Accounting

CLOs as per the Syllabus
CLO # 5: Describe the tools of the financial statement analysis and Analyze Financial statements by using liquidity, profitability and solvency ratios.

CLO # 6: Define manufacturing cost and prepare an income statement and its supported schedules for an incorporated manufacturing operation with cost distributions.

CLO # 7: Compare between the variable and fixed costs and employ Cost-Volume-profit analyses for planning using different methods.

For details of marking scheme, refer to Rubrics # ACA/F11.04

Note: This Project accounts for 40 % of the Student Final Grade.

Question 1: (Total 6 marks)

In a cost-volume-profit (C-V-P model) analysis the graph is frequently used in business meetings because it presents a picture of cost relationships within a company.

Required:

1. Briefly describe the type of information and data that you would need in order to prepare a CVP graph (construct a CVP graph for illustration). (3 marks)

2. How to interpret the breakeven point using graph analysis. (3 marks)

Solution question 1:

Question 2: (8 marks: 2 marks for each ratio)

XYZ specializes in the overnight transportation of medical equipment and laboratory specimens. The company has selected the following information from its most recent annual report to be the subject of an immediate press release and provided the following ratios:

1. The current ratio has changed to 2 from last year’s 1.5. (2 marks)
2. The interests’ coverage ratio has changed to 5 from last year’s 8. (2 marks)
3. The receivable turnover has changed to 8.5 from last year’s 6 times. (2 marks)
4. The return on assets ratio has changed to 2.5 from last year to 2.3. (2marks)

Required: As financial analyst, you are required to think carefully which information (if any) is good news for the company, and which (if any) is bad news. Assuming that Net income this year was $2.4 million. Last year’s net income had been $2.0 million.

Solution question 2:

Question 3 : (Total 5 marks)

1. Describe the differences between merchandising and manufacturing companies with regards to inventory the calculation of cost of goods sold.

Question 4: (total 6 marks)

AD Company estimates that variable costs will be 70% of sales and fixed costs will total $1,800,000. The selling price of the product is $10, and 700,000 units will be sold.

Instructions: Using the mathematical equation
(a) Compute the break-even point in units and dollars. (2 marks)
(b) Compute the margin of safety in dollars and as a ratio. (2 marks)
(c) Compute net income. (2 marks)

1. Project Assessment Criteria
The assessment of the project will be undertaken by the instructor.
Marks distribution will be as follows:
Report Body 25 marks
Presentation of the project 15 marks

2. Project Submission Date:
This project is due on week15; and it is an Individual project. The report should be uploaded using the model before the due date.

 Project due date is: May 15th 2020.

 Project presentation dates is: Last week / week 16 (May 26- June 2 2020).
Submission Instructions
3. Late Submission Instructions:

All students must comply with the submission deadlines. In case of Late Submission, the following rules apply:
 If students missed deadline by 1 week, the assigned grade is by reduced by 5%
 If students missed deadline by 2 weeks, the assigned grade is by reduced by 10%
Students are required to submit the report in soft copy also through the Turnitin system which is available online at https://lms.ectmoodle.ae
High “Similarity Index” will result in low marks for the project.
4. Format:
 Page size: (A-4)
 Margins: Font: Times New Roman/ Arial
 Font size: 12
 Line-spacing – 1.5 lines
 Referencing- Harvard Style.

Good Luck