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1BSc (Hons) Business ManagementAssignment Brief Module TitleBusiness FinanceModule Credit Value20Module Level5Module CodeLSME505Academic Year2020-2021/Term 3 Sept 2019 G2LecturerJose KattadyLearning OutcomesOn successful completion of this module students will be able to: Understand the different types of costs and their relevance to pricingdecisions. Understand the role and prepare budgets to control operations. Analyse capital investment decisions, including carrying out a riskassessment, using appropriate accounting ratios. Analyse and compare internal and external performance indicators andthe role of pricing on performanceIssue Date24.03.2021SubmissionDeadlineAssignment 1: Case Study 21.04.2021 4.00 PMAssignment 2: Case Study 25.05.2021 4.00 PMSignature ofAssessorJose Kattady Module DescriptionThe prime objective of business organisations is sustainable profitability and the maximisationof shareholder wealth. Managers are more likely to make a positive contribution to achievingthis objective if they understand and can analyse the factors affecting profitability and thecreation of shareholder wealth in their part of the organisation. The module considers fourmain areas of management accounting: costing decisions as to the basis of profitability,budgets and control mechanisms, investment decisions and financial performance appraisal.2Assessment TasksThere are TWO assignments to be completed in this module: Assignment 1 – (Case Study) 2000 words +/- 10%Total Weighting: 50%Intended Learning Outcomes: 1 and 2 Assignment 2 – (Case study) 2000 words +/- 10%Total Weighting: 50%Intended Learning Outcomes: 3 and 4Assignment 1: Case StudyLO 1. Understand the different types of costs and their relevance to pricing decisions.LO 2. Understand the role and prepare budgets to control operations.This assignment is divided into two parts: Part A and Part B. You are required to completeboth the parts to achieve LO1 and LO2 of the module.Part AMaxwell Ltd. makes and sells a single product which sells for £100 per unit and which hasDirect Material cost of £45 and per unit Direct Labour cost of £30. Total Fixed costs areexpected to be £ 125,000 for the year. Budgeted sales for the year are 60,000 units.You are required to: Calculate the Contribution per unit Calculate Breakeven Point in units and Breakeven Sales. Calculate Margin of Safety as a percentage of budgeted sales. Calculate the Breakeven Units if Maxwell Ltd expects a profit of £100,000 during thecurrent year. Prepare a memo to your Financial Manager explaining the importance of classifyingcost as Fixed cost, Variable cost and Semi variable cost and their relevance to pricingdecisions. 30 MarksFurther, Maxwell ltd. also produces a single product, Leather Jacket, and the followingfinancial information are provided. Selling price/unitDirect Material per unitDirect labour per unitVariable overhead per unitFixed overhead incurredBudgeted production and sales are 2,500 units.£75£18£8£5£ 5,000. Actual production is 2,200 units, and actual sale is only 2,100 units.Assuming that the sales prices and variable costs per unit are as budgeted and that fixedoverhead expenditure is the same as budgeted, show the amount of profit, using absorptioncosting and marginal costing. 20 Marks3Part BStar Plc is a UK based company manufacturing and selling Sweets. The company operates astandard costing system and analysis of variance is made every month. During the currentperiod, the company produces and sells 12,000 units.Standard Cost Card DetailsQuantity Per Unit£ per kg/hrDirect material6kg3Direct wages/labour3hrs5Variable overheads2kg3 The fixed overhead expense budgeted is £15,000.Actual figures DetailsQuantity Per unit£ per kg/hrDirect materials5kg4Direct Wages/labour2hrs3Variable overheads3kg3 Actual fixed overhead expense is £13,000.Using the case scenario, you are required to: Demonstrate an understanding of the role of Budgets in controlling theoperations of a business.14 Marks Calculate Material Price variance, Material Usage variance, Labour Ratevariance, Labour Efficiency variance and Fixed Overhead Expenditure varianceand comment on each variance. 22 MarksPrepare budgets for controlling operations, Direct Material budget, Direct Labour budget,Variable Overhead budget & Fixed Overhead expenditure budget.14 Marks[Total Part A + Part B=100 Marks]Assignment 1 – Indicative Marking Criteria EssayA* 80%+High FirstAn excellent answer will have the following attributes: Exceptionally factual and conceptual understanding of the differenttypes of costs and their relevance to pricing decisions Exceptional understanding of the role of budget Excellent budget preparation to control operations. Accurate methods of calculation with correct answers Correct use of English language Referencing using correct Harvard Style 4 A 70 – 79%First ClassAll components will have been submitted, and the remaining criteria will be asnoted for the 80%+ marking band. However, in one or two areas, the submissionwill be open to minor criticism.B 60 – 69 %UpperSecond A good factual and conceptual understanding of the different types ofcosts and their relevance to pricing decisions A very good understanding of the role of the budget. A very good budget preparation