OUM BUSINESS SCHOOL

SEPT 2016

BMAC 5203
ASSIGNMENT 2

ACCOUNTING FOR BUSINESS DECISION MAKING

NAME : Y NIRMALA YELLAMALAI

MATRICULATION NO : CGS01164101
IDENTITY CARD NO. : 811030-08-5690
TELEPHONE NO. : 019-2010565
E-MAIL : nirmus2430@yahoo.com
LEARNING CENTRE : GREENHILL LEARNING CENTER
Question 1

A) Sales Budget (In Units & Ringgit)

Quarter
1st 2nd 3rd 4th Year
Sales in Unit 2000 6000 8000 4000 20,000
Price Per Unit 25 25 25 25 25
Sales In RM 50,000 150,000 200,000 100,000 500,000

B) Cash Receipts Budget

Quarter
1st 2nd 3rd 4th Year
Accounts Receivable 4th
Quarter 2016 40,000 40,000
1st Quarter Sales
60%X 50000 30,000 30,000
40% X 60,000 20,000 20,000
2nd Quarter Sales
60%X 150,000 90,000 90,000
40% X 150,000 60,000 60,000
3rd Quarter Sales
60%X 200000 120,000 120,000
40% X 200,000 80,000 80,000
4th Quarter Sales
60%X 100000 60,000 60,000
Total Cash Collection 70,000 110,000 180,000 140,000 500,000

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C) Production Budget

Quarter
1st 2nd 3rd 4th Year
Budget Sales 50,000 150,000 200,000 100,000 500,000

Add:Desired Ending Inventory 15000 20000 10000

Total Needs 65,000 170,000 210,000 100,000 500,000
Less: Beginning Inventory 200 15,000 20,000 10,000 200
Required Production 64,800 155,000 190,000 900,000 499,800
D) Direct Material Budget
Quarter
1st 2nd 3rd 4th Year
Production 64,800 155,000 190,000 90,000 499,800
Materials Per Unit(Kilogram) 2 2 2 2 2
Productions Need 129,600 310,000 380,000 180,000 999,600

Add: desired Ending Inventory 31,000 38,000 18,000 99,960

Total Needed 160,600 348,000 398,000 279,960 999,600
Less: Beginning Inventory 480 31,000 38,000 18,000 99,960
Materials To Be Purchased 160,120 317,000 360,000 261,960 899,640

E) Cash Disbursement Budget

Quarter
1st 2nd 3rd 4th Year
Accounts Receivable 4th
Quarter 2016 10,980 10,980
1st Quarter Purchases
70%X 800600 560,420 560,420
30% X 800,600 240,180 240,180
2nd Quarter Purchases
70%X 158,5000 1,109,500 1,109,500
30% X 158,5000 475,500 475,500
3rd Quarter Purchases
70%X 1800000 1,260,000 1,260,000
30% X 1800000 540,000 540,000
4th Quarter Purchases
70%X 1309800 916,860 916,860
Total Cash Collection 571,400 1,349,680 1,735,500 1,456,860 5,113,440

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Question 2

Variable Cost Ratio : Total Variable Cost

A)
Total Sales

: 120,000
200,000

: 60%

Contribution Margin Ratio : Contribution Ratio

Sales

: 80,000
200,000

: 40%

B)

Sales = Variable Expenses + Fixed Expenses + Profits

Where:
Q: Number of Bikes Sold
RM 20 : Unit Sales Price
RM 12 : Total Variable Cost
RM64000 : Total Fixed Expenses

RM 20 Q = RM12Q + RM64000 + 0
RM8Q = RM64000
Q = 8000 Units (Break- even in Units)

Sales = Variable Expenses + Fixed Expenses + Profits

Where:
X : Total Sales Dollars
0.60 : Variable Expenses As Percetage of Sales
RM64000 : Total Fixed Expenses

X = 0.60X + RM64,000 +RM 0

0.40x = RM64,000
X = RM160,000 (Beak-Even In RM)

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C) Sales = Variable Expenses + Fixed Expenses + Profits
RM20Q RM12Q + RM64000+RM30000
=
RM8Q RM94,000
=
Q 11750 Units
=

D)
Total Total(RM) Per
(RM) Unit
Sales 225,000 200,000 RM20
Total Variable Cost 135,000 120,000 RM12
Contribution Margin 90,000 80,000 RM8
Total Fixed Cost 64,000 64,000
Operating Income 26,000 16,000

* additional profit that Mira would earn is RM10,000

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E)
Margin of Safety = Totals Sales - Break-Even Sales
RM200,000 - RM160,000
RM40,000 (In RM)

Margin Of Safety = Projected Units - Break-even Units

= 10,000- 8,000
= 2,000 ( In Units)

F)
Original (30 % Increased )
Total(RM) Total (RM)
Sales 200,000 260,000
Total Variable Cost 120,000 156,000
Contribution
Margin 80,000 104,000
Total Fixed Cost 64,000 64,000
Operating Income 16,000 40,000

Operating Leverage = Contribution Margin

Net Income
= 80,000
16,000
= 5

(i)% Change in Operating Income= 5.0 x 30%

= 150%

(ii)Expected Operating Income = 16,000 + (1.5 X 16,000)

= RM 40,000

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Reference:

Dr .Jaspal.Singh (April 2016). Accounting For Decision Making (1st ed.). London: Open
University Malasysia

Share research (2016). . Retrieved from http://www.academia.edu

Share research (2016). . Retrieved from http://www.books.google.sg

Share research (2016). . Retrieved from http://www.accountingtools.com.my

Share research (2016). . Retrieved from http://www.wikepedia.com

Share research (2016). . Retrieved from http://www.investopedia.com

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