Accounting for Managers (ACC00724) - Assignment 2 Report

This report provides a comprehensive analysis of two financial scenarios presented in an Accounting for Managers assignment. The first part evaluates three proposals for Pacific Telemet Limited, examining their impact on sales, costs, and profitability, including calculations for contribution margin, break-even points, and margin of safety. The second part addresses a bid price justification for Go-Go-Grow Limited, considering different factory capacity levels and their effect on per-unit costs and potential profits from a special order. The report also includes a personal background section detailing the student's academic and professional experience relevant to the course, highlighting the application of accounting principles in real-world scenarios.

Running head: ACCOUNTING FOR MANAGERS
Accounting for Managers
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

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Table of Contents
Question 1: Pacific Telemet Limited.........................................................................................2
Question 2: Go-Go-Grow Limited.............................................................................................6
Requirement 1:.......................................................................................................................6
Requirement 2:.......................................................................................................................6
Question 3: Personal background...............................................................................................7
References:.................................................................................................................................8

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Question 1: Pacific Telemet Limited
To,
The CEO,
Sherri Watkins,
Pacific Telemet Limited
Date: 18/01/2019
Subject: Evaluation of the three proposals
This is report is in response to the three proposals considered by the different
personnel of the organisation to explore the strengths and weaknesses of each of them. In
order to conduct the required analysis, certain calculations have been made, which are
represented as follows:
Proposal 1:

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It is clearly evident from the proposal of the production manager, David Groate, that
spending on quality is a strong sales booster as well as enhanced tool of profitability. This is
because it is increasing both sales revenue and sales volume. However, in this case, it is
identified that there would be increase in total variable costs as well. In this context, it is
noteworthy to mention that when profitability is viewed for a longer timeframe, all
organisations look for greater contribution margin (Collier 2015). This seems to be missing
from this option, as contribution margin per unit is the lowest compared to the other two
proposals, which is $204. Moreover, the break-even is obtained as 5,000 units and margin of
safety is calculated as 10,600 units, which are higher than the other two proposals. This
implies that the organisation has to conduct increased minimum amount of sales in order to
avoid any losses (Noreen, Brewer and Garrison 2014).
Proposal 2:
According to the proposal of the sales manager, Kirsten Arnold, there would be drop
in sales volume by 12% from the existing plan; however, there would be increase in selling
price per unit with rise in fixed cost. Therefore, the decline in sales volume is a weakness in
this proposal; however, rise in selling price per unit is soothing, which increases the
contribution margin per unit to $300, which is $60 more than the current plan. However, for a
longer timeframe, this proposal is definitely not sustaining with negative volume growth and
raising selling price and fixed costs owing to market pressure are bound to take place
(Dhamija 2015). This is because the net operating income is calculated as $2,088,000, which
is lower than the other two proposals.
Proposal 3:
As per the proposal of the marketing director, Jess Sutherland, this is a unique
strategy of providing rebate to the first 2,500 customers. This could be considered as the

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unique selling proposition (Fields 2016). As a result, the net operating income has been the
highest in this proposal. However, it is to be borne in mind that this strategy might not be
fruitful in the long-run, as most of the customers would be dissatisfied, if they fail to purchase
it in initial 2,500 orders. Therefore, the customers might not be enthusiastic to refer the
products to their acquaintances (Lev and Gu 2016). However, the contribution margin is
moderate with slight rise in fixed costs.
Question 2: Go-Go-Grow Limited

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Requirement 1:
Part a:
Part b:
Requirement 2:
To,

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The CEO,
Go-Go-Grow Limited
Date: 18/01/2019
Subject: Justification for the bid price
In accordance with the above table, it could be seen that the bid price is obtained as
S520 per unit for the special order, if the annual capacity of the factory is 90,000 units and
$695 per unit, if the annual factory capacity is $75,000 units. Moreover, since the sale would
be for a special order, no costs would be incurred for variable selling and administrative costs
and no amount needs to be incurred for fixed costs. This is definitely a big opportunity for the
organisation, as it would be able to earn more profit from the contract with Mantel and it
might receive future orders as well. However, if Mantel is not satisfied with the output of the
contract, there would be fall in net income and the other costs would increase as well (Libby,
Rennekamp and Seybert 2015).
Question 3: Personal background
Before joining MBA at Southern Cross University, I completed Bachelor of Business
Administration (BBA) from Guru Nanak University, India in 2012. After the completion of
BBA, I worked in Genpact, which is an American professional services firm, for three years.
In the past year, I completed my Advanced Diploma in Hospitality Management from Stei
Singapore. My earlier educational background has assisted me in gaining deeper
understanding of the various topics taught in this course, which include accounting reports,
financial statement analysis and working capital management. In this course, I have come
across some topics like management and cost accounting, full costing and activity-based
costing, planning, budgeting and control and financing the organisation, which have added

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further to my knowledge base. This knowledge will assist me in future accounting career, as I
would be able to deal with real life issues by using this knowledge base.

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References:
Collier, P.M., 2015. Accounting for managers: Interpreting accounting information for
decision making. John Wiley & Sons.
Dhamija, S., 2015. Financial Accounting for Managers, 2/e. Pearson Education India.
Fields, E., 2016. The essentials of finance and accounting for nonfinancial managers.
Amacom.
Lev, B. and Gu, F., 2016. The end of accounting and the path forward for investors and
managers. John Wiley & Sons.
Libby, R., Rennekamp, K.M. and Seybert, N., 2015. Regulation and the interdependent roles
of managers, auditors, and directors in earnings management and accounting
choice. Accounting, Organizations and Society, 47, pp.25-42.
Noreen, E.W., Brewer, P.C. and Garrison, R.H., 2014. Managerial accounting for managers.
New York: McGraw-Hill/Irwin.