to control operations. Mostly accurate methods of calculation with minor errors in answers Minor mistakes in the English language There may be some minor mistakes in presentation or referencing.C 50 – 59%LowerSecondAll components will have been submitted, and the remaining criteria will be asnoted for the 60-69% marking band. However, there will be some gaps inknowledge and analysis.D 40 – 49%Third Class A basic level of factual and conceptual understanding of the differenttypes of costs and their relevance to pricing decisions A basic level of understanding of the role of budget. Limited knowledge of budget preparation to control operations. Noticeable errors in calculations producing some inaccurate answers. Noticeable errors in the English language References may have some style errors.F 30 – 39%Fail The submission has a few major flaws. A few important sections are missing. Inadequate calculation and incorrect answers Major language and referencing errorsF 0 – 29%Poor Fail The submission has a large number of major flaws. The most important sections are missing. Assignment requirements are not met at any level 5Assignment 2: A Case StudyLO 3. Analyse capital investment decisions, including carrying out a risk assessment, usingappropriate accounting ratios.LO 4. Analyse and compare internal and external performance indicators and the role ofpricing on performance.Beta Ltd wants to re-establish itself as a retail giant and decides to appraise investmentopportunities. It has opportunities for investing in two different projects; Project 1 has aninitial cost of £360,000 and project 2 has an initial cost of £390,000. It is estimated that thenet cash flows over the next five years will correspond to those given below. Year12345Net Cash FlowProject 1£100,000£150,000£130,000£80,000£50,000Net Cash FlowProject 2£70,000£90,000£100,000£150,000£50,000 You are required to calculate for project 1 and project 2, the following: i)ii)iii)The payback periods.The net present value at a 12% cost of capital, andThe internal rate of return.10×3=30 Marks  Also, advise Beta ltd on the suitability of the projects, based on your abovecalculations. 10 MarksFinancial Statements of Beta Ltd. Income Statement for the period ended June 30, 2021Details££Sales700,000Less Cost of goodssold-400,000Gross profit300,000ExpensesSalary120,000Office expenses65,000Interest20,000Total(205,000)Profit before Tax95,000Tax-5,000Net profit90,000 6 Statement of Financial Position as on 30 June 2021AssetsNon-Current AssetsBuilding120,000Machinery57,000Car20,000Total197,000Current AssetsInventory25,000Trade receivables10,000Bank14,000Total49,000Less Current LiabilitiesTrade payables10,000Accruals11,000Bills payables6,00027,000-27,000Net Current Assets22,000Total Assets219,000Non-Current LiabilitiesBank Loans80,0005%Debentures60,000Total140,000Equity Share capital50,000Reserves and Surpluses19,0006% Preference ShareCapital10,000Total Capital andLiabilities219,000 You are required to: In line with the case scenario, write a Report analysing Capital Investment decisionsand carry out a risk assessment using appropriate accounting ratios, Current ratio,Quick ratio, Debt Equity ratio, Interest Cover ratio, Stock Turnover ratio, Debtors’Turnover ratio, Creditors Turnover ratio and Net Profit ratio.30 MarksAnalyse and compare internal and external performance indicators and the role ofpricing on performance. You must discuss different pricing strategies also.30 MarksTotal= 100 Marks7Assignment 2– Indicative Marking Criteria Case StudyA*80%+High FirstAn excellent answer will have the following attributes: Excellent analysis of capital investment decisions, carrying out athorough risk assessment, using appropriate accounting ratios. Excellent analysis and comparison of internal and external performanceindicators and the role of pricing on performance Accurate methods of calculation with correct answers Exceptionally well-structured and well-presented report Full reference accurately in the Harvard style of referencing.A 70 – 79%First ClassAll components will have been submitted, and the remaining criteria will be asnoted for the 80%+ marking band. However, in one or two areas student maynot have demonstrated the skills as noted in band 80%+B 60 – 69 %Upper Second Very good analysis of capital investment decisions, carrying out areasonable risk assessment, using appropriate accounting ratios. Very good analysis and comparison of internal and external performanceindicators and the role of pricing on performance Mostly accurate methods of calculation with minor errors in answers Exceptionally well-structured and well-presented report A well-structured and coherent work written in correct English withminor mistakes. Full list of references with minor errors/omissions.C 50 – 59%Lower Second All components will have been submitted, and the remaining criteria willbe as noted for the 60-69% marking band. However, there will be somegaps in knowledge and analysis.D 40 – 49%Third Class A limited analysis of capital investment decisions, carrying out a riskassessment showing a limited understanding of accounting ratios. A limited analysis and comparison of internal and external performanceindicators and a basic level of understanding of the role of pricing onperformance. Noticeable