Financial management/mba
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- Bu səhifədəki naviqasiya:
- Section A Case Study Total: (40 marks) Question 1
- Total Non-Current Assets
- Total Current Liabilities
- Total Liabilities And Equity
- KMC Ltd. Statement Of Financial Performance
- Profit for the year $ 4,500 $ 5,450 REQUIRED
- Industry Ratios for 2018
- Average 2017 2018
- SECTION B - Answer any THREE (3) Questions (Total: 60 marks) Question 4
- MODEL MODEL HITECH NAPTUNE $
- YEAR 0
- MANUFACTURING Variable materials
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Course Title: Accounting for Decision Making Time – 3 Hours Marks – 100 Term: Final Examination Instructions: Answer all the question in Section A and any 3 questions from Section B. Exam taker: ULUGBEKOV SARDORBEK ULUGBEKOVICH Section A Case Study Total: (40 marks) Question 1
REQUIRED: Based on the above financial statements, complete the following table. Show workings. (25 marks)
b) Using the ratios calculated and the industry averages, comment on the following:- (15 marks) (i) The liquidity position of the firm. On this ratio the position of KMC2017 is 1.83 which is higher than that of Average Industry, but KMC2018 with 0.89 is lower than the position of Average Industry. Management’s ability to generate adequate profit on the firm’s asset. T`he firm’s financing of the assets. The firm`s total assets divide into two big parts which includes tatal current and non-current asstes in 2017 and 2018. The firm`s total current assets are in all $ 50 500 in 2017 and also $ 62 000 in 2018. It is clear that the amount of the financing of the firm`s total current assets in 2017 are lower than that of the firm`s in 2018. On the other hand the firm`s total non-current assets in the two years too are more than the total current asset, with $ 62 000 in 2017 and with $ 88 000 in 2018. Total assets of the firm in 2017 is $ 112 500 and $ 150 000. The return received by the shareholders. The amount of equity both KMC2017 and KMC2018 are much higher than the Average Industry with 9.5%. it is actually good for the company and its strategies of managers. SECTION B - Answer any THREE (3) Questions (Total: 60 marks) Question 4 Maju Bhd. makes uniforms for several large customers. They have received an order to produce 1,000 uniforms. The order will take 3,500 metres of material that costs $10 per metre and will require 1,500 direct labour hours and 625 machine hours. The following are the expected annual total costs and expected total labour and machine hours for Maju Bhd. Direct labour cost : $279,000 Direct labour hours : 31,000 hours Direct materials : $210,000 Overheads : $124,000 Machine hours : 20,000 hours REQUIRED:- From the above information, calculate the following:- The overhead absorption rate given that the process is labour intensive. (3 marks) (b) The total costs to Maju Bhd. of fulfilling the order. (9 marks) (c) The cost of the order if Maju Bhd. choses to use machine time as the basis for allocating overheads. (5 marks) The company’s normal practice is to add a mark-up of 20% to total cost. Determine the selling price by using labour hours as a basis of absorbing overheads. (3 marks) Order – 1 000 Direct material – 3 500 * $ 10 = $ 35 000 Direct labour hours – 1 500 Machine hours – 625 Total Direct labour cost – 279 000 Direct labour hours – 31 000 hours Direct materials – 210 000 Overheads – 124 000 Machine hours – 20 000 hours Manufacturing overhead rate = 279 000 / 31 000 = $ 9 per Machine hours overhead rate = 124 000 / 20 000 = 6.2 per hour Total cost: direct material cost + direct labour cost + direct labour hour + allocate manufactured overhead = 35 000 + (1 500 * 9) + (625 * 6.2) = 52 375 Allocate manufactured overhead = 13.95 * 625 = 8 718,75 Total: 52 375 + 8 718,75 = 61 093,75 Selling price: total cost (1+mark up) = 61 093,75 *(1+0.2) = 73 312,75 Question 5 The managers of TMC Bhd. are currently considering two mutually exclusive investment projects (only one can be accepted). Both projects are concerned with the purchase of a new truck. The following data is available for both trucks. MODEL MODEL HITECH NAPTUNE $ $ Purchase of cost (immediate outlay) (285,000) (165,000) Expected net cash flow Year 1 120,000 80,000 Year 2 90,000 78,000 Year 3 80,000 50,000 Year 4 65,000 40,000 Year 5 60,000 35,000 TMC Bhd. has a cost of capital of 12% and has laid down the following criteria for all project selection: The payback period must be less than three years. The net present value must be positive when discounted by the cost of capital. The profitability