Page 3 of 26
x
x
x
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
Section A – (20 Marks)
20 multiple-choice questions
Each question is worth 1 marks.
Please Note:
Indicate your answer by writing A, B, C or D in
the BOX provided next to each question.
Page 4 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
Section A (20%): (Q1 – 20)
For every question, indicate your answer by circling
A, B, C or D and writing in the BOX provided.
1) Which of the following statements best describes the term ‘accounting’?
a) Accounting is a process of recording economic events in journals and ledgers in
the proper order so that the financial statements prepared are correct.
b) Accounting is a process of keeping business records to determine the profit made
in a financial period.
c) Accounting is a technique of recording business data using the double-entry
system to produce an accurate trial balance to aid decision-making.
d) Accounting is a process, which involves analyzing business data, recording, and
communicating financial information of an entity in a specific period to be used
for decision-making.
1-Answer=
2) The preparation of financial statements summarising past events, usually in the form of
profit and loss accounts and balance sheets would be associated with
a) Financial Management
2-Answer=
b) Financial Accounting
c) Management Accounting
d) Forensic Accounting
3) _________________ information are product costs and cost data relevant to a particular
decision, say, a choice between make or buy.
a) Financial Management
3-Answer=
b) Financial Accounting
c) Management Accounting
d) Forensic Accounting
4) _________________covers the raising of finance and its deployment in the various
resources needed by a business, in the most efficient way.
a) Financial Management
4-Answer=
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MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
b) Financial Accounting
c) Management Accounting
d) Forensic Accounting
5) The two key financial statements that measure a business’s performance and position are
called _________________and _________________
a) Profit and Loss and Balance sheet
b) Profit and Gain and Balance sheet
5-Answer=
c) Credit and Debit
d) Cash Flow and Account receivable
6) Financial accounts disclose all the following except:
a) The total turnover of the business Gross profits of the business
b)
Cost of sales, profit before tax
c)
Expenses
6-Answer=
d) Profit performance by individual products.
7) Which of the following statement is true?
a)
Direct material costs are the costs of materials that are known to have been used
in producing and selling a product or rendering a service.
b)
Direct labour costs are the non-specific costs of the workforce used to produce a
product or rendering a service.
7-Answer=
8) If the Total Cost (TC) = Fixed Cost (FC) + Variable Cost (VC), then the Variable Cost
(VC) is equal to?
a)
VC = TC + FC
b)
VC = TC / FC
c)
VC = TC – FC
d)
VC = TC x FC
8-Answer=
9) A _________ stays the same; no matter how many products you produce.
a) Semi Fixed Cost
9-Answer=
Page 6 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
b) Variable Cost
c) Fixed Cost
d) Semi variable Cost
10) Which of the followings is the reason of an increase in total variable cost:
a)
Increase in fixed cost
b)
Increase in direct material cost
c)
The rise in interest on capital
d)
Depreciation of machinery
10-Answer=
Answer Questions 11, 12, 13, 14, 15, 16 based on the information
below.
Page 7 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
(High – Low) Cost estimation
In 2017 Oman hospital in Muscat has recorded the following (patient
activity) or a number of patients activity and the associated maintenance
cost for managing those patients.
TABLE 1.0
Number of
Month
Emergency
Patients
Maintenance
Cost incurred £
January
5,600
7,900
February
7,100
8,500
March
5,000
7,400
April
6,500
8,200
May
7,300
9,100
June
8,000
9,800
July
6,200
7,800
AUGUST
?
In 2017, due to the extreme heat wave the hospital is expecting 9000
emergency patients in August. What would be the maintenance cost
associated with this number in August 2017?
Using High – Low method as discusses in the class calculates the above
to answer Questions 11, 12, 13, 14, 15 and 16.
Answer Grid:
Page 8 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
Based on (High – Low) Cost estimation method fill in the following
Table 2.0 (below) from the information in Table 1.0 (above) in order to
answer the MCQ questions 11 to 16.
