Accounting 1 free essay sample

Referencing: APA referencing is to be used only where necessary however you DO NOT need to reference the assignment question. However, you DO need to reference your textbook (or any other text) IF you have QUOTED or PARAPHASED it. (See the library course page on the ACCTG 101 Cecil home page for details on how to use APA referencing). Always answer the questions in your own words. Presentation: Typed on A4 paper using Arial font and 11 font size. If calculations or tables are required for an answer they should be set out neatly and labelled clearly. Bullet point answers are acceptable only if the whole sentence makes sense. Plussage: It is important that you attempt this assignment to the best of your ability in order to qualify for plussage (see details in course book document on Cecil for details). Hand in: Please make sure that you hand your assignment into the correct box. Do not post it in the RETURN box as it will NOT be marked. The POSTING boxes are directly behind the lift on level 0 in the OGGB building. Workings: For any calculation type questions, you should show all workings, no matter how trivial they may be. This is good practice for the test and exam. Questions 40 marks 1. Business Organisation – 6 marks Select a company listed on the New Zealand Stock Exchange (NZX) https://www. nzx. com/markets/NZSX/indices/ALL. Locate the latest Annual Report. You may not use Auckland International Airport or The Warehouse’s annual reports to answer this question. Using information from the NZX website and the latest Annual Report of the company that you have selected, answer the following questions; a. What is the name of the company? Is it a service, merchandising or manufacturing company? 1 mark) b. Who is the largest shareholder of the company and what percentage of the business do they own? (1 mark) c. What is the market capitalisation? State the date and source for your answer. (Show your workings). (1 mark) d. What is the book value of the company? State the source for your answer. (1 mark) e. Discuss two reasons why there is a difference between the book value and the market val ue (capitalisation) and provide relevant examples of each reason. (2 marks) (Total 6 marks) Page 1 of 3 Assignment 01 Questions DUE DATE: 8 April 2013 2. Cost Volume Profit – 12 marks (a) Planters for Africa Company plans to sell 1,000 chainsaws at $400 each in the coming year. Product costs include: Direct materials per chainsaw Direct labour per chainsaw Variable factory overhead per chainsaw Total factory overhead cost Fixed selling and administrative expenses Total selling and administrative costs $180 $100 $25 $40,000 $30,000 $50,000 Required: Costs and contributions: (i) (ii) (iii) (iv) (v) (vi) (vii) Calculate the total variable costs per chainsaw. Calculate the total fixed costs for the year. Calculate the number of chainsaws that must sell to breakeven. Calculate the contribution margin ratio. Calculate the breakeven point in sales dollars. (0. 5 mark) (0. 5 mark) (1 mark) (1 mark) (1 mark) (1 mark) Prepare a contribution margin income statement based on the number of units calculated in (vii) above. (5 marks) Calculate the number of chainsaws that must be sold to earn a profit of $37,500. (b) Two companies have identical sales revenue of $15 million. Is it true that both have the same operating income and the same margin of safety? Is it possible that one company has a higher margin of safety? 2 marks) (Total 12 marks) Page 2 of 3 Assignment 01 Questions DUE DATE: 8 April 2013 3. Budgeting – 22 marks Margo Manufacturing produces a radiator used in the production of Toyota Pruis engines. The radiator is sold to a vehicle manufacturer. Projected sales for the coming five months are: January, 48,000 units; February, 55,000 units; March, 61,000 units; April, 69,000 u nits and May, 73,000 units. The unit selling price of the radiator is $199. The total budgeted figures for the monthly selling and administrative expenses are: January February March $298,000 $153,120 $164,400 Margo Manufacturing has the following production policies: Finished goods inventory: The desired ending inventory for each month is 80% of the next month’s sales. Inventory on January 1st was 40,000 units. Direct Materials: Eight kilograms of metal is used per unit of output. The per kilogram cost of metal is $12. The inventory policy dictates that sufficient direct material be on hand at the end of the month to produce 50% of the next month’s production needs. This is exactly the amount of material on hand on 31 December of the prior year. Direct Labour: The direct labour used per unit of output is four hours. The rate per hour is $16. 65. Overhead each month is estimated using a flexible budget formula. The cost driver for variable overheads is direct labour hours: Fixed-Cost Component ($) 45,000 41,000 190,000 30,000 69,200 Variable-Cost Component ($) 0. 50 0. 60 Maintenance Supervision Depreciation Rates Utilities All sales and purchases are for cash. Overheads and direct labour are paid in the month they are incurred. The cash balance on January 1st equals $200,000. The firm requires a minimum ending balance of $50,000. If the firm develops a cash shortage by the end of the month, sufficient cash is borrowed to cover the shortage. Any cash borrowed is repaid at the end of the quarter. The interest due on the cash borrowed is paid at the end of each month. The interest rate is 12 percent per annum. No money is owed at the beginning of January. Required Prepare the following budgets for the months of January, February and March. It is suggested that you use Excel to prepare these budgets. (i) Production budget in units. (3 marks) (ii) Direct materials purchases budget in kilograms and dollars. (5 marks) (iii) Direct labour budget. (2 marks) (iv) Overhead budget. (3 marks) (v) Cash budget. (9 marks) (Total 22 marks) Page 3 of 3