Accounting Assignment Help

Accounting Assignment Help

Accounting Assignment Help

Question 1

Considering the fact that a new clinic has been opened for the purpose of cash budgeting we would need to ask the following questions:

Inflow

  1. How many patients do you expect in a year or on a monthly basis?
  2. What is the accuracy of the above forecast?
  3. Any other additional sources of revenue you can think of?
  4. Are you planning to sell old assets or any other things?
  5. What would be opening cash balance your organization would be commencing with?
  6. What is the amount of depreciation?
  7. Is your organization planning to maintain a specific cash balance?
  8. Will be revenue be collected in the month of provision of service? If not what is the expected pattern of collection of revenue?

Accounting

Outflow

  1. What are the variable expenses of providing the service per patient?
  2. Will the same be paid that very month? If not then in how many days?
  3. Any other fixed expenses? If yes when is the same due for payment?
  4. Are you willing to purchase any fixed assets?
  5. Are you going t pay dividends or make any other expenses in the future, if yes what would be the amount ad expected purchase month

Question 2

Part A

Particulars

July

August

September

Opening Cash

30000

8000

-60500

Receipts

104000

120000

133000

Total Cash

134000

128000

72500

Purchases

55000

45000

35000

Wages

6000

7500

5500

Miscellaneous

6000

6000

6000

Machinery

0

80000

0

General Admin Expense

50000

50000

50000

Cash Dividend

9000

0

0

Total Cash Paid

126000

188500

96500

Closing Cash

8000

-60500

-24000

Taking into accounting help the fact that the organization would maintain an opening cash balance of $30000 per month the cash position of the organization would be as follows:

Particulars

July

August

September

Opening Cash

30000

30000

30000

Receipts

104000

120000

133000

Total Cash

134000

150000

163000

Purchases

55000

45000

35000

Wages

6000

7500

5500

Miscellaneous

6000

6000

6000

Machinery

0

80000

0

General Admin Expense

50000

50000

50000

Cash Dividend

9000

0

0

Total Cash Paid

126000

188500

96500

Closing Cash

8000

-38500

66500

Part B

If the organization is to maintain a minimum opening cash balance of $30000, it needs to borrow $22000 in the month of August and $68500 in the month of August.

Part C

The organization is not advised to make the purchase in the month of August as it is deteriorating the cash position of the organization. If the organization is not to make the purchase in the month of August the cash position of the organization would be as follows:

Particulars

July

August

September

Opening Cash

30000

8000

19500

Receipts

104000

120000

133000

Total Cash

134000

128000

152500

Purchases

55000

45000

35000

Wages

6000

7500

5500

Miscellaneous

6000

6000

6000

Machinery

0

0

0

General Admin Expense

50000

50000

50000

Cash Dividend

9000

0

0

Total Cash Paid

126000

108500

96500

Closing Cash

8000

19500

56000

Question 3

Average cost is derived by dividing the entire cost of the organization or the concerned operation over the allocable units. On the other hand marginal cost refers to the extra cost of producing one extra unit. The marginal cost does not take into consideration the fixed costs of an organization and only considers the variable cost.

Considering the current scenario the organization should not open an open heart surgery division as that would lead to a loss for the organization.

The number of patients required as non-open heart cases to absorb the loss of the open heart department have been calculated below:

    

Open Heart

Amount

Number

Amount

Revenue

         28,000.00

      100.00

     2,800,000.00

Cost

       (30,000.00)

      100.00

  (3,000,000.00)

Amount

  

      0(200,000.00)

    

Non Open Heart

Amount

Number

Amount

Revenue

         14,000.00

      200.00

     2,800,000.00

Cost

       (13,900.00)

      200.00

  (2,780,000.00)

Amount

  

           20,000.00

Particulars

 Amount

Total Cost

   2,780,000.00

Marginal Cost

   2,640,000.00

Fixed Cost

       140,000.00

  

Contribution Per Patient

               800.00

Total Fixed Cost

       340,000.00

Number of Patients Required

               425.00

    

