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\u00a0<\/span><\/p>\n \u00a0<\/span><\/span><\/p>\n This assignment is an individual assignment designed to assess the following learning outcomes: <\/span><\/p>\n 2.\u00a0 <\/span><\/span><\/span>Apply numeracy skills and qualitative judgment to aid financial decision making. <\/span><\/p>\n 3.\u00a0 <\/span><\/span><\/span>Understand apply and evaluate management accounting concepts and techniques in decision making. <\/span><\/p>\n Coursework Assignment<\/span><\/u><\/strong>\u00a0 <\/span><\/span><\/strong><\/p>\n You have just started a new job as Managing Director of Newtron Technologies Ltd a UKbased company whose principal activity is the manufacture and distribution of computer components. <\/span><\/p>\n After discussions with colleagues at a business conference, you have concluded that the strategic planning and annual budgeting process needs to be reformed. You are particularly interested in the concept of \u201cBeyond Budgeting\u201d that was one of the themes of the conference. <\/span><\/p>\n You have therefore carried out some background research into \u201cBeyond Budgeting\u201d and have obtained the following documents (available on the module Moodle page). <\/span><\/p>\n Document 1<\/span><\/strong> \u2013 A journal article on the Beyond Budgeting (Sandalgaard, N. and Bukh, P.N. <\/span><\/p>\n (2014) \u2018Beyond Budgeting and change: a case study.\u2019 Journal of Accounting & Organizational <\/span><\/p>\n Change 10, (3) 409-423) <\/span><\/p>\n The following income statements relate to Newtron Technologies Ltd. <\/span><\/p>\n \u00a0\u00a0\u00a0 <\/span><\/span>Year-ended \u00a0\u00a0 <\/span>31\/12\/2017 31\/12\/2016 31\/12\/2015 31\/12\/2014 31\/12\/2013 31\/12\/2011 31\/12\/2010 <\/span><\/strong><\/p>\n \u00a0<\/span><\/span><\/p>\n<\/td>\n \u00a3000 <\/span><\/strong><\/p>\n<\/td>\n \u00a3000 <\/span><\/strong><\/p>\n<\/td>\n \u00a3000 <\/span><\/strong><\/p>\n<\/td>\n \u00a3000 <\/span><\/strong><\/p>\n<\/td>\n \u00a3000 <\/span><\/strong><\/p>\n<\/td>\n \u00a3000 <\/span><\/strong><\/p>\n<\/td>\n \u00a3000 <\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n Turnover\u00a0 <\/span><\/span><\/p>\n<\/td>\n 31,671 <\/span><\/p>\n<\/td>\n 43,416 <\/span><\/p>\n<\/td>\n 48,509 <\/span><\/p>\n<\/td>\n 52,377 <\/span><\/p>\n<\/td>\n 42,753 <\/span><\/p>\n<\/td>\n 20,097 <\/span><\/p>\n<\/td>\n 14,810 <\/span><\/p>\n<\/td>\n<\/tr>\n Cost of Sales\u00a0 <\/span><\/span><\/p>\n<\/td>\n (22,603) <\/span><\/p>\n<\/td>\n (31,603) <\/span><\/p>\n<\/td>\n (36,239) <\/span><\/p>\n<\/td>\n (40,272) <\/span><\/p>\n<\/td>\n (31,076) <\/span><\/p>\n<\/td>\n (15,292) <\/span><\/p>\n<\/td>\n (11,636) <\/span><\/p>\n<\/td>\n<\/tr>\n Gross Profit\u00a0 <\/span><\/span><\/p>\n<\/td>\n 9,068 <\/span><\/p>\n<\/td>\n 11,813 <\/span><\/p>\n<\/td>\n 12,270 <\/span><\/p>\n<\/td>\n 12,105 <\/span><\/p>\n<\/td>\n 11,677 <\/span><\/p>\n<\/td>\n 4,805 <\/span><\/p>\n<\/td>\n 3,174 <\/span><\/p>\n<\/td>\n<\/tr>\n Administration Expenses\u00a0 <\/span><\/span><\/p>\n<\/td>\n (12,675) <\/span><\/p>\n<\/td>\n (11,102) <\/span><\/p>\n<\/td>\n (12,482) <\/span><\/p>\n<\/td>\n (16,980) <\/span><\/p>\n<\/td>\n (23,876) <\/span><\/p>\n<\/td>\n (5,433) <\/span><\/p>\n<\/td>\n (3,951) <\/span><\/p>\n<\/td>\n<\/tr>\n Operating Profit\u00a0 <\/span><\/span><\/p>\n<\/td>\n (3,607) <\/span><\/p>\n<\/td>\n 711 <\/span><\/p>\n<\/td>\n (212) <\/span><\/p>\n<\/td>\n (4,875) <\/span><\/p>\n<\/td>\n (12,199) <\/span><\/p>\n<\/td>\n (628) <\/span><\/p>\n<\/td>\n (777) <\/span><\/p>\n<\/td>\n<\/tr>\n Other Income & <\/span><\/p>\n Interest\u00a0 <\/span><\/span><\/p>\n<\/td>\n 2 <\/span><\/p>\n<\/td>\n 194 <\/span><\/p>\n<\/td>\n (152) <\/span><\/p>\n<\/td>\n (1,123) <\/span><\/p>\n<\/td>\n 10,432 <\/span><\/p>\n<\/td>\n (63) <\/span><\/p>\n<\/td>\n (47) <\/span><\/p>\n<\/td>\n<\/tr>\n Profit (Loss) before Tax\u00a0 <\/span><\/span><\/p>\n<\/td>\n (3,605) <\/span><\/p>\n<\/td>\n 905 <\/span><\/p>\n<\/td>\n (364) <\/span><\/p>\n<\/td>\n (5,998) <\/span><\/p>\n<\/td>\n (1,767) <\/span><\/p>\n<\/td>\n (691) <\/span><\/p>\n<\/td>\n (824) <\/span><\/p>\n<\/td>\n<\/tr>\n Taxation\u00a0 <\/span><\/span><\/p>\n<\/td>\n 