errors in calculations producing some inaccurate answers. The work will have some noticeable errors in the English Language. References and citation of all the sources not includedF 30 – 39%Fail An inadequate analysis of capital investment decisions, carrying out a riskassessment showing an inadequate understanding of accounting ratios. An inadequate analysis and comparison of internal and externalperformance indicators and a very limited level of understanding of therole of pricing on performance. Inadequate calculation and incorrect answers Many mistakes in grammar or sentence construction. The references list not complete and not in the Harvard referencing style.F 0 – 29%Poor Fail Largely inaccurate or irrelevant material. Little or no evidence of factual or conceptual understanding of thesubject. The work shows no or very limited evidence of calculations and analysis. 8  Structure very weak or lacking. Many mistakes in grammar or sentence construction. Citations and bibliography are incorrect or missing. The work may be incomplete or too brief. Completing the tasksTo complete Assignments 1 and 2, you will need to research different information sourcessuch as textbooks, journals, articles, and the Internet. You are also required to develop skillsin the analysis and synthesis of information. Analysis requires you to critically examinedifferent aspects of a topic and identify important issues. Synthesis requires you tosummarise the information you have analysed clearly and coherently manner. Make use ofinformation on assignment preparation and command verb usage in your Moodle Platform.Helpful informationCore TextsAdditional Texts Brealey, R., Myers, S.C., Allen, F., and Mohanty, P. (2007) Principle of Corporate Finance,8th ed. New York, McGraw Companies Drury, C. (2003) Cost & Management Accounting, An Introduction, 5th ed. London,Thomson Publishing UK Horngren, C.T., Datar, S.M., and Foster, G. (2006) Cost Accounting: A ManagerialEmphasis, 12th ed. Prentice Hall IndiaReferencing your workReferences to relevant academic theory and research findings should be provided and citedappropriately using the Harvard system of referencing. An example of this referencing style isas follows:Sillah, D. (2007) ‘Screening of TB in the Gambia’ Journal of Epidemiology, 1 (2), pp.34-56Author/s name and initials are listed first, followed by the year of publication in brackets.Then there is the title of the article and the journal where the article appears, which is initalics. Finally, state the volume and issue number (in brackets) along with the pages wherethe article can be located. Include at least two in-text citations and references in eachassessment criterion. Further information on the Harvard System of referencing is on yourMoodle Platform.Note: Do not use Wikipedia as a source of reference.Academic MalpracticeYou are required to work independently when preparing this assignment and you arereminded of the need to avoid the risk (intentionally or unintentionally) of committingacademic malpractice. Presenting another learner’s work as yours or taking information fromany sources without acknowledging the source correctly can constitute academic malpractice.T Atrill, P., McLaney, E. (2018), Management Accounting for Decision Makers. Harlow,PearsonDrury, C. (2016), Management Accounting for Business. Andover, Cengage Learning EME9You are expected to submit your work using the Turnitin software that is provided by theschool. Please note that your work may be subject to penalties and/or cancellation ifacademic malpractice has taken place. The Turnitin similarity report can highlight whereacademic sources have not been referenced appropriately/effectively and this could result ina concern being highlighted around possible plagiarism (one form of academic malpracticewhere sources have been used without proper acknowledgement). Make sure you read overyour work carefully and ensure that all sources of information have been acknowledged toavoid any untoward investigations that would result in a delay in your achievement of themodule. Further information on academic malpractice (including plagiarism) and potentialconsequences are available in your student handbooks.PresentationPresent a document with a word count of 2000 words (+/- 10%) (Case Study evaluation) and2000 words (+/- 10%) (Case Study evaluation) excluding references, bibliography, images,diagrams, table and appendices. The word count should be stated in the assignment coversheet and please note you will be penalized for exceeding the word limit. Work must besubmitted in a folder, word-processed in a suitable format of 12-point font, 1.5-line spacingand pages numbered.SubmissionWhen submitting your assignment, you must include: An Assignment Submission Sheet/ Assignment Front Cover Other documents required by your lecturer as evidence of achievement All assignments should be submitted via TurnitinSubmission deadlines must be strictly observed. Therefore, disciplined time management isvery important when producing this assignment. Failure to meet deadlines will be consideredas a failure by non-submission. You will only have the opportunity for one resubmission of adifferent assignment. Refer to the Student Handbook for more information.End of Assignment Brief