Assignment Overview

The assignment for this module is a cost and performance consultancy project. The vocational context of the project is as follows:

‘Assume you work for a management systems consultancy. A client company, Educate Limited, has just completed the first year of operations, providing a management accounting tuition/coaching/mentoring service to students. The company currently has no costing or budgeting systems. The owner has no knowledge of the nature and purpose of such systems, and has no knowledge or understanding the technicalities and logistics of the operation of such systems. You have been supplied with data and information relating to the first year of operations in Appendix A. Appendix A is shown immediately after the Tasks specified below.’

Students are required to complete 4 tasks as part of the assignment.

Task 1: Preparation of Powerpoint slides (provides evidence for AC 1.1, 1.2, 1.3, 3.1)
Task 2: Report on cost analysis (provides evidence for AC 1.4, 2.1, 2.2, 2.3)
Task 3: Preparation of a client report (provides evidence for LO3 (AC 3.2, 3.3, 3.4)
Task 4: Construction of a spread sheet and briefing notes (provides evidence for LO4 (AC 4.1, 4.2, 4.3)

Task 1 (this task provides evidence for the following assessment criteria: AC 1.1, 1.2, 1.3, 3.1)

You are asked to prepare a set of Powerpoint slides in which you:

• Explain the nature, purpose and characteristics of an effective costing system, such as a job costing system, in the course of which you should use different costing methods (LO1.2) to illustrate your points with reference to
  relevant examples
• Explain the purpose and nature of the budgeting process (LO3.1)
• Classify different types of cost (LO1.1), with reference to relevant examples where appropriate.
• Explain the nature of and differences between absorption, marginal and activity-based costing, and standard
  costing methods, illustrating in principle how each costing method is used and costs are calculated. In the course of this explanation you must develop your examples to the extent that you calculate costs using appropriate techniques(LO1.3)

Required:

Prepare the powerpoint slides requested. You should use a maximum of 12 powerpoint slides and you may include
accompanying notes (maximum 1,000 words) if you wish.

Task 2 (this task provides evidence for the following assessment criteria: AC 1.4, 2.1, 2.2, 2.3)

The client has no idea about how cost data can be analysed and subsequently presented in financial statements and/or in diagrammatic and/or tabular form, using, where appropriate, index numbers. The client is also keen to reduce costs and improve quality of service to customers. The client admits that, given no understanding of cost data, prices have been set using a ‘let me guess’ basis rather than using cost detail, and, ideally would like to generate a 20% profit margin on cost.

Analyse the cost data in Appendix A using appropriate techniques (LO1.4) and prepare a report (of between 1,000 and 1,500 words) for the client in which you:

• prepare and analyse a cost report (LO2.1) Comment on variances and the implications of your analysisfor pricing purposes.
• Suggest and illustrate improvements to reduce costs (LO2.3), and enhance value and quality.
• Use performance indicators to identify potential improvements. (LO2.2)

Required:

Prepare the report and financial information requested. It is strongly recommended that you use a spreadsheet package to help prepare your cost report.

Task 3 (this task provides evidence for LO3 (AC 3.2, 3.3, 3.4)

The client knows nothing about the theory and art of budgeting, and is concerned that last year resulted in less cash in the bank at the end of the year than had been hoped for. Using the data and information, as appropriate, in Appendix A, prepare a report (of between 750 and 1,000 words,) for the client in which you :

• Explain the nature of, and distinguish between, each of the incremental and zero-based approaches to budget preparation, and select appropriate budgeting methods for the client’s current needs (LO3.2).
• Given the budget preparation approach you have suggested as being appropriate, prepare a Profit or Loss Statement budget for the second year of operations, presented month-by-month, and in total for the year.
  (LO3.3)
• Prepare a Cash Budget (LO 3.4) for the second year of operations, presented month-by-month, and in total for
  the year

Required:

Prepare the report and financial information requested. It is strongly recommended that you use a spreadsheet package to help prepare your budgets.

Task 4 (this task provides evidence for LO4 (AC 4.1, 4.2, 4.3)

The client is concerned that actual figures did not match budgeted figures during year 1 and understands that variance analysis may throw light on why differences occurred.

Using the data and information, as appropriate, in Appendix A, construct a spread-sheet and briefing notes (max 500 words) that:

• Calculate variances from budget, identify possible causes and recommend corrective action. These should be
  based on annual and not monthly figures; (LO4.1)
• Prepare an operating statement reconciling budgeted with actual results; (LO4.2)
• Report your findings to management in accordance with identified responsibility centres, such as teaching and
  support services. (LO4.3)

Required

Prepare the spreadsheet and briefing notes.