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Required:
- i) Prepare a report showing Coffee Shack revenue and spending variance for January 2024? In your report, outline the possible reasons for variances?
- Management Accountant of Coffee Shack has been analysing income statement on the store locations and drawn management attention of underperforming. The statement has shown details for the period ending 31 December 20×3 is as follows:
- Business expansion has always been a key focus of Coffee Shack management. The operations team has identified 10 new potential sites. Company has been considering proposals from different equipment suppliers. To make those sites operational, this requires significant investment. Two proposals have taken management interest. These are two proposals under consideration:
Explain the terms profitability and financial sustainability. Suggest management potential sources of finance to fund proposals in part c. Your report should advise the Coffee Shack on the measures they should adopt to ensure the attainment of sustainability. (20 marks)
ii) Outline the objectives of budgeting and explain how Coffee Shack benefits from engaging in robust budgetary processes? (25 marks)
£
|
Sales |
390,000 |
| Direct Material |
142,000 |
|
Direct Wages |
70,000 |
|
Variable overheads |
44,000 |
| Fixed overheads |
19,000 |
| Admin Overheads |
52,500 |
| Selling & distributing overheads |
35,000 |
|
Total Expenses |
362,500 |
|
Profit/Loss |
27,500 |
Calculate and comment:
- Calculate the total contribution and discuss importance of break-even sale.
- Profitability ratios
- 35% of sales contain meal deals and representative cost associated to material is 40%. Evaluate viability of proposal when increase in sale for meal deals by 10% and
Direct Material
by 12% with other
Selling & distributing overheads
of £2500 will generate profits for upcoming period.
Explain results and show benefits of Cost volume profit analysis (20 marks)
|
Proposal 1 |
Proposal 2 |
|||
| Equipment cost |
£925,000 |
£890,000 |
||
| Economic life |
5 Years |
|||
|
Cash flow year 1 |
180,000 |
250,000 |
||
|
Year 2 |
175,000 |
|||
|
Year 3 |
185,000 |
|||
|
Year 4 |
130,000 |
200,000 |
||
|
Year 5 |
650,000 |
400,000 |
||
|
Total Cashflows |
1,315,000 |
1,215,000 |
NB: cost of capital 10%
All cash flows are in £
There is no residual value of equipment.
Based on above details:
- Assess and effectively apply investment appraisal techniques (Payback, NPV, ARR, IRR etc) to advise management on above proposals outlining merits of each technique. (25 marks)
The word count for this assignment is 1,500 words +/- 10% and will not include the title page, executive summary, contents page or bibliography.
It is important that you show knowledge of key debates within the wider literature. Also, it is strongly advised that you are critical in your writing and ensure a good level of integration and coherence in applying theories. Please work on, and ensure an excellent level of criticality, coherence, and flow of your report. This will require effective discussion and clarity.
Please note that a significant amount of the marks is awarded on the basis of wider reading, critical and logical presentation, quality of argument, referencing, academic integrity and academic writing conventions. Please see Assessment Criteria on the Moodle.
Academic Year 2023/24
Assessment Guide
Term Jan 2023 – May 2024
Module Leader
Name: Altaf Khoso
Email: A.Khoso@uel.ac.uk
Room: DL4.01
Student Hours: Monday 11-1200hrs
Tuesday 11-1300hrs
Further can be requested or Online
Co- Module Leader
Name: Syed Naqavi
Email: S.Naqavi2@uel.ac.uk
Room: DL4.01
Student Hours: TBD
Assessment
Individual Coursework
06 May 2024 @ 0900hrs
This assignment accounts for 50% of the module marks.
Your Task:
Coffee Shack is a privately owned company that runs an established chain of
cafes in fifty-nine locations around the UK. Most are located on high streets
and in shopping centres, but there are also units located in airports and large
railway stations. The company sells a wide variety of speciality coffees, cakes,
sandwiches, and other beverages. It markets itself as a sustainable business
with high standards of business ethics.
The Coffee Shack is a company that serves commuters and regular customers
located next to the busiest station and shopping malls. The company’s planning
and actual budgets for January shown below:
Updated January 2024
1
Coffee Shack
Budget and actual data for the month ended January 31st, 2024.
Quantity
Coffee cups (q)
Cakes sale (q)
Sandwiches (q)
Beverages (q)
Meal Deals (q)
BUDGET
ACTUAL
95,000
40,000
66,000
45,000
65,000
110,000
45,000
75,000
48,000
75,000
Revenue
Coffee
£
995,200
£
1,129,600
Total Revenue
995,200
1,129,600
Expenses
Raw material
Wages and salaries
Utilities
Facility rent
Insurance
Repairs and maintenance
Fuel
273,680
149,280
68,420
80,000
18,000
6,220
12,440
418,000
219,890
102,500
80,000
18,000
11,600
15,800
Total Expenses
608,040
865,790
Net Operating profit
387,160
263,810
Note: Total quantity sold: Budget 311,000
Actual: 353,000
Prices and costs are taken as average of standard activity
Average selling price
Raw material
Wages and salaries
Utilities
Facility rent
Insurance
Repairs and maintenance
Fuel
Updated January 2024
3.2
0.88
0.48
0.22
0.26
0.06
0.02
0.04
2
Required:
a) i) Prepare a report showing Coffee Shack revenue and spending variance
for January 2024? In your report, outline the possible reasons for
variances?