TABLE 2.0
Month Chosen (H- L)
Number of
Emergency
Patients those
months
Maintenance Cost
incurred in those
months £
June
March
Variance (Difference)
Based on (High – Low) Cost estimation Calculate:
11)
12)
13)
Variance for ‘Patients’ =
a)
3,000 Patients
b)
5,000 Patients
c)
8,000 Patients
d)
12,000 Patients
11-Answer=
Variance for ‘Cost’ incurred =
a)
£2,400
b)
£7,400
c)
£17,200
d)
£9,800
12-Answer=
Cost per patient =
a)
0.80 or 80p
13-Answer=
Page 9 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
14)
b)
1.48 or £1.48p
c)
1.23 or £1.23p
d)
0.82 or 82p
Fixed Cost (FC) of (June) =
14-Answer=
15)
16)
17)
a)
£3,400
b)
£3,200
c)
£3,100
d)
£3,000
Fixed Cost (FC) of (March) =
a)
£3,400
b)
£3,200
c)
£3,100
d)
£3,000
15-Answer=
Total Cost (TC) for 9,000 expected patients in August =
a)
£10,600
b)
£10,500
c)
£10,400
d)
£10,100
16-Answer=
Absorption costing is used for stock valuation, pricing decisions and budgeting.
Page 10 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
a)
True
b)
False
17-Answer=
18) Absorption costing technique is made up of three steps namely; allocation, summation
and valuation
19)
a)
True
b)
False
18-Answer=
Overhead allocation rate = estimated indirect cost / estimated activity base.
a)
True
b)
False
19-Answer=
19) A cost centre is a business unit that is only responsible for the costs that it
incurs.
a)
True
b)
False
20-Answer=
—————-END of Section A—————-
Page 11 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
Section B (50 Marks)
Five Scenario-based questions
Each question is worth 10
marks.
Please Note:
Write your answers after the
question and the marking scheme
provided
Page 12 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
Scenario:
Oman Steel Mills LLC (Muscat) manufactures and sell
specialized
aluminium rods used in medical equipment.
The product is manufactured and sold in 0.25 meter long “sticks.”
The product is generally produced and sold to match customer demand,
and there is not a significant amount of finished goods inventory at any
point in time.
Scenario: Summary information for 2017 is as follows:
Sales were £5,000,000, consisting of Quantity of 200,000 sticks.
Total Rev= P (price) * Q (quantity) =
5000000= 200000 * P
Total variable costs were £3,500,000.
Total fixed costs were £1,250,000.
Net income was £250,000.
Due to deteriorating general economic conditions, there is some
concern about a reduction in sales volume.
Answer Section B- Questions 1, 2, 3, 4, 5, based on the above
information.
Page 13 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
Q1)
Refer to the scenario in section ‘B’ for the following question.
Anwaar, a new trainee accounts assistant has joined the company and will
be shadowing you for one month. She is struggling with the concept of
break-even analysis.
Write a training memo for Anwaar explaining the following:
(10 Marks)
A) Define break-even analysis. (2 marks)
B) Outline break-even analysis advantages. (3 Marks)
C) Outline break-even analysis limitations. (3 Marks)
D) When managers or entrepreneurs should use break-even analysis? (2
Marks)
Note: Write your answers below addressing the points (A to D) above.
Page 14 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
Q2)
Refer to the scenario in section ‘B’ for the following question.
What is the company’s break-even point in “sticks?” Can the company
sustain a 30% reduction in total volume, and remain profitable?
(10 Marks)
Question 2) Marks Breakdown – Suggested Structure
Formulas:
Break-Even Point in Sticks = Total Fixed Costs / Contribution Margin Per Unit
Break-even Point in volume = Total Fixed Cost / Contribution
Contribution = Selling Price – Total Variable Costs
( Remember Variable cost varies with production)
Rev= Price * Quantity
From Scenario = Total Volume 200,000 ( 200,000 – 30%) = 140,000
or (70% of 200,000) = 140,000
Total Rev – VC=
Scenario: Summary information for 2017 is as follows:
Sales were £5,000,000, consisting of Quantity of 200,000 sticks.
Total Rev= P (price) * Q (quantity) =
5000000= 200000 * P
Total variable costs were £3,500,000.
