.0/msohtmlclip1/01/clip_image002.gif”>Qatar University
College of Business and Economics
Department of Accounting and Information Systems
ACCT 116 – Managerial Accounting
Fall 2014
Group Project
Due date: Written assignment to be submitted on 23rd November 2014
This assignment contributes 10% to the total assessment for this course The assignment is to be done in syndicates of 5 members
1. Syndicate Membership:
You are required to form syndicates of 5 members and submit a syndicate form (see attachment) to your instructor by 26th October 2014. Your mark will be based on the mark that your syndicate achieves.
2. Background Information
Gonzales plc is considering the following budgeted income statement for the coming year:
Budgeted Income Statement
$
$
$
Sales at $4 per unit
320,000
Less
Materials
120,000
Wages
48,000
Variable overhead
24,000
192,000
128,000
Less Fixed Overhead
Factory costs
10,000
Administration costs
20,000
Marketing costs
20,000
50,000
Profit
78,000
The directors of Gonzales wish to see profit increased to at least $100,000 and have asked the marketing manager to suggest alternative strategies of achieving this. The factory is currently working at 50% of capacity and the alternatives proposed by the marketing manager are as follows:
Alternative 1: To increase sales by a combined strategy of reducing the selling price to $3.70per unit and undertaking a special marketing campaign at a cost of $21,600.
Alternative 2: To accept an offer from an overseas customer to purchase units at $3.00 each(these are additional to those included in the original budgeted income statement as shown above). If this offer was accepted, Gonzales would incur additional administration costs of $5,000.
Required:
a) Using an excel sheet that shows the relevant formulas; calculate the break-even point
(in units as well as in dollars)for the original budgeted income statement provided above.
(Weight 10%)
b) Assuming that Alternative (1) proposed above of reducing selling price and undertaking a marketing campaign was adopted, calculate the quantity that would need to be sold to yield a profit of $100,000. You are required to present your answers in an excel sheet that shows the relevant formulas.
(Weight 20%)
c) Regarding Alternative (2) above, and assuming that the order from an overseas customer for additional units was accepted, you are required to determine the volume of units that would need to be sold to the overseas customer to increase the profit from the current budgeted figure of $78,000 to the required figure of $100,000. You are required to present your answers in an excel sheet that shows the relevant formulas.
(Weight 20%)
d) It has always been argued that certain underlying assumptions place definite limitations on the use of CVP analysis. Therefore, it is essential that anyone preparing CVP information should be aware of the underlying assumptions on which the information is to be derived. If these assumptions are not recognized, serious errors may result and incorrect conclusions may be drawn from the analysis. In word format, discuss these assumptions underlying cost-volume-profit analysis.
(Weight 25%)
e) Regarding the two alternatives proposed above, and to enable the directors of Gonzales to decide which alternative is favoured, in word format, you are required to provide management with an analysis and assessment of any other factors that should be taken into accountwhen advising the directors of Gonzales with regard to these twoalternatives.
(Weight 25%)
(Total Marks: 10)
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General guidelines:
Your report should contain:
(a) Group assessment cover sheet. This cover sheet must include your team members full names and student ID numbers.
(b) The report should contain, immediately after the cover sheet, a paragraph which highlights the contribution of each member towards the accomplishment of the project and also the steps and procedures undertaken in order to come up with this contribution.
(c) The report is a joint responsibility, and each member is responsible fornumerical accuracy, presentation, and standard of writing. If there are problems within the group which you cannot resolve, please discuss with your instructor
IMMEDIATELY as no late complaints will be considered. If the problemsare not resolved and it is felt there has been an unequal contribution, then, exceptionally, you should inform your instructor of the proportion of the workwhich has been contributed by each member.
(d) Please use Times New Roman as the font, size 12, and lines are to be 1.5 spaced NOT SINGLE SPACED, also ADJUST THE LINES IN ALL THE PARAGRAPHES.
(e) To satisfy the last two requirements, you are expected to refer to several internet websites and state their links in the list of references at the end of your report. Failing to do so would be treated as plagiarism- a breach ofregulations with serious penalties.
(f) The team leader must send/submit a copy of the report to the instructors e-mail or online on the Blackboard by the due date; Sunday 23rd November 2014. The team leader is also required to submit a hard copy to the instructor by the due date.
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