index must be more than 1. The present value of $1 at 12% is as follows:- YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 1 0.8929 0.7972 0.7118 0.6355 0.5674 REQUIRED:- For each truck, calculate the following: (i) The Payback Period for each truck. (4 marks) If all cash flow for the year is $ 285 000, then assume monthly cash flow = $ 285 000 / 12 month = $ 23 750 per month Straight line depreciation applies $ 285 000 / 5 years = $ 57 000 per year Project HITECH YEARS NET CASH FLOW 0 $ 285 000 1 $ 120 000 2 $ 90 000 3 $ 80 000 4 $ 65 000 5 $ 60 000 2 years we have recovered $ 210 000 of the required $ 285 000 Balance to reqover is $ 285 000 - $ 210 000 = $ 75 000 Therefore PAYBACK PERIOD = 2 + ($ 75 000 / ($ 80 000 + $ 65 000 + $ 60 000)) = 2.36 YEARS Project NAPTUNE YEARS NET CASH FLOW 0 $ 165 000 1 $ 80 000 2 $ 78 000 3 $ 50 000 4 $ 40 000 5 $ 35 000 2 years we have recovered $ 158 000 of the required $ 165 000 Balance to reqover is $ 165 000 - $ 158 000 = $ 7 000 Therefore PAYBACK PERIOD = 2 + ($ 7 000 / ($ 50 000 + $ 40 000 + $ 35 000)) = 2.056 YEARS (ii) The Net Present Value for each truck. (8 marks) Net Present Value for Project HITECH YEARS NET CASH FLOW 0 $ 285 000 1 $ 120 000 2 $ 90 000 3 $ 80 000 4 $ 65 000 5 $ 60 000 The company`s cost of capital is 12 % NPV = - 285 000 (year 0) + 120 000 / 1 (year 1) + 90 000 / 1.12*1.12 (year 2) + 80 000 / 1.12*1.12*1.12 (year 3) + 65 000 / 1.12*1.12*1.12*1.12 (year 4) + 60 000 / 1.12*1.12*1.12*1.12*1.12 ( year 5) = - 285 000 + 107 142.8 + 71 747.4 + 56 942.4 + 41 308.6 + 34 045.6 = $ 26 186.8 Net Present Value for Project NAPTUNE YEARS NET CASH FLOW 0 $ 165 000 1 $ 80 000 2 $ 78 000 3 $ 50 000 4 $ 40 000 5 $ 35 000 The company`s cost of capital is 12 % NPV = - 165 000 (year 0) + 80 000 /1 (year 1) + 78 000 /1.12*1.12 (year 2) + 50 000 /1.12*1.12*1.12 (year 3) + 40 000 / 1.12*1.12*1.12*1.12 (year 4) + 35 000 / 1.12*1.12*1.12*1.12*1.12 (year 5) = - 165 000 + 80 000 + 62 181.1 + 35 589 + 25 420.7 + 19 859.9 = $ 58 057 (iii) The Profitability Index for each truck. (4 marks) Profitability Index for Project HITECH PI = (107 142.8 + 71 747.4 + 56 942.4 + 41 308.6 + 34 045.6) / 285 000 = 311 186.8 / 285 000 = 1.091 Profitability Index for Project NAPTUNE PI = (80 000 + 62 181.1 + 35 589 + 25 420.7 + 19 859.9) / 165 000 = 223 057 / 165 000 = 1.351 (b) State which, if either, of the two trucks the directors of TMC Bhd. should select. Justify your answer. (4 marks) I think that the Project NAPTUNE is profitable for getting firm`s stability revenue in the future, because of the fact that in two points the activity of Project NAPTUNE is higher than that of Project HITECH. Question 6 Lotus Ltd manufactures standard laptops, which it sells for $1,300 each. Next year the company plans to make and sell 25,000 units. The company’s costs are as follows:- MANUFACTURING Variable materials : $800 per unit Variable labour : $50 per unit Other variable costs : $15 per unit Fixed costs : $4,800,000 per year ADMINISTRATION & SELLING Variable : $12 per unit Fixed : $3,150,000 per year REQUIRED:- (a) Calculate the expected profit for next year. (4 marks) (b) Calculate the break-even point for next year, expressed both in units and sales value. (4 marks) (c) Calculate the margin of safety for next year, expressed both in units and sales value. (4 marks) (d) Explain the significance of the margin of safety using the results in part c. (4 marks) (e) The firm is considering spending an extra $500,000 on advertising; this is expected to increase the sales volume by 5%. Based on profits, do you feel that it is a good move? Show calculations. (4 marks) Sales – 25 000 Price – $ 1 300 Variable materials - $ 800 per unit Variable labour - $ 50 per unit Other variable costs - $ 15 per unit Fixed costs - $ 4 800 000 per year Variable - $ 12 per unit Fixed - $ 3 150 000 per year profit for the year: direct cost = 800 + 50 + 15 = 865 fixed cost = 4 800 000 / 25 000 = 192 manufactured overhead cost = 12 + (3 150 000 / 25 000) = 138 total manufactured cost = 865 + 138 = 1 003 fixed cost = 1 003 + 192 = 1 195 profit = (1 300 * 25 000) - (1 195 * 25 000) = 2 625 000 contributing margin per unit price – variable manufacturing cost = 1 300 (800 + 50 +15) = 435 break in point in units = fixed cost / contributing margin per unit = (4 800 000 + 3 150 000) / 435 = 18 275,8 = 18 276 contribution margin ratio (price – variable manufacturing cost) / price = (1 300 – 865) / 1 300 = 0.33 Break even in sales: 7 950 000 / 0.33 = 24 090 909 -- Yüklə 241,5 Kb. Dostları ilə paylaş:
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