Individual assignment

Question 1.
a) In each of the below five steps in a common strategic management process,
critically discuss how the strategic management accounting could assist in the
planning, control and decision making for a company.
i. Establish mission, vision and objectives
ii. Undertaking a position analysis such as SWOT
iii. Identify and assessing strategic options
iv. Select strategic options and formulate long and short term plans
v. Perform, review and control

30 marks
b) Identify and critically evaluate how the below variances could applied to
evaluate the performance of a manufacturing company:
i. Material price variance
ii. Material usage variance
iii. Wage rate variance
iv. Labour efficiency variance

20 marks
Total 50 marks

Question 2.
a) Critically evaluate the usefulness of relevant costs for management accounting
purposes.

15 marks

b) Critically evaluate the financial and non-financial (qualitative) issues that may
arise when an organisation is considering the following decision making
situation:
i. Outsourcing (make or buy) decisions
ii. Product mix decisions when capacity constraints exist

35 marks
Total 50 marks

Question 3.
CD Limited is preparing its annual budgets for the year to 31st December 2022. It
manufactures and sells one product, which has a selling price of £250.00. The
marketing director believes that the price can be increased to £280.00 with effect from
1st July 2022 and that at this price the sales volume for each quarter of 2022 will be as
follows:

Sales Volume
Quarter 1 18,000
Quarter 2 22,000
Quarter 3 20,000
Quarter 4 27,500
Sales for each quarter of 2023 are expected to be 30,000 units.
Each unit of the finished product which is manufactured requires three units of
component X and five units of component Y. Both items are purchased from an
outside supplier. Currently prices are:
Component X £8.00 each
Component Y £12.00 each
The components are expected to maintain their current levels of pricing as above
during all quarter periods of 2022.
Assembly of the two components into the finished product requires 4 labour hours:
labour is currently paid £7.50 per hour. A 5% increase in wage costs is anticipated to
take effect from 1st October 2022.
Variable overhead costs are expected to be £20 per unit for the whole of 2022, fixed
production overhead costs are excluded from the budget.
Stocks on 31st December 2021 are expected to be as follows:
Finished units 5,000 units
Closing stocks at the end of each quarter are to be as follows:
Finished units 20% of next quarter’s sales
Required:
a) Prepare the following budgets of CD Limited for the year ending 31st December
2022, showing values for each quarter and the year in total:
i. sales budget (in £s and units)
ii. production budget (in units)
iii. material usage budget (in units)
iv. production cost budget (in £s)

30 marks
b) Critically evaluate whether the use of continuous or rolling budget is more
effective than the traditional way of budgeting.

20 marks
Total 50 marks

– End –

The report should include critical evaluation of the models and concepts proposed outlining
their merits and limitations. You may incorporate logical assumptions with regard to the
company and use numerical examples to illustrate the models and concepts that you
propose to adopt

Answer

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