Management Accounting

TASK 1

1. Spread sheet to analyse organisational performance

From the above table it can be analysed that organisation can get a success in the market as estimated sales for each month is 15600, profits are 11433 and closing profits are 76803 which is estimation based of estimated information and figures.

TASK 2

1. Calculation of BEP, margin of safety and budgeted net income

Calculation of BEP:

Calculation of margin of safety:

Budget net income at the targeted level of sales:

As analysed form above tables that total BEP in units for Scott is 0.72, 1.10 and 2.09 for all the three types of computers. Margin of safety for all those three computers are 1.28, 4.9 and 9.91. Total profits for all the computers are 1841.5, 4633.5 and 4957.5 (Burkert and Lueg,  2013).

2. Requirement of funds

It has been analysed that total fund requirement to start the business is 6000 pound while starting the business. As the use of ban account for personal use will be considered as drawings than Scott have to pay interest on 1000 pound and the interest rate for the same is 24%.

Total interest= 1000*24/100*1/12

= 20 pounds per month in the situation of overdraft

3. Budgeted cash flow

It is assumed that Scott is willing to take a loan of 20000 pounds. If he takes loan outside of the organisation than he have to pay interest on the loan the assumed interest rate for the loan is 18%. this loan has been taken for 12 months (Johnson, 2013). The instalment will be the combination of principle amount and interest. In the situation of loan estimated cash flow is as follows:

From this can flow statement it can be determined that Scott is able to take a bank loan as all the installments and interest can be paid by him on time.

4. Cash Budget

From the above cash flow it has been analysed that at the end of sixth month organisation is going to have a estimated profit of 76803 pounds. The estimated sales for each month is 15600 pounds which is because Scott has estimated that he will sale at least 20 computers. Total amount of the loan has been taken form the example which is shown in the question (Sisaye and Birnberg, 2012).

Conclusion

From the above project report it has been summarised that management accounting is the process of analysing the business performance. Information gathered from various sources like BEP, margin of safety, cash budget can help the stakeholders to analyse that organisation is performing well or not.

References

• Bourne, M. and et. al., 2014. Emerging issues in performance measurement. Management Accounting Research. 25(2). pp.117-118.
• Burkert, M. and Lueg, R., 2013. Differences in the sophistication of Value-based Management–The role of top executives. Management Accounting Research. 24(1). pp.3-22.
• Johnson, H. T., 2013. A New Approach to Management Accounting History (RLE Accounting). Routledge.
• Sisaye, S. and Birnberg, J. G. eds., 2012. An organizational learning approach to process innovations: the extent and scope of diffusion and adoption in management accounting systems. Emerald Group Publishing Limited.

UPTO50%

Avail The Benefit Today!

To View this & another 50000+ Free Sample

Enter Email

Submit