ACC81210 Assignment 3 Answers

The course ACC81210 Accounting for Managers is an essential one for the students of the 21stcentury. In the changing environment, it is essential that the managers also take part in the financial decisions to properly implement the changes in their teams while keeping the monetary parameters in mind. This is why students have to pay extra attention to the assignments in order to develop their accounting skills. One such painful assignment is Assignment 3 of ACC81210. In this blog post, I will explain to you how to write your ACC81210 assignment 3 answers.

Question 1 - The Game of Proposals

This question revolves around Pacific Telemet Ltd, a manufacturer of dual SIM smartphones. Their phones are loved by executives travelling overseas frequently. There is a good number of financial data for this product. The Board of Directors is forcing the CEO to increase the profitability of the product. The executives from different departments are sharing their ideas. After reading the responses from 3 managers, you need to comment on them. No, not as a Facebook comment. You need to draft a report for this. Remember, you do not have to make a particular choice. You also do not have to make any recommendations. Try to explore the strengths and weaknesses of the ideas. How are you planning to do it? Through discussion on break-even, potential profits, and margin of safety. You have to keep in mind that the sales volumes are only an estimate. You need to consider the possible difference in the sales volume while writing your report.

Question 2 - Go-Go-Grow and Mantel

Go-Go-Grow Ltd is a manufacturer of toy cars in Geelong having clients in Australia and the USA. The current sales volume is 5,000 units. On this, the budget of the company is given. The second company is Mantel Ltd. No, this is not a subsidiary of Mattel, Inc. Mattel sells in India and China. They want Go-Go-Grow to make 20,000 toy cars. There will be no costs on variable selling, no administrative costs, and no additional fixed costs. Keeping in mind that the annual factory capacity of Go-Go-Grow is 75,000 units, bid a price for the order placed by Mantel Ltd. The same analysis has to be done when Go-Go-Grow’s annual capacity is 90,000 units. Also, when the capacity of the factory is 90,000 units, you have to prepare a justification for the asked price. Other than this, you also have to discuss what are the advantages and disadvantages of this contract.

Question 3 - Cash Flow

This question has 3 parts. For the first part, you have to define what are the three categories of cash flow statement. These categories are -

• Operating activities
• Investing activities
• Financing activities

Once mentioned, take out some time to write a line or two about these activities as well. Then, one by one, you will select these activities and see if they form positive or negative cash flow in a newly established and growing entity. The cash flow from operating activities would be negative as the company would invest in the working capital. The cash from investing activities would be negative because the company would invest in fixed assets for conducting the business. It would not sell any fixed asset, therefore; the cash flow would be negative. The new entity would gather fund in the initial and growing years, therefore, the cash flow from financing activities would be positive for the newly established and growing entity.

Question 4 - Loan v/s Investment

In this question, you own a simple business where you are earning a profit of $120,000 per year before tax. You now want to play at the big boy’s table and need $400,000 to expand. The rise in profit due to this expansion will be $80,000 per year forever and ever. For this, you have two options. You can either take a loan from the bank with 8% interest rate for 5 years. When the time comes, you can pay back the $400,000 or roll over a loan. The other option is to allow an investor to hand over your $400,000. But, you would need to give them a 50% shareholding of the business. You need to discuss the advantages of taking a loan. You have to discuss why taking a loan is a bad choice. The same procedure will be followed for the option of an investor. Then, you need to discuss which option is best and why.

Question 5 - The Budget of Pauls Co.

The table above is based on the following information as given in the question - Cash sales of shop 40% Credit sales of shop 60% Collection of credit sales - 40% in the month of sale, 30% in the next month, 20% in the second month and 10% was not collected. The credit sales in April were $10,000 and $12,000 in May. Using the details, you have to calculate the values of variables ‘a’ to ‘v’.

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