Management Accounting Assignemnt | Radisson Plc

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Added on 2019-12-17

Management Accounting Assignemnt | Radisson Plc

Added on 2019-12-17

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Table of ContentsINTRODUCTION................................................................................................................................3TASK 1.................................................................................................................................................31.1 And 1.2........................................................................................................................................31.3.....................................................................................................................................................5TASK 2.................................................................................................................................................62.1.....................................................................................................................................................62.2 and 2.3........................................................................................................................................72.4.....................................................................................................................................................8TASK 3.............................................................................................................................................93.1.....................................................................................................................................................93.2...................................................................................................................................................103.3...................................................................................................................................................11TASK 4...............................................................................................................................................134.1...................................................................................................................................................134.2...................................................................................................................................................14CONCLUSION..................................................................................................................................152

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INTRODUCTIONEvery start-up and existing establishments need sufficient funds to start and run their corporation. Entities require money to pay dailyexpenses, spending, investment in fixed assets, new technology, expansion and growth plans. The present assignment aims to identify both theinternal and external sources by which Radisson Plc can generate long-term capital to support its expansion programme. Moreover, various costand management accounting tools and techniques like cost calculation, pricing method, project evaluation technique and cash budgets will beapplied and evaluated for better and strong decisions to reach goals. TASK 11.1 And 1.2Radisson Plc is a medium-sized computer software manufacturing company operating in London. Recently, it acquired a long-term contractto provide bespoke software to different companies around United Kingdom. Operational manager of the company believed that there are lots ofmarket opportunities available to the business to expand their operations and enhance industrial market share. In order to financing its newproject, Radisson can generate funds from any of the following sources, described underneath:Internal sources: Retained Earning: Raddison Plc is already conducting its business activities and operations in the existing market, henceforth, companywill have surplus available in the business which can be use to fulfil their financial requirement (Broadbent and Cullen, 2012). Owner investment: Owner of the business can invest own personal saving to meet their capital requirement for the expansion project. It isconsidered as a cheaper financial source because Radisson plc does not need to pay financial cost like interest and dividend on owner’s money. External source:Bank loan: company’s executive or director can submit their financial plan to the bank manager so as to raise money through loan. It willprovide extensive support to the business to collect funds for long-term period and thereby meet their monetary requirement (Sources of finance,2016). 3

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Share capital: Issuing more additional shares in the market enable Radisson Plc to gather enough or sufficient amount of money in theform of share capital. Hire purchase: Radisson plc can buy new equipments, machinery and tools without the requirement of making higher payment at thepoint of purchase. It is because, vendor allow buyer to make some initial payments as down payment while remainder is spread out over a fixedperiod, so that, company can arrange cash accordingly.Source Financial Legal Dilution Bankruptcy Retained profit No financial cost will beincurred if money raisedfrom this source than, butstill, opportunity cost exists.Company is not liable tocreate any legal contract toreinvest business netearnings. It is unchanged asno new ownersand shareholdersare added.Henceforth,privacy can bemaintained. If insolvencyincurs than it istotally theliability ofowners to paytheir outsiders asthey are incharge. Ownerinvestment Helps to meet long-termfinancial need without anyfinancial obligations No legal restriction exists on ownerto put own funds. Existing owner investfurther amount hence,transfer is not diluted.Money can beinvested to theavailable extent andno need to repay.Bank loan On long-term period loans,bank charge a changeable andvariable interest rate. Repayment can be made ininstalments over aCollateral securityDebt covenants and legalregulations Kept assets as charge for securingloan repayment Lenders cannot alteror change Radisson Plc need tomet all the terms andconditionsmentioned underdebt covenants. 4

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