810 <\/span><\/p>\n<\/td>\n (82) <\/span><\/p>\n<\/td>\n 0 <\/span><\/p>\n<\/td>\n (569) <\/span><\/p>\n<\/td>\n 386 <\/span><\/p>\n<\/td>\n 214 <\/span><\/p>\n<\/td>\n 267 <\/span><\/p>\n<\/td>\n<\/tr>\n Profit (Loss) after <\/span><\/p>\n<\/td>\n (2,795) <\/span><\/p>\n<\/td>\n 823 <\/span><\/p>\n<\/td>\n (364) <\/span><\/p>\n<\/td>\n (6,567) <\/span><\/p>\n<\/td>\n (1,381) <\/span><\/p>\n<\/td>\n (477) <\/span><\/p>\n<\/td>\n (557) <\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Tax\u00a0 <\/span><\/span><\/p>\n The last seven years have been very difficult for the company, and it has survived through the support of its parent company and its bank. However, the company now intends to engage in a number of income generating, cost-saving and efficiency measures in order to improve its financial performance.<\/span><\/p>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n Newtron Technologies Ltd are considering automating their production process for the TX9 computer procesor. At present this is requires a significant input of manual labour. <\/span><\/p>\n Due to the automation, the requirement for production labour will be significantly reduced.\u00a0 <\/span><\/span><\/p>\n The current typical annual volume of output and sales is about 160,000 units. <\/span><\/p>\n Information relevant to this decision is given in the following table: <\/span><\/p>\n \u00a0<\/span><\/span><\/p>\n<\/td>\n Current production system <\/span><\/strong><\/p>\n<\/td>\n Automated production system <\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n Sales price (per component) <\/span><\/p>\n<\/td>\n \u00a342.00 <\/span><\/p>\n<\/td>\n \u00a342.00 <\/span><\/p>\n<\/td>\n<\/tr>\n Direct materials cost (per component) <\/span><\/p>\n<\/td>\n \u00a323.00 <\/span><\/p>\n<\/td>\n \u00a323.00 <\/span><\/p>\n<\/td>\n<\/tr>\n Direct labour cost (per component)\u00a0 <\/span><\/span><\/p>\n<\/td>\n \u00a312.00 <\/span><\/p>\n<\/td>\n \u00a35.00 <\/span><\/p>\n<\/td>\n<\/tr>\n Fixed manufacturing overheads\u00a0 <\/span><\/span><\/p>\n<\/td>\n \u00a3800,000 <\/span><\/p>\n<\/td>\n \u00a31,400,000 <\/span><\/p>\n<\/td>\n<\/tr>\n Fixed administrative overheads\u00a0 <\/span><\/span><\/p>\n<\/td>\n \u00a380,000 <\/span><\/p>\n<\/td>\n \u00a360,000 <\/span><\/p>\n<\/td>\n<\/tr>\n Fixed selling and distribution overheads\u00a0 <\/span><\/span><\/p>\n<\/td>\n \u00a360,000 <\/span><\/p>\n<\/td>\n \u00a360,000 <\/span><\/p>\n<\/td>\n<\/tr>\n Break-even point (components) <\/span><\/p>\n<\/td>\n \u00a0<\/span>134,286\u00a0 <\/span><\/span><\/p>\n<\/td>\n \u00a0<\/span>108,572\u00a0 <\/span><\/span><\/p>\n<\/td>\n<\/tr>\n Margin of safety at budgeted profit level <\/span><\/p>\n Unit sales required to achieve budgeted profit <\/span><\/p>\n<\/td>\n 35% <\/span><\/p>\n<\/td>\n 25% <\/span><\/p>\n<\/td>\n<\/tr>\n of \u00a3500,000 (components) <\/span><\/p>\n<\/td>\n \u00a0<\/span>205,715\u00a0 <\/span><\/span><\/p>\n<\/td>\n \u00a0<\/span>144,286\u00a0 <\/span><\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \u00a0<\/span><\/span><\/p>\n \u00a0<\/span><\/span><\/p>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n \u00a0<\/span><\/span><\/p>\n Newtron Technologies Ltd\u2019s Finance Department has prepared the following cash budget and budgeted income statement together with some balances extracted from the budgeted statement of financial position for the final 6 months of 2018. <\/span><\/p>\n The Chairman of the Board has expressed surprise and dismay that the cash balance is expected to deteriorate by nearly \u00a32,000,000 over a period when the total loss is expected to be less than \u00a31,500,000. <\/span><\/p>\n Cash budget\u00a0 <\/span><\/span><\/strong><\/p>\n<\/td>\n July <\/span><\/strong><\/p>\n<\/td>\n August <\/span><\/strong><\/p>\n<\/td>\n September \u00a0\u00a0\u00a0\u00a0 <\/span>October <\/span><\/strong><\/p>\n<\/td>\n November <\/span><\/strong><\/p>\n<\/td>\n December <\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n \u00a0<\/span><\/span><\/strong><\/p>\n<\/td>\n \u00a3 <\/span><\/strong><\/p>\n<\/td>\n \u00a3 <\/span><\/strong><\/p>\n<\/td>\n\n\n
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