Task 1
Statement of Profit or Loss
Statement of Financial Position
Task 2
Report – calculations
Report – comments and recommendations
Brief summary of ethics in accounting
Task 1
On 31 December 2019 the following information was available from the books of Maya McGreary, a sole trader operating in the cosmetics industry.
£ £
Bank Loan 30 000
Heat and light 3 300
Rent and rates 27 400
General expenses 82 900
Salaries 130 500
Drawings 7 600
Administrative expenses 2 700
Machinery at cost 50 000
Provision for depreciation of machinery 15 000
Motor vehicles at cost 60 000
Provision for depreciation of motor vehicles 12 000
Rent received 800
Sales Revenue 520 000
Purchases 234 600
Discount received 2 600
Carriage inwards on purchases 3 700
Capital at 1 Jan 2019 92 400
Commission received 4 200
Bank balance (not an overdraft) 23 000
Trade Receivables 31 000
Trade Payables 17 000
Inventory at 1 Jan 2019 37 300
694 000 694 000
Additional information:
- Closing inventory at 31 December 2019 was valued at £35,000
- Rent for the two-month period 1 November 2019 to 31 December 2019 is due and unpaid. The rent is £12,000 per annum.
- Included in the administrative expenses is a payment of £600 relating to a course that one of the employees will attend in February 2020.
- Machinery is depreciated using the straight line method and is expected to last 10 years; motor vehicles are depreciated at 20% using the reducing balance method.
Requirements for Task 1:
• Prepare the statement of profit or loss for the year ended 31 December 2019 and the statement of financial position at that date for Maya McGreary’s business.
Assessed Learning Outcomes – Task 1
- Prepare key financial statements within the private sector.
Task 2
Maya is investigating an opportunity to enter the perfume market and has carried out some market research, as well as preparing some financial data relating to the coming year ending 31 December 2020.
Each bottle of perfume will sell for £35
Expected costs will be: £
Direct materials 8
Direct Labour (90 minutes paid at £6 per hour) 9
Variable manufacturing costs 3
The annual fixed costs associated with opening and running the new factory are expected to be £360,000 per year. Maya hopes to achieve a weekly profit of £3,000. She operates on a 52-week year.
Since carrying out her original research, Maya has now discovered she is not meeting the minimum wage for her employees, which needs to be £8 per hour, and she had not included the cost of the bottling machine which will be leased at a monthly cost of £4,560.
Also, Maya would actually like her weekly profit to be higher than £3,000 per week but does not believe the market will accept a higher selling price and so is contemplating using cheaper materials, which are rumoured to cause skin damage.
Another possible course of action would be to import the perfume from a manufacturer in South East Asia and be just a wholesaler and retailer, rather than a manufacturer as well.
Required for Task 2:
You are to write a report to Maya advising her on all aspects of her intended venture into the perfume market.
Your report should include:
• A calculation of the number of bottles of perfume Maya would have needed to produce and sell per week in order to break even and to achieve the planned weekly profit, based on her original data.
• A calculation of the number of bottles of perfume Maya will now need to produce and sell per week in order to break even and to achieve the planned weekly profit, in light of the new information about wages and the bottling machine.
• Advice to Maya of what the possible effects would be of using the cheaper materials, or buying in the perfume instead of producing it herself, and suggestions of other possible actions which she could take to increase predicted profits.
Assessed Learning Outcomes – Task 2
- Prepare and analyse financial accounting information for effective business optimisation.
- Apply appropriate ethical considerations to financial data.
Presentation of report;
Student Number Only (No name), Module Name, Assignment Number and due date in ‘Header’
Double space lines
Arial font – size 12
Insert Page numbers
Harvard Referencing
Mark Scheme
Task 1
Statement of Profit or Loss 25
Statement of Financial Position 25
Task 2
Report – calculations 20
Report – comments and recommendations 20
Brief summary of ethics in accounting 10
Total
100
Comments from Customer
Dear Writer,
Please , used the sources listed below (these have to be cited)
Atrill, P. McLaney, E. (2015) Management Accounting for Decision Makers 8th Ed. Pearson.
Davies, T. (2011) Business Accounting and Finance. Prentice Hall.
Leiwy, D. and Perks. R. (2013) Accounting: Understanding and Practice 4th Ed. McGraw-Hill.
Seal, W. and Rohde, C. (2014) Management Accounting. 5th Ed McGraw-Hill Higher Education.
Journals:
(available via PRIMO)
• Accounting, Organizations and Society
• The British Accounting Review
• Journal of Management and Governance
As well as Open University free accounting courses and resources.
Thank you.
A.