ii) Outline the objectives of budgeting and explain how Coffee Shack
benefits from engaging in robust budgetary processes? (25 marks)
b) Management Accountant of Coffee Shack has been analysing income
statement on the store locations and drawn management attention of
underperforming. The statement has shown details for the period ending
31 December 20×3 is as follows:
£
Sales
Direct Material
Direct Wages
Variable overheads
Fixed overheads
Admin Overheads
Selling & distributing
overheads
Total Expenses
Profit/Loss
390,000
142,000
70,000
44,000
19,000
52,500
35,000
362,500
27,500
Calculate and comment:
• Calculate the total contribution and discuss importance of break-even
sale.
• Profitability ratios
• 35% of sales contain meal deals and representative cost associated to
material is 40%. Evaluate viability of proposal when increase in sale for
meal deals by 10% and Direct Material by 12% with other Selling &
distributing overheads of £2500 will generate profits for upcoming period.
• Explain results and show benefits of Cost volume profit analysis (20
marks)
c) Business expansion has always been a key focus of Coffee Shack
management. The operations team has identified 10 new potential sites.
Company has been considering proposals from different equipment
suppliers. To make those sites operational, this requires significant
investment. Two proposals have taken management interest. These are
two proposals under consideration:
Updated January 2024
3
Equipment cost
Economic life
Cash flow year 1
Year 2
Year 3
Year 4
Year 5
Total Cashflows
Proposal 1
£925,000
5 Years
180,000
175,000
180,000
130,000
650,000
1,315,000
Proposal 2
£890,000
5 Years
250,000
180,000
185,000
200,000
400,000
1,215,000
NB: cost of capital 10%
All cash flows are in £
There is no residual value of equipment.
Based on above details:
• Assess and effectively apply investment appraisal techniques
(Payback, NPV, ARR, IRR etc) to advise management on above
proposals outlining merits of each technique. (25 marks)
d) Explain the terms profitability and financial sustainability. Suggest
management potential sources of finance to fund proposals in part c. Your
report should advise the Coffee Shack on the measures they should
adopt to ensure the attainment of sustainability. (20 marks)
The word count for this assignment is 1,500 words +/- 10% and will not include
the title page, executive summary, contents page or bibliography.
It is important that you show knowledge of key debates within the wider literature.
Also, it is strongly advised that you are critical in your writing and ensure a good
level of integration and coherence in applying theories. Please work on, and
ensure an excellent level of criticality, coherence, and flow of your report. This
will require effective discussion and clarity.
Please note that a significant amount of the marks is awarded on the basis of
wider reading, critical and logical presentation, quality of argument, referencing,
academic integrity and academic writing conventions. Please see Assessment
Criteria on the Moodle.
Reassessment
Updated January 2024
4
The reassessment will be a resubmission of this report, with tracked changes
made in response to the feedback given. The date for Reassessment is TO BE
ADVISED.
The Learning Outcomes assessed by this assessment are:
Knowledge
1. Demonstrate an understanding of different markets and sources of
finance; and the role of budgeting in an organisation.
2. Be able to assess budgets based financial data to support
organisational objectives (CMI Los 2).
Thinking skills
3. Analyse the information contained in a company’s annual report; and
appraise finance and investment decision.
Skills for life and work (general skills)
4. Demonstrate an understanding of the context within which accounting
operates, and the various local and international standards that need to
be complied with.
Subject-based practical skill
5. Effectively apply budgets and investment appraisal techniques.
6. Effectively apply key ratios appropriate for analysing the financial
performance of the organisation.
7. Understand how to evaluate financial proposals for expenditure
submitted by others (CMI Los 3).
We strongly suggest that you try to submit all coursework by the deadline set
as meeting deadlines will be expected in employment. However, in our
regulations, UEL has permitted students to be able to submit their coursework
up to 24 hours after the deadline. The deadline is published in this module
guide. Coursework which is submitted late, but within 24 hours of the deadline,
will be assessed but subjected to a fixed penalty of 5% of the total marks
available (as opposed to marks obtained). If you submit twice, once before the
deadline and once during the 24-hour late period, then the second submission
will be marked and 5% deducted. This rule only applies to coursework. It does
not apply to examinations, presentations, performances, practical assessments
or viva voce examinations. If you miss these for a genuine reason, then you
will need to apply for extenuating circumstances, or accept that you will receive
a zero mark.