Total fixed costs were £1,250,000.
Net income was £250,000.
Focus
Marks
A) Calculate Selling Price per stick =
B) Calculate Variable Cost per stick =
C) Calculate Contribution =
D) Calculate Break-even point in
Volume=
E) Can the company sustain a 30%
reduction in total volume, and remain
profitable? ( Show your workings)
2
2
2
2
Marks
Marks
Marks
Marks
2 Marks
Note: Write your answers below addressing the points (A to E) above.
Solution Q2
Q3)
Page 15 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
Refer to the scenario in section ‘B’ for the following question.
The company’s managing director (MD) Dr Khalid Al Wali is aiming for an
annual salary of £600,000.
What be the target turn over or revenue of Oman Steel Mills LLC (Muscat),
if the MD, Dr Khalid Al Wali needs to be remunerated £600,000 in 2017.
(10 Marks)
Question 3) Marks Breakdown – Suggested Structure
Formulas:
Formulas:
Break-even Point in volume = Total Fixed Cost +Target Income / Cost per unit
Contribution = Selling Price – Total Variable Costs
( Remember Variable cost varies with production)
Selling Price= Already calculated in Question 2
Rev= Price * Quantity
From Scenario = Total Volume 200,000 ( 200,000 – 30%) = 140,000
or (70% of 200,000) = 140,000
Total Rev – VC=
Scenario: Summary information for 2017 is as follows:
Sales were £5,000,000, consisting of Quantity of 200,000 sticks.
Total Rev= P (price) * Q (quantity) =
5000000= 200000 * P
Total variable costs were £3,500,000.
Total fixed costs were £1,250,000.
Net income was £250,000.
Target Income = £600,000
Focus
Marks
5 marks
5 marks
Note: Write your answers below addressing the points (A &B ) above.
A) Calculate Break-even Point (Units) =
B) Calculate Sales Value =
Solution Q3
Page 16 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
Q4)
Refer to the scenario in section ‘B’ for the following question.
If total volume is expected to decrease by 20% and the company wishes
to continue to produce a £250,000 net income by raising the unit
selling price, what revised per stick price, must be imposed?
Please also prove that £250,000 is achieved when new selling price is
achieved.
(You will also need the variable cost from Part B question no 2).
(10 Marks)
Question 4) Marks Breakdown – Suggested Structure
Formulas:
Break-Even Units = (Fixed Costs + Target Income) / Contribution Per Unit
Total Rev ( sales Value ) = BE * Percentage or Sale Value = P * Q
Contribution = Selling Price – Total Variable Costs
Contribution = S.P – V.C
Scenario: Summary information for 2017 is as follows:
Sales were £5,000,000, consisting of 200,000 sticks.
Total variable costs were £3,500,000.
Total fixed costs were £1,250,000.
Net income was £250,000.
Focus
Marks
A) Calculate Revised Volume =
B) Calculate Revised Selling Price =
C)
D)
E)
F)
G)
Calculate Revised Variable cost
Calculate Revised Contribution
Calculate Variable cost =
Calculate Selling Price =
Proving if the new selling price
archives the target?
2 Marks
2 Marks
2 Marks
1 Marks
1 Marks
1 Marks
1 Marks
Note: Write your answers below addressing the points (A to F) above.
Q5)
Refer to the scenario in section ‘B’ for the following question.
Page 17 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
If the company expects a drop in raw material prices to reduce total
variable costs to £15 per stick, but all other revenue and cost factors
to be unaffected, what will be the revised break-even point in sales
and units? Remember selling price form question 2 section A. (10 Marks)
Question 5) Marks Breakdown – Suggested Structure
Formulas:
Break-Even Units = Total Fixed Costs / Contribution Per Unit
Total Rev ( sales Value ) = BE * Percentage or Sale Value = P * Q
Contribution = Selling Price – Total Variable Costs ( Selling price from Q2 Section A)
Contribution = S.P – V.C
Revised contribution= SP- VC
New selling price = BEP * SP (From Q2 section A)
Scenario: Summary information for 2017 is as follows:
Sales were £5,000,000, consisting of 200,000 sticks.
