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Task -01 (LO - 6.1/6.2/6.3)
You have been appointed as the new Finance Manager of your company from 1st May 2016. Your first task of the position is to analyze the overall financial result and position of the business entity. Use financial statements (Income Statement and Statement of financial position) in 2013/2014 and 2014/2015 of your organization and provide your opinion on the present financial result and position based on the given financial statements. Your opinion should be presented in the form of report to the board of directors.
Your report should contain
- Introduction of the analysis with relevant measures such as Profitability, Short-term Liquidity , Long-term Stability and Efficiency
- Calculation of Relevant Accounting Ratios for each measure in both financial years.
- Comparison of ratios.
- Discussion of each measure with comparison and trend
- Your opinion and conclusion
Note: Please provide income statement and statement of financial position in 2013/2014 and 2014/2015.
Task -02 (LO - 1.1/1.2/1.3/2.1/2.2)
Mr. Sam is a proprietor who produces garments to the local market. The business firm is carried out in a rented building. The business property is an insured entity and the insurance premium is paid by Mr. Sam as per the building rent agreement. The manager of the business receives a fixed amount of remuneration. Special payment should be made to the municipal council on the production activities carried out by all domestic garment producers. Sam is a member of Domestic Garment Association (DGA) and pays membership fee of Rs.25, 000/- annually. This association provides various services to the members so as to improve their businesses.
Fabric is the main materials used for garments and other raw materials are also used in the production. The factory uses electricity mainly for production activities. Factory labour force plays a vital role in the production process and it accounts for a considerable proportion of the total cost of the production. Special cleaning service is provided by a local cleaning service on every production day. Other cleaning services are done by company cleaning staff. Rs.60/- of special garment Tax must be paid for each unit of garment.
Following additional information is provided for the month of March 2015
Selling Price Rs. 1200
Direct materials Rs.220
Direct Labour Rs.360
Variable overhead Rs. 140
Total Fixed Cost Rs. 240,000
Normal production capacity of the business is 2000 units. Budgeted sales for April-2015 are 2200 units. Fixed cost remains unchanged in each month.
You are required to,
1. Identify Five fixed costs and Five variable cost in the Sam’s Business
2. Determine the break even production level for month of March
3. Calculate Margin of safety for the month of April-2015
4. Calculate the budgeted profit for April-2015
5. Determine sales requirement to achieve a profit of Rs.100,000/- in March-2015
6. Calculate contribution to sales Ratio
7. Prepare Income Statement for Sam’s Business for the month of March.
8. Explain the difference between Absorption Costing and Marginal Costing