Verification

Amount

Number

Amount

Revenue

         14,000.00

      425.00

     5,950,000.00

Variable Cost

         13,200.00

      425.00

     5,610,000.00

   

        340,000.00

Loss from Open Heart Surgery

 

      (200,000.00)

Fixed Cost

  

      (140,000.00)

   

                          -  

Question 4

      
      

Old Machinery

Year 1

Year 2

Year 3

Year 4

Year 5

Sales

877500

965,250.00

1,061,775.00

1,167,952.50

1,284,747.75

Salvage Value

0

0

0

0

150000

Maintenance

-60000

-60000

-60000

-60000

-60000

Cash Inflow

817500

905250

1001775

1107952.5

1374747.75

       
       

New Machinery

Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

Purchase of Machinery

-1500000

     

Sales

 

1170000

1287000

1415700

1557270

1712997

Salvage Value

 

650000

   

750000

Maintainence

 

-30000

-30000

-30000

-30000

-30000

Cash Inflow

-1500000

1790000

1257000

1385700

1527270

2432997

Net Present Value

 

Machine 1

Machine 2

Discounting Factor @9%

DCF Machine A

DCF Machine B

Year 0

 

-1500000

1

0

-1500000

Year 1

817500

1790000

0.917431193

750000

1642202

Year 2

905250

1257000

0.841679993

761930.8139

1057992

Year 3

1001775

1385700

0.77218348

773554.1057

1070015

Year 4

1107952.5

1527270

0.708425211

784901.4837

1081957

Year 5

1374747.75

2432997

0.649931386

893491.711

1581281

    

3963878.114

4933446

Hence the machine B should be chosen over machine A as it has a higher net present value. The answer could have been different had the rate of taxation help been considered for the purpose of this calculation. 

Question 5

Part A

Particulars

Budget

Actual

Variance

Number of patients

          10,000.00

            9,560.00

         (440.00)

Patient fees

     1,750,000.00

     1,242,800.00

  (507,200.00)

 

 

 

 

Variable Expenses

 

 

 

Salary and wages

        758,662.00

        872,222.00

   113,560.00

Administration

            4,500.00

            1,700.00

      (2,800.00)

Repairs and maintenance

            5,600.00

            8,300.00

       2,700.00

Food

          14,000.00

          13,000.00

      (1,000.00)

Drugs

          36,000.00

          49,500.00

     13,500.00

Electricity

            5,000.00

            6,500.00

       1,500.00

Clinical supplies

          18,500.00

          18,700.00

          200.00

Telephone

            4,800.00

            4,850.00

            50.00

Miscellaneous expenses

            3,500.00

            5,000.00

       1,500.00

Total variable expenses

        850,562.00

        979,772.00

   129,210.00

 

 

 

 

Fixed expenses

 

 

 

Insurance

            5,500.00

            7,800.00

       2,300.00

Rent

          10,500.00

          11,700.00

       1,200.00

Council rates

            6,500.00

            6,500.00

                  -  

Depreciation expenses

          18,000.00

          18,000.00

                  -  

Office overheads

          35,000.00

          35,000.00

                  -  

Total fixed expenses

          75,500.00

          79,000.00

       3,500.00

 

 

 

 

 

        823,938.00

        184,028.00

  (639,910.00)

Part B

The most significant variances are as follows:

  1. The biggest variance is in the area of sales which has lead to the lower profits
  2. The variable expenses have also increased more than the budgeted amount
  3. Minor variations in the fixed expenses

Part C

The variances may have occurred because of the following reasons:

  1. The assumptions or sales forecasts are wrong
  2. Increase in the price of raw material
  3. Increase in the rate of labor
  4. Use of inefficient labor

Part D

The variances can be reduced by following the below mentioned recommendations:

  1. Proper sales forecasting
  2. Using purchase techniques like EOQ, Just in time purchase etc.
  3. Using material of good quality
  4. Use of skilled and professional work force.