Total variable costs were £3,500,000.
Total fixed costs were £1,250,000.
Net income was £250,000.
Focus
Marks
A) Calculate Selling Price =
B)
C)
D)
E)
Identify Variable cost =
Calculate Revised Contribution =
Identify Fixed cost =
Calculate Break-even with revised
contribution =
F) Calculate New Selling price =
1 Marks
1 Marks
3 Marks
2 Marks
2 Marks
1 Marks
Note: Write your answers below addressing the points (A to F) above.
Solution Q5
————-END of Section B—————-
Page 18 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
Page 19 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
Section C (30 Marks)
Three Short Answer Questions
Each question is worth 10 marks.
Please Note:
Write your answers after the question and
the marking scheme provided.
Word Count for Question 1, 2, 3:
Minimum 300 words
Maximum 600 words
Page 20 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
Section C
Q1) Critically evaluate the following statement. “Budget is different from
forecast”.
(10 Marks)
Solution:
Q2) Evaluate direct cost from indirect cost, and why is this not necessary
in process-costing environments?
(10 Marks)
Solution:
Q3) Critically analyse the functions of Financial vs managerial
accounting.
(10 Marks)
Solution:
————-END of Section A, B & C—————-
Page 21 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
Postgraduate Generic Assessment Criteria
(Refer to academic Handbook for the latest edition.)
The following give some general guidance on how marks are allocated:
Overall Marks
Mark
Description
90 – 100 An exceptional and outstanding submission, providing original insights, which add
to the discipline area or academic area and, with some editing, could be published
as a study in its own right. In addition to the next section, a submission in this range
would be distinguished by superior organisation and comprehensiveness, given the
maximum word limit and time scale.
80 – 89 A submission that demonstrates an excellent understanding of the question and
issues under consideration and of the complexity of the issues involved. Theoretical
considerations are used to underpin the overall design and the relevance of factual
information. There is some measure of original and creative thinking. There must
be evidence of wide reading with a critical focus.
70 – 79 This range will cover a submission that has a number of original insights and also
provides a comprehensive and accurate coverage of the question and issues under
consideration with a high level of consistency throughout the dissertation.
60 – 69 The submission will show evidence of ability to maintain a personal position in
original terms and show a command of the accepted critical positions with some
attempts at innovation. There is a demonstration of the dissertation question being
clearly put and understood in relation to the complexities of the issues involved.
There is a sound use of relevant factual knowledge and theoretical issues.
50 – 59 The submission shows a reasonable ability to defend a position on the basis of use
of evidence. It shows evidence of evaluation of the ability to use information and
synthesis of generalisations from it. There is clear evidence of selection of
appropriate material, research design, logical structure and argument but with
lapses of integration. The answer demonstrates an understanding of the major basic
issues, both factually and theoretically.
40 – 49 The submission demonstrates some understanding of the major or basic issues in
the question. There is less than average evidence of a level of analysis and
judgement, use of criteria and an attempt to use a logical structure and argument.
There is evidence of effort and significant data collection.
30 – 39 There is little or no evidence of understanding the basic issues. There are significant
factual errors and contradictions. The submission is poorly planned and integrated
with little evidence of a clear train of thought or development of argument. Some
evidence of ability to collate information and construct generalisations, but with
little discretion.
20 – 29 The submission does not clearly specify a basic question and shows little logical
development or structure. There is no evidence of criticism, synthesis or evaluation.
0 – 19
Little evidence of getting beyond the proposal.
Page 22 of 26
MBA7001 ACCOUNTING FOR DECISION-MAKERS – ASSESSMENT 50%
Note:
Please make sure that you are familiar with the following ‘M’ Level ‘Terminology’ when
attempting essay questions for seminar task or the final examination.
Essay term
Definition
Analyse
Break an issue into its constituent parts. Look in depth at each part using
supporting arguments and evidence for and against as well as how these
interrelate to one another.
Assess
Weigh up to what extent something is true. Persuade the reader of your
argument by citing relevant research but also remember to point out any flaws
and counter- …
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