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BMAC5203/MAY16/A-NK

ASSIGNMENT SUBMISSION AND ASSESSMENT


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BMAC5203
ACCOUNTING FOR BUSINESS DECISION MAKING
MAY 2016
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INSTRUCTIONS TO STUDENTS
1. This assignment contains question that is set in English.
2. Answer in English.
3. Learners are to submit assignment only in MsWord (.docx) format unless
specified otherwise. Please refrain from converting text / phrases into
picture format such as .gif / .jpeg / print screen / etc.
4. Download the language version of the assignment template concerned
from the myINSPIRE for preparation and submission of your assignment.
Your assignment should be typed using 12 point Times New Roman font
and 1.5 line spacing.
5. Your assignment should be between 3,000 words to 5,000 words
excluding references. The number of words should be shown at the end of
your assignment. Do not copy the assignment question and instructions
to your answer.
6. Submission of assignment:

Face-to-face Class Student:


You MUST submit a softcopy of your assignment online through
myINSPIRE and a hardcopy to your facilitator.

Online student:
You MUST submit a softcopy of your assignment via myINSPIRE and
another softcopy to the facilitator via e-mail.

7. You can submit your assignment ONCE only in a SINGLE file.


8. Your assignment must be submitted between 1st July 2016 until 3rd July
2016.
9. Your assignment should be prepared individually. You should not copy
another persons assignment. You should also not plagiarise another
persons work as your own.
10.Please ensure that you keep the RECEIPT issued upon submisson of your
assignment as proof of submission. Your assignment is considered as NOT

BMAC5203/MAY16/A-NK

submitted if you fail to produce the submission receipt in any dispute


arises concerning assignment submission.

EVALUATION
This assignment accounts for 60% of the total marks for the course and shall
be assessed based on the Rubrics attached.
You would be given feedback on the assignment before the Final Semester
Examination commences.
PLAGIARISM: MARKS DEDUCTION
Warning: The submitted assignment will automatically undergo a similarity
check. If plagiarism is detected, marks would be deducted as follows:

No.

% Similarity Group

1
2
3
4

0 30
30.01 50
50.01 70
70.01 100

% of Mark
Deduction
0
5
10
100

BMAC5203/MAY16/A-NK

ASSIGNMENT QUESTION

TASK 1

Topic 5: Cost-Volume Profit Analysis

Objectives

To be able to identify the relevant and irrelevant costs


and benefits associated with each feasible alternative
with the greatest overall net benefit to aid decision
making.

Marks
allocated

40 marks

Penfast Electronics Sdn. Bhd. (Penfast) is a manufacturer of high capacity


batteries for electronic toll transponders. The company has lately been
experiencing erratic sales of this sole product. The companys contribution
format income statement for the month of March 2016 is as follows:

Sales (19,500 units x RM30 per unit)


Variable expenses
Contribution margin
Fixed expenses
Net operating loss

RM
585,000
409,500
175,500
180,000
(4,500)

Required:
a. Compute the companys contribution margin ratio and its break-even point in
both unit sales and dollar sales.
(8)
b. The general manager believes that a RM16,000 increase in the monthly
advertising budget, combined with an intensified effort by the sales staff, will
result in an RM80,000 increase in monthly sales. If the general manager is
right, what will be the effect on the companys monthly net operating income
or loss? (Use the incremental approach in preparing your answer).
(5)
c. Refer to the data for Penfast. The sales manager is convinced that a 10%
reduction in the selling price, combined with an increase of RM60,000 in the
monthly advertising budget, will double unit sales. What will the new
contribution format income statement look like if these changes are adopted?
(5)
d. Refer to the data for Penfast. The marketing manager thinks that a fancy new
package for the transponder battery would help improve sales. The new
package would increase packaging costs by RM0.75 cents per unit. Assuming
no other changes, how many units would have to be sold each month to earn
a profit of RM9,750.
(3)

BMAC5203/MAY16/A-NK

e. Refer to the data for Penfast. Automation of the manufacturing process could
reduce variable expenses by RM3 per unit. However, fixed expenses would
increase by RM72,000 each month.
i.

ii.

iii.

Compute the new contribution margin ratio and the new break-even
point in both unit sales and dollar sales.
(7)
Assume that the company expects to sell 26,000 units next month.
Prepare two contribution format income statements, one assuming that
operations are not automated and one assuming that they are. (Show
data on a per unit and percentage basis, as well as in total, for each
alternative.)
(8)
Would you recommend that the company automate its operations?
Explain.
(4)
(TOTAL: 40)

TASK 2

Topic 7: Budgets & Budgetary Controls

Objectives

To be able to prepare a cash budget to estimate the cash


inflows and outflows for a business for a specific period of
time. The findings of a cash budget can be used to assess
whether the entity has sufficient cash to fulfill regular
operations and/or whether too much cash is being left in
unproductive capacities.

Marks
allocated

30 marks

Alam Sekitar Sdn. Bhd. is a wholesale distributor of industrial cleaning products.


As a treasurer, you have approached your bank for short term financing and the
bank has advised you that any financing requirements for next year have to be
supported by a detailed statement of cash collections and disbursements.
Your assistant treasurer has prepared the following information to assist in
preparing a detailed cash budget.

