Student Details ( Student should fill the content)

Name
Batch Number
Student ID Cardiff Met ID : ICBT ID :
Scheduled unit details
Unit code MBA 7001
Unit title Accounting for Decision Makers
Assignment Details
Nature of the Assessment Assignment – Individual Report
Topic of the Case Study GIVEN
Learning Outcomes covered YES
Word count 4000 words
Due date / Time 30 March 2023
Declaration
I certify that the attached material is my original work. No other person’s work or ideas
have been used without acknowledgement. Except where I have clearly stated that I have
used some of this material elsewhere, I have not presented it for examination / assessment
in any other course or unit at this or any other institution
Signature Date
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Name & Signature of the
Marks by 1st Assessor
1st Assessor Agreed
Name & Signature of the Mark
Marks by IV:
IV
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Receipt date Received by

Assignment Type & Title:

For student use: Critical feedback on the individual progression towards achieving the
assignment outcomes

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For 1st Assessor use: Assessment feedback
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 Cardiff Metropolitan University

Accounting for Decision Makers (MBA7001)

Assignment (Individual work)

1. The objective of this assignment is to assess the application of theory and

knowledge gained in the above subject.

Word limit: 4000 words

Weighting of assessment: 100% total marks

2.       Assessment Criteria

A. Select an Annual report of a Company for the latest available period and
use the financial statements of the selected company to answer the
following questions.

i) “Accounting is important not only for the Accounting Professionals”.

Critically explain this statement indicating clearly the main objective of
Accounting. Explain various parties that use accounting information with
their specific purpose of using such information? (10 marks)

ii) What is the importance of using accounting policies/principles when

preparing financial statements? Select three accounting policies used by
the company in the preparation of financial statements from the annual
report and explain the importance of those policies. (10
marks)

iii) Using the financial statements of the selected company Calculate liquidity,
profitability, efficiency and solvency ratios for the recent two years and
write a brief report to the board of directors on the status of financial
position and financial performance of the company. (15
marks)

iv) Why might the revenue and cost figures shown on a standard income
statement not be representative of the actual cash inflows and outflows
that occurred during a period? Why cash position of an organization is
different from its profit? (10
marks)

B. CVP analysis studies the relationship of cost-volume-profit at different

levels of output. This analysis is an important tool for profit planning. The
three factors of CVP analysis, namely, costs, volume and profit are
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interconnected and dependent on one another. For example, profits
depend upon the selling price. Selling price, largely, depends upon cost of
production. Cost of production, in turn, depends upon volume of
production.

i) Business Firms have to experience various types of costs in

producing their products or in providing their services. Explain the
basis of costs classification as “Direct-Indirect” and “Fixed-Variable”
using examples of a selected manufacturing or trading company.
What are the main criteria that should be taken in to account in
determining whether a particular cost is relevant for business
decision making? (5 marks)

ii) Let Us Grow Ltd (LUG) is considering to produce a new product

which has the following revenue and cost estimates.

Per Unit (£)

Selling price 100
Direct material 20
Direct labour 30
Variable overhead 25
Rent charges* 20
Insurance charges* 20
Other fixed overhead 10
Profit / (Loss) (25)

* Rent charges represents the monthly rent payable for the building
used to produce the new product and monthly insurance premiums for
the vehicles used for the product is included under Insurance charges.
These per unit rates have been calculated assuming 2000 units of this
products will be produced per month.

A Senior Manager of LUG has recommended that this new product

should not be produced under these conditions, since there is a loss
from this product as per the above analysis. He has also proposed two
more alternatives in order to consider recommending the production of
the above product.

(a) Increasing the selling price by 25%.

(b) Using materials with lower cost (lower quality) and using more
unskilled labour, in order to reduce the cost of the production.

Critically analyze the information relating to the above product using

the appropriate concepts relevant to Cost-Volume-Profit (CVP)
analysis.
(15 marks)

iii) Explain the meaning of “limiting factor decision making” under CVP
analysis and the process of selecting the best production mix
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 stating clearly the other factors that should be considered in such a
situation. (5
marks)

C. “Capital Investment Decision is probably the most important decision for

an organization”.

i) Explain the meaning of the above statement clearly stating the

meaning and the importance of capital investment decision. What
are the other key finance decisions related to capital investment
decision? (5 marks)

ii) ABC Company is evaluating a Capital Project and the following

estimates have been done by the evaluation team on the same.

Initial investment cost of the project is Rs. 400 million and the
estimated net cash inflows for the project is Rs. 100 million per year
for the next five years. According to the current economic condition
and the level of risk involved in the project, it is considered that the
required rate of return of the investment should be at least 15% per
annum.

Since the project is expected to generate net cash inflows greater

than the initial investment cost, senior management has decided to
accept the project.

Using the appropriate capital investment evaluation techniques,

critically explain the factors that should be considered in deciding
the acceptance of this project. Use the relevant calculations as
appropriate.
(10 marks)

D. We May Pay Ltd (WMP) is a Finance Company which has a considerable

deposit base due to the confidence they have created among their
customers as their name implies.

During the Management meeting, it was discussed about the preparation

of budgets for the company. Management is of the view that it is sufficient
to develop the budget by the Senior Management so that strict targets can
be given to all the employees to improve the performance of the company.
Further, it was discussed that since it is planned to improve the
performance by about 20% compared to the previous year, previous
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 budgets can be easily used to develop the next year budgets, and it will
help to complete the budgeting process without much cost and effort.

It was also discussed to prepare the operational budgets for the next
financial year on quarterly basis and to conduct reviews semi-annually.
However, Management Accountant of the company suggested that
operational budgets (specially cash budget) should be prepared more
frequently for this organization, since there is critical information that
should be available to make important decisions by the company.

Using the above information relating to We May Pay Ltd, critically explain
the importance of “Budgeting” to the organization, the approach used to
develop the budget highlighting its advantages and disadvantages, the
alternative approaches available to overcome limitations, and the relevant
frequency of the operational budgets.
(15 marks)

(Total – 100 marks)

End of Assignment

Important Information for Students

 The final version of your individual assignment softcopy needs to be uploaded to

the Turnitin via Cardiff Met Moodle before the deadline.

For TURNITIN submission please log on to www.cardiffmet.ac.uk and submit

through the Moodle.

 The final version of your individual assignment soft copy (word format only)
must be uploaded to ICBT SIS on or before the deadline.

Please log on to www.icbtsis.lk to upload your assignment.

The softcopy should be named as MBA-(subject number) (followed by the Cardiff
met student ID.
E.g. for Delivering Successful Projects Assignment
MBA-7024 -2000000

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 Students are expected to keep a backup of all the assignments. ICBT and Cardiff
Metropolitan University have all the right to re call for soft copy of any assignment at
any time during the course.

 Please note that plagiarism is treated as a serious offence and therefore the work you
produce must be individual and original although may work in groups in some
instances (Please refer to Student Handbook on Plagiarism & Cheating).

 All sources of information must be referenced using “Harvard referencing” where

a reference listing should be included at the end of the assignment.

 Please note that the submission date given for this assignment is the final date that
you can upload the assignment. No late submissions are allowed by the system.

 Please refer to Student Handbook on Assignments – Re-submission, mitigating

circumstances procedure.

 Please include the assignment coversheet and feedback sheet in your softcopy of the
assignment. Please avoid copying assignment question in your answer file.

 The submission instructions of Turnitin and ICBT SIS will be circulated a few
weeks before the submission deadline.

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