Assessment Schedule 2011 Accounting: Explain and prepare information for management decision making (90505)

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1 NEA Level 3 Accounting (90505) 2011 page 1 of 5 Assessment Schedule 2011 Accounting: Explain and prepare information for management decision making (90505) Evidence Statement Question Evidence ode ONE The costs increase as output increases The more jumps made, the higher the total costs of photo pack materials for Adventure Bungee. Or material costs vary directly with the photos produced First e Stating costs rise as output increases Second e An explanation in context using souvenir photo pack materials / number of bungee jumps taken Note: Not to link to sales or purchases of photo packs Schedule of Accounts Receivable for the two months ended 28 February 2011 January February ash from invoices issued in November ash from invoices issued in December ash from invoices issued in January Total cash received from invoiced customers (Accounts receivable) # orrect figure # orrect totals for both months

2 NEA Level 3 Accounting (90505) 2011 page 2 of 5 Question Evidence ode ash Budget for the two months ending 28 February 2011 January February Estimated receipts ash from accounts receivable f ash sales Total cash received Estimated payments Souvenir photo pack materials Other expenses including cost of goods sold Interest on loan OSH safety checks and certification Total cash payments Net surplus / (deficit) of cash * (d) f TWO correct amounts allow follow-through from orrect amount(s) * orrect process for surplus They should (for example): There is plenty of cash surplus from Jan and Feb ($ in Jan and $ in Feb) to afford to loss the sales ($ in Jan and $ in Feb) Non ould attract more customers to do a bungy jump there (where they get a free photo) instead of somewherlse (where they don t) Spillover sales into the café and souvenirs They should not (for example): Receiving $30 on each sale of souvenir photo packs sold to cover fixed costs and make a profit ($40 $10 materials) There is a loss of sales from photos in Jan / Feb of $ Non Most people purchase one anyway (80%), so it may not attract more customers E plus E E Any one valid financial reason E Any one valid non-financial reason E E

3 NEA Level 3 Accounting (90505) 2011 page 3 of 5 Question Evidence ode TWO (d) Break-even point = Fixed costs / contribution margin per unit ie / ($155 $35) = Break-even in units per annum: jumps orrect answer only Level of sales = (Fixed costs + profit) / ontribution margin per unit ie ( ) / (155 35) Number of jumps required to achieve profit target: jumps orrect answer only Margin of safety in units = Actual sales Break-even sales ie Margin of safety in units: jumps orrect answer only The margin of safety shows management of : The relationship between break-even (where total costs and revenues arqual and profit is zero) and the current number of bungy jumps Enough customers are doing bungy jumps to ensure a profit They could lose up to bungy jump customers before not making a profit Sales can drop 12.5% before breakeven is achieved e Any appropriate description of margin of safety in context of e

4 NEA Level 3 Accounting (90505) 2011 page 4 of 5 Question Evidence ode THREE The decision to introduce a Flying Fox attraction is strategic because it is a decision with a long-term impact on OR An impact beyond one accounting period OR involves top level management decision Long term impacts Will provide an additional attraction for visitors benefiting the business over a number of periods / repayments are made over a number of years / or any suitable flow on effect beyond one accounting period. On For idea of long-term / beyond one accounting period / top-level management of On For relevant link to the long-term impact of the purchase of the Flying Fox apital expenditure budget will show the outlay and the time frame of when funds to purchase the flying fox attraction (totalling $ ) How much finance will be needed and when it will be needed, when cash will be drawn on in the budget to meet the costs of the capital purchase On Describing the capital expenditure budget as a plan of outlays to purchase the equipment On Importance for management, eg making payments / financing decisions / raise the loan / use cash, to purchase the Flying Fox for Should There is sufficient surplus in the cash budget, and even though less in Feb (as numbers fall off after school holidays / summer) enough to meet additional interest costs on loan ($ % = $45 000, OR $3 750 per month) and over $ that can contribute to the difference required ($ $ ) close to relevant range for bungy jumps ( last year, and relevant range only jumps, so an additional source of sales could help to increase profits once relevant range met) Non-financial New flying fox is an additional attraction so greater customer satisfaction New flying fox should attract a new customer base / expanded market Opportunity for additional sales in café and souvenir shop Should not ash budget is only for Jan and Feb, which are the high sales months Nov was much lower, and winter months might not generatnough cash to cover additional expense Any valid increase in costs to operate the Flying Fox, eg wages to staff / maintenance / costs of health and safety Non-financial No Market Research to justify the outlay to predict sales / uncertainty about expanding customers Training is required for staff / time delay before operational Fying Fox also summer seasonal so does not solve problem of lower numbers in winter months E E

5 NEA Level 3 Accounting (90505) 2011 page 5 of 5 Disruption to current operations with construction One E Any valid financial reason should bxpressed in dollars, or clearly indicate a financial aspect, eg additional expenses must be paid for One E Any valid non-financial reason in context of flying fox / bungy attractions Overall Statement riteria Achievement Merit Excellence One 2 e 4 e 6 e Two Three 3 E

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