ASSIGNMENT BRIEF 2

BTEC HIGHER NATIONAL CERTIFICATE/ DIPLOMA

PLOMA IN BUSINESS

Student Name/ID Number

Unit Number and Title 5 Management Accounting
Academic Year 2018 - 2019
Unit Assessor Vanessa Kabigting
Assignment Title Effective Planning Tools for Managing Accounts
Issue Date 13 March 2019
Submission Date 08 May 2019
IV Name & Date

Submission Format

The submission is in the form of an individual written report

report.. This should be written in a concise, formal
business style using single spacing and font size 12. You are required to make use of headings, paragraphs
and subsections as appropriate and all work must be supported with research and referenced using the
Harvard
rvard referencing system. Please also provide a bibliography using the Harvard referencing system. The
recommended word limit is 2000 - 3000 words, although you will not be penalised for exceeding the total
word limit.

SUBMIT THE FINAL ASSIGNMENT AND DECLARATION STATEMENT THROUGH TURNITIN.

Unit Learning Outcomes
LO3 Explain the use of planning tools used in management accounting.
LO4 Compare ways in which organisations could use management accounting to respond to financial
problems.
Assignment Brief and Guidance
Scenario:

You are a newly hired Junior Management Accountant of a medium medium-sized

sized manufacturing business. You
were assigned to evaluate the use of planning tools to ensure financial stability and performance as well as
ways in which management accounting has played a key role in preventing and solving financial problems.

The report should contain the following:

1. An explanation of the advantages and disadvantages of at least three (3) planning tools used for
budgetary control. Provide an analysis on their application for preparing and forecasting budgets.
Answer the cases to support your analysis.
2. A research of at least two (2) companies undergoing financial problems (e.g. unfavourable
variances in budgetary targets, surplus/shortage ooff direct materials, shortage of cash inflows).
inflows)
Compare how organisations respond to financial problems using management accounting systems.
Consider an analysis of how management accounting can lead organisations to sustainable success.
3. A conclusion of how planning tools and financial governance respond to or prevent financial
problems. Consider management accounting skill sets, effective strategies and systems.

Answer the following cases with solutions in good form

form:
1. Carlton Cookie Company produces a hand hand-processed
processed gourmet cookie that is made with organic sugar.
Five (5) pounds of organic sugar are required per batch of gourmet cookies. The organic sugar costs $2.40
per pound. The company needs to have 20% of the follfollowing
owing month's production needs of organic sugar in
ending inventory so it is on hand to start each month. A total of 120 pounds of organic sugar are expected
to be on hand on April 1.

1. Budgeted production of the gourmet cookies for the first four months of the upcoming year is as
follows:

Number of batches of cookies to be produced in

January 600
Number of batches of cookies to be produced in
February 750
Number of batches of cookies to be produced in March 800
Number of batches of cookies to be produced in April 700

HNC/HND Business 3
Required: Prepare a direct materials budget for organic sugar for each of the months in the second
quarter and for the second quarter in total. Include both the quantity of sugar to be purchased and the
cost of the purchases in each month.

2. Byerly Corporation anticipates the following sales revenue over a five month period:

Byerly Corporation's sales are 40% cash and 60% credit. The Byerly Corporation's collection history
indicates that credit sales are collected as follows:

Month of sale 20%

Month after sale 50%
Two months after sale 25%
Uncollectible 5%

Required: Prepare a cash collections budget for each month in the quarter (January, February, and
March) and for the quarter in total.

3. Potato State Manufacturing is preparing its cash payments budget in the upcoming month. The
following information pertains to the cash payments:
a. Potato State Manufacturing pays for 70% of its direct materials purchases in the month of purchase and
the remainder the following month. Last month's direct material purchases were $40,000, while First State
Manufacturing anticipates $45,000 of direct material purchases this coming month.
b. Direct labor for the upcoming month is budgeted to be $25,000 and wil willl be paid at the end of the
upcoming month.
c. Overhead is estimated to be 150% of direct labor cost each month and is paid in the month in which it
is incurred. This monthly estimate includes $8,000 of depreciation on the plant and equipment.
d. Monthly operating
perating expenses for next month are expected to be $27,500, which includes $1,500 of
depreciation on office equipment and $2,000 of bad debt expense. These monthly operating expenses are
paid during the month in which they are incurred.
e. Potato State Manufacturing
anufacturing will be making an estimated tax payment of $6,000 next month.

Required: Prepare a cash payments budget for the month.

HNC/HND Business 4