MNGT2113 Management and Financial Accounting Teamwork

Assessment Task 2

Management and Financial Accounting Teamwork

Due date: Friday 14^th April 2023

Weighting: 35%

Total marks: 50

Word limit: 1500 words (Teamwork Agreement, meeting minutes, summary emails and the recommendation email of Part Two Management Accounting) + financial and management accounting reports

Teamwork

You are required to form a team with three (3) members. It is your responsibility to make your team. Use the Find a Group discussion board to find members and then register your names under one of the group numbers listed in MyLO (under Groups then Assessment Task 3 group signup).

Your team is required to:

1. complete the Teamwork Agreement document (see learning activities under Assessment Task 3 in our content);

1. complete regular meeting minutes and summary emails (see learning activities Assessment Task 3 in our content);

1. complete Part One Financial Accounting, via a worksheet, Income Statement and Balance Sheet using Excel; and

4. calculate the answers to Part Two Management Accounting, also Excel and present recommendations from this information to the owner by email.

If you have any issues with your team conforming to the Teamwork Agreement document, please notify your Unit Coordinator.

One person from your team will upload to the Dropbox:

1. the Teamwork Agreement document;

1. the first and last meeting minutes and summary emails;

1. three linked Excel worksheets for the transaction worksheet, the Income Statement and the Balance Sheet for Part One;

4. one Excel worksheet for the answers Part Two; and

5. one email (written in Word) for the recommendation about Part Two.

PART ONE

Financial Accounting

Cindy Wood decided to open Woodys Cafe on 1 January 2023. Cindy will sell sandwiches and coffee in her store and also take custom orders. She contributed raw materials valued at $3,000, equipment valued at $15,000 and patented recipes valued at $9,000. She also deposited $18,000 into a business bank account. Cindy plans to use her own vehicle to make deliveries and pick up supplies. Cindy purchased the vehicle for $45,000 on 1 July 2022. The expected life of the car is 5 years with a residual value of $10,000. On 1 January Cindy took out a $30,000 business loan with a fixed rate of interest of 12% p.a. Monthly repayments on the loan are $675 and are due on the 18^th of every month.

Transactions during January were:

4 Took a five-year lease on a shop and paid the first 6 months of rent $12,000.

4 Mr. Long requested a quote for a custom order of 200 sandwiches.

4 Cindy purchased a $450 printer on credit.

8 Cindy contacted Mr. Long to inform her the custom order would cost $900.

9 Purchased supplies for $600, paid $150 cash in part payment for these supplies.

11 Cash received for her first week is deposited, $3,825.

12 EFTPOS sales of $187.5

13 Paid petrol $60, postage $15, and electricity bill $636.

13 Paid the balance of the printer owing from 4^th January.

14 Supplies used $123.

15 Mr. Long paid a $100 deposit for his sandwiches to be collected on January 31^st.

16 Engaged a part time assistant at an agreed wage of $375 per week.

17 Cash revenue received $1237.5

18 Paid the balance of the supplies purchased on January 9^th.

21 Raw materials purchased for $127.5 on credit.

23 Paid weekly wages to the assistant.

24 The owner withdrew $600 for her own use.

25 Revenue earned of $1398, receiving $198 in cash, $900 EFTPOs and the remainder to be paid later.

28 Phone expenses paid of $60.

30 Cash of $1200 deposited.

31 Paid weekly wages to the assistant.

Required

Complete a worksheet on Excel for the month of January using the above data and prepare an income statement and balance sheet at 31 January 2023 (also on Excel and linked to the worksheet).

PART TWO

Management Accounting

An investment

Cindy is contemplating the purchase of a refrigerated van in which she can travel and deliver to customers in remote areas. The original purchase price of the van (beginning of year 1) is expected to be $165 000 and its expected useful life is 5 years. She expects the van to generate additional cash sales revenue in year 1 of $75 000, with associated cash expenses of $25 000. The additional sales revenue from and expenses of the van are projected to increase by 10 per cent each year. Ignore company income taxes.

Cindy estimates the required rate of return to be 10%.

Required

1. Calculate the net present value for the investment and state (with a justification of your answer) whether it should be accepted.

1. Calculate the payback period for the investment and state (with a justification) whether it should be accepted.

Breaking even on a product

Cindy will produce custom made birthday cakes with her assistant. She averages out the variable costs to be the following per cake:

1. Ingredients = $10

1. Decorations = $5

1. Labour = $20

She attributes fixed operational costs of $200 and marketing costs of $1000 per month to this product and thinks she could sell each cake for $50 dollars.

Required

1. How many cakes does she need to sell per month to break even? Round to the nearest whole number.

1. If she makes 90 cakes what is the margin of safety in dollars?

Further requirements

1. Write an email to Cindy explaining your professional opinion on:
   
   
   1. The non-financial benefits and costs that might be associated the purchase of the special van; and
   
   
   1. Cindy can source the decorations for the cakes from a supplier overseas for $2.5 per cake. She does not know anything about this supplier except for the price of their decorations. Outline some of the issues of accountability and possible implications that may be associated with using this cheaper supplier.
   
   
   

Budgeting

Cindy is considering producing edible cake toppers that she will sell in-store and online. She hopes to start selling this line in February and has provided you with her expectations of sales in dollars. Based on her prior experience, she expects the following collection pattern for its credit sales:

• 70 per cent collected in the month of sale

• 15 per cent collected in the first month after sale

• 10 per cent collected in the second month after sale

• 4 per cent collected in the third month after sale

• 1 per cent uncollectable.

The credit sales have been budgeted for the next seven months of the year, as shown below:

Required:

1. Cindy would like you to demonstrate how to budget for cash receipts. Using an Excel spreadsheet:

1. Calculate the estimated total cash receipts during June from credit sales.

1. Calculate the estimated total cash receipts during the June quarter (April-June) from credit sales during that quarter.

Marking Rubric