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ASSIGNMENT based on-

“BAY TURNS 25”

Course No: Management of Accounting

Course Code: ACN202
Section: 04
Spring 2021

Submitted By-
Name: Shaima Akhter Shathy
ID: 1610150

Submitted To Faculty-
Naheem Mahtab CPA
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Table of Contents:

Topics Name Page

Cover Page
1

Table Of Contents
2

Company Brief History

3

1) Identify the Fixed and Variable costs related to construction

4

2) Related data to selling price in each project

4

3) Determine the breakeven point for each project if the fixed costs are as follows
4-5

4) Justify whether the customization should be allowed based on profitability

analysis and qualitative justifications. 6-7

5) Cash inflow from Sales & Rentals,

Cash outflow for Expenses 7

6) How department can the PMC department at Bay fulfil this process ensuring 8
responsibility budgeting?

Reference
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Company Brief history: ‘Bay Turns 25’

It started 25 years ago with the promise of Bay's customers. From this commitment the buildings
have demonstrated the values of hard work, dedication and unwavering qualities. The Gulf
project is a landmark milestone, all the result of people’s leadership and innovation.
The more than five dozen facilities found in today's Dhaka apartments are part of Bay's
contribution, and many are part of the National Building Code. As the real estate market in
Dhaka has evolved, so have customer demands, and with a long-term commitment to quality,
Bay has pioneered the maintenance and operation of professional buildings.
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Ans to the Qus. No.1

Using online research, here is identifying fixed and variable costs related to the construction:

Fixed Cost Variable cost

Electricity bill, 60000tk Labor cost per square feet,

Lift installation, 568000tk Construction materials,

Pool installation, 134000tk Apartment cost per square feet,

Land cost

Ans to the Qus. No.2

Following data related to selling price in each project and determine the selling price by
apartment type is:
Bay’s Chayaneer- (3600*25000sqft)
=90000000 selling price
Bay’s Lyra- (23000*4500sqft)
=103500000 selling price
Bay’s Selestte- (22000*3950sqft)
=86900000 selling price
-(22000*4150sqft)
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=91300000 selling price

Ans to the Qus. No.3

Determine the break-even point for each project if the fixed costs are as following:

Fixed cost Per Project (TK)

Site electricity 60000
Site Salary 95000
Site machinery 105000
Site common costs 267000
Lift installation 568000
Gardening 273000
Pool installation 134000
Total fixed cost 1502000

Variable cost:
Bay’s Chayaneer, (3600*18000) =64800000
Bay’s Lyra, (4500*20000) =90000000
Bay’s Seleste, (3950*20000) =79000000
Bay’s Seleste, (4150*20000) =83000000

Contribution Margin:
Bay’s Chayeneer, (90000000-64800000) =25200000
Bay’s Lyra, (103500000-90000000) =13500000
Bay’s Seleste, 3950sqft= (86900000-79000000) = 7900000
Bay’s Seleste, 4150sqft= (91300000-83000000) = 8300000

Breakeven point:
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Bay’s Chayaneer, = (Fixed cost/CM)

= (1502000/25200000)
= 0.0596
Breakeven point:
Bay;s Lyra, = (Fixed cost/CM)
= (15020000/13500000)
=0.1112
Breakeven point:
Bay;s Seleste, 3950sqft = (Fixed cost/CM)
= (15020000/7900000)
= 1.9012

Breakeven point:
Bay’s Seleste, 4150sqft= (Fixed cost/CM)
= (15020000/8300000)
= 1.8096

Ans to the Qus. No.4

Chayaneer original incremental cost is,

(Fixed cost + Variable Cost)
=1502000+64800000
=66302000
Total incremental cost is, {66302000+(42000+24000+90000)}
= (156,000+66302000)
=66458000
Incremental revenue is, 90000000
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And incremental net operating income is, 90000000 – 66458000

=23542000

Lyra original incremental cost is, (1502000+90000000)

=91502000
Total incremental cost is, 91814000
Incremental revenue is, 103500000
Incremental net operating income is, (103500000-91814000)
=11686000

Ans to the Qus. No.5

There is a variant report:

Details Budget (tk) Actual (tk) Variance (tk) Variance %

Cash inflows 396 (m) 239 (m) 157 (m) 39.65

Sales &
rental
Cash outflows 208 (m) 235 (m) -27(m) -12.98
expenses
Shortage 188 4 130 69.15

Here we see that there is a decrease in cash inflow, sales and rental income for the company. Bay
compared to their actual income. So the reason is for-it could be due to lack of demand as due to
the pandemic crisis, many of us has lost our jobs and it has reduced disposable their income.
And there compared to main budgeted cash outflow for expenses, the company has spent on
expenses, that reason could be increases in prices of raw materials and other cost related to
construction.
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Ans to the Qus. No.6

The PMC department should think about the following project life cycle:

The following way the PMC department can ensure the process of responsibility of budgeting.
There in all levels of management must be conscious of importance of budgeting and follow
their role.
Management uses budgets to show how it indicate to use resources to achieve the company’s
long range goals. And employees are likely to strive towards organizational goals if they
participate in setting them and in preparing budgets. Here budget follow up and data feedback
are part of the control aspect of budgetary control. Since the budget are dealing with their
projections for future operating results, financial positions then managers must continue check
budgets and correct if need.
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References

https://baydevelopments.com/bay-turns-25/

www.accountingtools.com

And the other information collected from the company “Bay Turns 25”