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ACCT2127: Accounting for Management Decision

   

Added on  2021-06-02

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Cover sheet for submission ofwork for assessmentSCHOOL: RMIT UniversityProgram nameMaster of Business Information TechnologyProgram codeMC200P15Office use onlySchool date stampCourse/unit nameAccounting for Management DecisionCourse/unit codeACCT2127TAFE National Module Unit of Competency (UOC) nameTAFE National Module Unit of Competency (UOC) IDAssignment no.2 (version 2)Due date21st October 2019Name of lecturer/teacherCameron NicholCampusClass day/timeWednesday – 6:30 PMTutor/marker’s nameSTUDENT/SFamily nameGiven nameStudent numberLY TRONG TIEN S3790425DECLARATION AND STATEMENT OF AUTHORSHIP1.I/we hold a copy of this work which can be produced if the original is lost/damaged.2.This work is my/our original work and no part of it has been copied from any other student’s work or from any other source except where due acknowledgement ismade.3.No part of this work has been written for me/us by any other person except where such collaboration has been authorised by the lecturer/teacher concerned.4.I/we have not previously submitted this work for this or any other course/unit.5.I/wegivepermissionforthisworktobereproduced,communicated,comparedandarchivedforthepurposeofdetectingplagiarism.6.I/we give permission for a copy of my/our marked work to be retained by the school for review and comparison, including review by external examiners.I/we understand that:7.Plagiarism is the presentation of the work, idea or creation of another person as though it is my/our own. It is a form of cheating and is a very serious academic offence that may lead to exclusion from the University. Plagiarised material can be drawn from, and presented in, written, graphic and visual form, including electronic data and oral presentations. Plagiarism occurs when the origin of the material used is not appropriately cited.8.Plagiarism includes the act of assisting or allowing another person to plagiarise or to copy my/our work.Student signature/sI/we declare that I/we have read and understood the declaration and statement of authorship.Further information relating to the penalties for plagiarism, which range from a notation on your student file to expulsion from the University, is contained in Regulation 6.1.1 Student Discipline and the Plagiarism Policy which are available on the Policies and Procedures website at www.rmit.edu.au/policies.Copies of this form can be downloaded from the student forms web page at www.rmit.edu.au/students/forms.1Coversheetforsubmissionofworkforassessment1111page1of1
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QUESTION ONE(a)- ARR of each proposal as below: A = (300,000 – 200,000) / 1000,000 = 10%B = (200,000 – 100,000) / 500,000 = 20%C = (175,000 – 50,000) / 250,000 = 50%- Payback period for each proposal as below:A = 1,000,000 / 300,000 = 3.33 yearsB = 500,000 / 200,000 = 2.5 yearsC = 250,000 / 175,000 = 1.4 years- NPV for each proposal as below:APVBPVCPV 0 (1,000,000) (1,000,000) (500,000) (500,000) (250,000) (250,000) 1 300,000 266,100 200,000 177,400 175,000 155,225 2 300,000 230,700 200,000 153,800 175,000 134,575 3 300,000 202,500 200,000 135,000 175,000 118,125 4 300,000 177,600 200,000 118,400 175,000 103,600 5 300,000 155,700 200,000 103,800 175,000 90,825 NPV 32,600 188,400 352,350 NPV A = 32,600 NPV B = 188,400NPV C = 352,350(b)Project ranked as C > B > A. Project C is highly recommended due to:ARR: C generates the biggest value compared to B > A with the same period of time.Payback period: with $1 investment, C can collect profit faster than B > A. NPV: value of the investment in C has greater value than B > A in the next 5 years. (c)The advantage when calculating the net present value (NPV) is the ability to measure how profit oftoday’s investment would be in the future, and involve all the forecast cashflow in the process whenevaluating one investment. While the drawbacks of NPV is the calculation needs to involve all theguesswork for the business’s future cashflow, if there are some uncertain events happen in the future2
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may affect to the cashflow, the NPV may not be correct and reliable. Furthermore, when comparingmore than two projects to invest when a business has budget limitation, NPV cannot give accuratefinal decision if the amount of investment of mutually exclusive projects are not equal. To analyze thepotentiality of each investment, the ultimate solution should combine another method not justinterpreting NPV, but needs to work out the internal rate of return for a better comprehensive result(Nichol 2019, Atrill 2018).QUESTION TWO(a) 3
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Income StatementDelivery Income – Cash Receipts for year ending 30 June 2019700,000Delivery Income - On Credit to account customers for the year ending 30 June 2019150,000Cost of Fuel Usage (Stock Increase + Stock @ Start - Stock @ End)(830,000)Gross Profit20,000Depreciation for the year(160,000)Bad Debts expense(10,000)Salaries Paid(250,000)Other cash operating expenses(77,000)Operating Profit(477,000)Other incomeProfit on sale of truck 25,000Dividend received from investment200,000Profit for the year(252,000)Interest paid for the year(6,000)Tax expense / paid to the Tax Office(78,000)Total Loss(336,000)Operating CashflowInterest paid for the year(6,000)4
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