FIN401 FINANCIAL & MANAGEMENT ACCOUNTING
RESIT CHALLENGED BASED PROJECT
DATE DUE: 17th July 2022 @ 23:59PM
GENERAL INSTRUCTIONS TO CANDIDATES:
The participants of this coursework are expected to be familiar with CVP analysis AND capital
budgeting techniques. The course would take the form of an essay of about 1000 words. You are to
assume the position of a management accounting consultant and to analyse / give your opinion on
Two case studies that have been passed over to you. The coursework will enable you to understand
some of the key concepts and application of management accounting.
The paper is expected to be not more than 1000 words and the deadline is 17th July 2022 @ 23:59pm.
Please do ensure that the submission is typed (handwritten assignments will not be allowed). Make
sure that your name and ID number are on the assignment
INTENDED LEARNING OUTCOMES
Critical thinking
Begin to actively and independently question sources of information and how it is conveyed, in
order to form an objective judgement.
Cross-disciplinary integration
Begin to develop the ability to apply analyses and knowledge from multiple perspectives to a core
issue, problem or experience to form an integrated perspective.
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YOU ARE REQUIRED TO ANSWER ALL THE QUESTIONS
Case Study 1
Regents Sinks Plc has prepared its summarised profit and loss for its last financial year.
£’000 £’000
Sales (100,000 sinks) 2000
Direct materials 600
Direct labour 500
Fixed production overhead 400
Variable production overhead 100
Selling and administrative
overhead 600
2200
Loss -200
The directors are anxious to take remedial action to improve the company’s trading
position and, at the next director’s meet, the following separate proposals will be
considered.
Proposal A
Pay salesmen a commission of 10 per cent of sales and hence increase sales to reach break-
even point.
Proposal B
Increase sales through advertising of £400,000, together with a rise of 20 per cent in selling
price.
Proposal C
Cut selling price by 15 per cent, increase volume by 45 percent. reduce fixed production
overheads by £150,000.
Required
Calculate the break-even point as it stands (20 Marks).
Calculate the break-even points for each proposal (15 Marks).
Do a revised profit and loss account for each proposal and advise on which proposal is the
most viable one (15 Marks).
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Case Study 2
Regents Devices Inc
The Technical Director has been contacted by a UK company – Regents Devices Inc. which
is prepared to offer York the opportunity to manufacture a patented product under licence,
for exclusive sale in the Western European Market.
An initial licence fee of £100,000 will be payable to Regents Devices Inc. The following are
the P&L account so far for three years:
Year 1 Year 2 Year 3
£’000 £’000 £’000
Sales 320 470 540
Variable Manufacturing Costs 160 240 270
Contribution
Additional marketing costs 100 120 130
Profit
Question 1
From the above figures calculate the contribution and hence the profit for each year
(20 Marks).
Additional Information
In addition to the above there are royalty costs as follows:
Year 1 £12,800, Year 2 £18,800, Year 3 £21,600
Regarding inventory the cost are as follows:
Year 1 is £40,000; Year 2 is £5,000 and for Year 3 there is a credit in the account for
+£45,000.
Question 2
With a present value factor of 9% calculate the NPV of this project (30 Marks).