1. Budgeted sales and merchandise purchases for the next year, as well as
actual sales and purchases for the last quarter of the current year are:
Merchandise
Sales
Purchases
RM
RM
2.

Current year:
Fourth quarter actual

The
200,000

126,000

Current year:
First quarter estimated
300,000
186,000
Second quater estimated
400,000
246,000
Third quarter estimated
500,000
305,000
Fourth quarter estimated
200,000
126,000
company normally collects 65% of a quarters sales before the quarter ends
and another 33% in the following quarter. The remainder is uncollectible. This

BMAC5203/MAY16/A-NK

3.
4.
5.
6.
7.
8.

9.

pattern of collections is now being experienced in the current years fourthquarter actual data.
Eighty percent of a quarters merchandise purchases are paid for within the
quarter. The remainder is paid for in the following quarter.
Selling and administrative expenses for next year are budgeted at RM50,000
per quarter plus 15% of sales. Of the fixed amount, RM20,000 each quarter is
depreciation.
The company will pay RM10,000 in dividends per quarter.
Land purchases of RM75,000 will be made in the second quarter, and
purchases of RM48,000 will be made in the third quarter. These purchases
will be for cash.
The Cash account contained RM10,000 at the end of the current year. As
treasurer, you feel that this represents a minimum balance that must be
maintained.
The company has an agreement with a local bank that allows the company to
borrow in increments of RM1,000 at the beginning of each quarter, up to a
total loan balance of RM100,000. The interest rate on these loans is 2.5% per
quarter and for simplicity we will assume that interest is not compounded.
The company would, as far as it is able, repay the loan plus accumulated
interest at the end of the year.
At present the company has no loans outstanding.

Required:
a. Prepare the following by quarter and in total for next year.
i.
A schedule of expected cash collections.
ii.

A schedule
purchases.

of

expected

cash

disbursements

for

(5)
merchandise

(5)
b. Compute the expected cash disbursements for selling and administrative
expenses, by quarter and in total, for next year.
(6)
c. Prepare a cash budget, by quarter and in total, for next year.
(14)
(TOTAL: 30)
TASK 3

Topic 6: Short Term Decision Making

Objectives

To be able to carry out a differential analysis which


requires all the potential solutions to a particular
business opportunity to be examined to determine which
one is the most cost-effective.

Marks
allocated

30 marks

a. Perabot Brothers Sdn. Bhd. sells and delivers office furniture in the Klang
Valley area. The costs associated with the acquisition and annual operation
of a reconditioned delivery truck are given below:

Insurance
Commercial Licenses
Road Tax

RM
1,600
250
150

BMAC5203/MAY16/A-NK

Rental for parking per truck


Depreciation (RM9,000 /
years)
Diesel, oil, tyres and repairs

1,200
1,800*
*
RM0.07 per mile

** Based on obsolescence rather than on wear and tear


Required:

i.

ii.

iii.

iv.

Assume that Perabot Brothers Sdn. Bhd. has purchased one truck that has
been driven 50,000 kilometres during the first half year. Compute the
average cost per mile of owning and operating the truck.
(9)
At the beginning of the second year, Perabot Brothers is unsure whether to
use the truck or leave it parked in the garage and have all hauling done
commercially. (Payment of vehicle taxes is required even if the vehicle is not
used.) What costs from the previous list are relevant to this decision?
Explain.
(8)
Assume that the company decides to use the truck during the second year.
Near year-end an order is received from a customer over 1,000 kilometres
away. What costs from the above list are relevant in a decision between
using the truck to make the delivery and having the delivery done
commercially? Explain.
(2 marks)
Occasionally, the company could use two trucks at the same time. For this
reason, some thought is being given to purchasing a second truck. The total
kilometres driven would be the same as if only one truck were owned. What
costs from the list are relevant to a decision over whether to purchase the
second truck? Explain.
(3)
b. Damai Laut Sdn. Bhd. makes marine equipment. The company has been
experiencing losses on its pump product line for several years. The most recent
quarterly contribution format income statement for the pump product line is as
follows:
Damai Laut Sdn. Bhd.
Income Statement - Pump Product Line
for the Quarter ended 31 March
RM

850,0
00

Sales
Variable expenses:
Variable manufacturing expenses
Sales commissions
Shipping

RM

330,0
00
42,00
0
18,00
0

BMAC5203/MAY16/A-NK

390,0
00
460,0
00

Total variable expenses


Contribution margin
Fixed expenses:
Advertising
Depreciation of equipment (no resale value)
General factory overhead *
Salary of product-line manager
Insurance on inventories
Purchasing department **
Total fixed expenses
Net operating loss

270,0
00
80,00
0
105,0
00
32,00
0
8,000
45,00
0
540,0
00
(80,00
0)

*
Common costs allocated on the basis of machine
hours.
** Common costs allocated on the basis of sales dollars
Discontinuing the pump product line would not affect sales of other product lines
and would have no effect on the companys total general factory overhead or total
purchasing department expenses.
Required:
Would you recommend that the pump product line to be discontinued? Support
your answer with appropriate computations.
(8)
(TOTAL: 30)