Question 1

A. Explain briefly what action management can take to manage direct labour if this is expected to be a scarce resource.

Note: You must use the relevant academic literature and relevant practical examples or case studies to answer this question and include references appropriately as an evidence of your wider reading and research.

B. Hygienics Co produces free-standing sanitiser units for domestic and commercial use. They produce a single product in a highly competitive market. They have gathered the following expected information for the year 2021:

£

Selling price (per unit)

Direct materials (per unit)

Direct labour (per unit) 155.00 60.25 30.50

Other costs are estimated for the year 2021 based on the expected sales of 62,000 units. These costs are given below:

Fixed Costs Variable Costs

Operating Costs 420,000 1,750,000

Marketing Costs 350,000 122,500

Storage Costs 570,000 101,000

Administration Costs 232,000 –

For the year 2021, you are required to calculate:

a) the expected profit or loss

b) breakeven point in units and sales revenue

c) margin of safety in units and % change

d) the profit/loss if the selling price is increased by 5% and sales quantity decreases by 50%

e) the revised break-even point in units for (d).

Question 2

A. Discuss the importance, for an organisation, of preparing a cash budget especially in light of the COVID-19 pandemic and the difficulties this may present.

Note: You must use the relevant academic literature to answer this question and include references appropriately as an evidence of your wider reading and research.

(15 marks)

B. Bright Co. has three production departments Star, Shine, and Spark and one service department Shade. Bright Co is preparing its annual budget for the final quarter of 2021. Planned overhead costs for the quarter are as follows:

Overheads £

Allocated overheads 40,000

Supervision 14,400

Depreciation 18,000

Machine Insurance 6,000

Rates and Rent 36,000

The following information is available for each department:

Departmental details Star Shine Spark Shade

Allocated overhead 12,500 14,000 10,250 3,250

Machine Value (£) 5,000 2,500 3,500 1,500

Budgeted Direct Labour hours 1,000 500 1,500 1,000

Floor Area Occupied (Square metres) 1,500 400 500 100

Of the total overhead costs allocated to the service department Shade, 30% is charged to Star and the remainder is charged equally to Shine and Spark.

a) Prepare an overhead analysis sheet showing the total overhead cost budgeted for all four departments. You must show all your workings clearly.

(25 marks)

b) Allocate the services department Shade’s costs to all production departments.

(5 marks)

c) Glow+ is one of the leading products of Bright Co. Bright Co. plans to earn 20% profit on per unit cost of Glow+.

Standard cost: Glow+ Per Unit

Direct Materials per unit £60

Direct Labour per unit £64

Labour hours per unit of each department:

Star 2

Shine 1

Spark 3

Calculate the unit price of Glow+ using the above information.

check the attached file for all the questions and follow the requirements.

The word count for this assignment is 1500-1400 excluding references.

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