You should type your answers into a document. For answers that require equations, formulae, graphs or diagrams you should write your answers clearly on paper or on a document and take a photograph of each page.
To complete this assessment, you must:
- read all instructions very carefully
- read the question paper carefully before you begin to answer
- type or write your answers clearly
Question 1 (20 marks)
John Wilson, who is interested in computers, has decided to establish a small mail order business selling computer software. The software, which is mainly computer games and small business software, is bought in bulk from the manufacturer and then sold by means of advertisements in computer magazines.
John with your assistance has produced estimates for his new business for the next 6 months, as follows:
- He will commence trading in January 2018, with capital of £1,750
- At the beginning of January, he will purchase a “base” stock of software which will cost him £800. As he is not yet established in business, he will have to pay for this straight away.
- He has estimated his sales to be:
- January £600
- February £1,000
- March £800
- April £1,100
- May £2,200
- June £1,300
- The reason for the high sales figures estimated for May is because John plans to have a stand at a major computer exhibition.
- Most Sales will be for cash, but he does expect a quarter of each month sales will be made to computer shops; he allows customers one month’s credit.
- His software purchases will be at cost price, being 40% of his selling price.
- Apart from the purchase of initial stock, all purchases will be made from suppliers who will allow him one month’s credit.
- He will spend £270 each month on advertising, which must be paid for straightaway. The stand at the computer exhibition in May will cost £500 and must be paid for in April.
- Various sundry expenses, including post and packing, are expected to cost £100 for January, and then gradually increased £20 per following month from February to June.
- As John plans initially to operate his business from his parents’ house there will be no office rental costs. He will, however, need to buy office equipment in January at a cost of £700; this will be paid for straightaway. John expects this equipment to last 5 years before it need replacement. Depreciation charge for this year is £100.
- For the first six months, John will take £100 per month for his personal use; once the business is established, he hopes he will be able draw out more.
Prepare a forecasted cash budget. (Total 20 Marks)
Question 2 (20 marks)
The following financial data is available
Quayle Products plc manufactures waste disposal units. Its sales and costs budget for November 20X2 is as follows:
Sales: (3000 units × £72) 216 000
Direct materials (metal) 3000 × (1kg × £14) (42 000)
Direct materials (plastic) 3000 × (£0.5kg × £7) (10 500)
Direct labour: 3000 × (0.75 hours × £8) (18 000)
Production overhead (86 500)
Other overheads (31 000)
It may be assumed that all of its overheads are fixed in nature.
The company’s actual results for the month are as follows:
Sales: 2950 units × £73 215 350
Direct materials (metal) 2950 × (0.9kg × £13.80) (36 639)
Direct materials (plastic) 2950 × (£0.5kg × £7.20) (10 620)
Direct labour: 2950 × (0.7 hours × £8.20) (16 933)
Production overhead (84 250)
Other overheads (32 250)
- Prepare a statement showing the profit/loss based on the
- budget set
- actual results
- revised budget
- Calculate any variances that have arisen (6 marks)
- Provide 2 reasons why these variances have occurred for each of the variances
- Labour (2 marks)
- Materials (2 marks)
- What is a variance? (1 mark)
(Total 20 marks)
Question 3 (20 marks)
MIS system Case Study – National Australia Bank (NAB)
National Australia Bank (NAB) is a financial services organization employing more than 40,000 people, operating more than 1,800 branches and service centres, and responsible to more than 460,000 shareholders. The company provides more than 10.93 million customers worldwide with retail, business, and institutional banking services.
NAB wants to eliminate inconsistencies arising from storing data in 34 different financial and operational systems. The organization lacked consistency in how it maintained data about cost centres, branches, and general ledgers for various business units. To remedy this situation, the bank wanted to establish a master data repository underlying all of its information systems so that changes to data elements in one system would be applied universally across all other systems.
In addition, by establishing a standard change-control process, bank officers would be able to prevent ad hoc, unjustified and erroneous data updates that could result in financial misrepresentations or inaccurate data in regulatory reports. They wanted to ensure that all finance systems stored data and produced results in a consistent manner.
To achieve these goals, the bank decided to replace an aging, inflexible mainframe system used as a pseudo master data management tool with a more sophisticated, true master data Management Information System. The MIS system they looked to implement is called the Oracle Hyperion Data Relationship Management.
Employed as the consultant from Oracle Consulting, you have been asked to provide an explanation to the Senior Management Team of NAB outlining the following:
- Explain the purpose of the MIS system. (2 marks)
- Identify and explain the key characteristics that the Oracle Hyperion Management Information System should have to make a suitable MIS system. (8 marks)
- Identify and explain the 5 benefits that NAB will gain from implementing the MIS system?
(Total 20 Marks)