Further information is available in the Assessment & Feedback Policy at
https://www.uel.ac.uk/Discover/Governance/Policies-RegulationsCorporate-documents/Student-Policies (click on other policies)
a) Marks distribution for the task:
Updated January 2024
5
Marks distribution
Maximum Mark
Objectives of Preparing a Budget, Revenue and
Spending Variance Report
Financial statement analysis
Investment appraisal
Advising on Profitability, Sustainability and sources of
finance
Clarity & Structure: i.e. detailed, coherent and formal
structure should be demonstrated. It also should be
well presented
Referencing: appropriate application of Harvard
referencing should be evident
25
Total Mark
100
20
25
20
5
5
b) Guidance on referencing
As a student you will be taught how to write correctly referenced essays
using UEL’s standard Harvard referencing system from Cite Them Right.
Cite them Right is the standard Harvard referencing style at UEL for all
Schools apart from the School of Psychology which uses the APA system.
This book will teach you all you need to know about Harvard referencing,
plagiarism and collusion. The electronic version of “Cite Them Right: the
essential referencing guide” 9th edition, can be accessed whilst on or off
campus, via UEL Direct. The book can only be read online and no part of it
can be printed nor downloaded.
Further information is available at:
https://uelac.sharepoint.com/LibraryandLearningServices/Pages/defa
ult.aspx
c) Details of submission procedures:
Notice is hereby given that all submissions for this component must be
submitted to Turnitin.” If you fail to submit component to Turnitin, in
accordance with the guidance provided on the Virtual Learning Environment
(Moodle), a mark of 0 will be awarded for the component.
Submitting Assessments Using Turnitin:
Turnitin is required for coursework assessments, such as report/research
papers or projects in Microsoft Word, PowerPoint, and in PDF format. There
are two main reasons we want you to use Turnitin:
• Turnitin can help you avoid academic breaches and plagiarism. When
you use Turnitin before a submission deadline, you can use the
Updated January 2024
6
Originality Report feature to compare your work to thousands of other
sources (like websites, Wikipedia, and even other student papers).
Anything in your work that identically matches another source is
highlighted for you to see. When you use this feature before the
deadline, you will have time to revise your work to avoid an instance of
academic breach/plagiarism.
• Turnitin saves paper. When using Turnitin to electronically submit your
work, you will almost never have to submit a paper copy.
Late Submissions Using Turnitin
UEL has permitted students to be able to submit their coursework up to 24
hours after the deadline. Assessments that are submitted up to 24 hours
late are still marked, but with a 5% deduction. However, you have to be
very careful when you are submitting your assessment. If you submit
your work twice, once using the original deadline link and then again using
the late submission link on Turnitin, your assignment will be graded as late
with the 5% deduction.
Turnitin System Failure
Best Advice: Don’t wait until the last minute to submit your assessments
electronically. If you experience a problem submitting your work with
Turnitin, you should notify your lecturer/tutor by email immediately.
However, deadlines are not extended unless there is a significant systems
problem with Turnitin. UEL has specific plans in place to address these
issues. If UEL finds that the issue with the system was significant, you will
receive an email notifying you of the issue and that you have been
given a 24-hour extension. If you don’t receive any email that
specifically states you have been given an extension, then the
original deadline has not been changed.
d) Feedback and return of work:
Work should be submitted on Turnitin and all feedback will be on Turnitin.
This will be released to students on TBC.
You may submit formative work to your seminar tutor by TBC. Generic
feedback will be given to the whole class.
Updated January 2024
7
Assessment criteria
Knowledge and Understanding (25%)
Up to 40%
The Report is written with little or no reference to any
theoretical underpinning.
40% – 50%
Evidence of some use of underpinning theory, but its use is
limited and there are clear gaps of conceptual
understanding in its application.
50% – 60%
Theory is used to inform decisions and to justify them in a
clear and logical manner. Systematic understanding of the
discipline is evidenced through the implementation plan and
risk register.
The Report makes effective use of a wide range of theory
and underlying concepts to provide a well judged and
practical implementation plan evidencing a good
understanding of the discipline.
60-70%
70% plus
Precise and well judged choice of theory and literature to
inform an excellent proposal that synthesizes the practical
and theoretical elements to produce a well judged proposal
that incorporates a wide range of issues and concepts.
Independent Research and Learning (25%)
Up to 40%
There is no evidence of independent research or of making
use of the independent learning resources
40% – 50%
There is evidence of some independent resources being
used but of a limited value and number.
50% – 60%
Relevant independent resources have been identified and
incorporated to build the depth and breadth of the proposal.
60-70%
A significant range of independent resources from the
forefront of the discipline is introduced into the proposal to
significantly raise its impact and to ground it effectively.
70%+
An extensive range of independent resources if high quality
is synthesized for inclusion to lend the proposal an
academic weight that lends significant authority.
Persuasive, consistent argument (20%)
Up to 40%
No real structure to the argument
40% – 50%
The report follows the prescribed structure in parts only.
50% – 60%
The report l follows the prescribed structure and builds a
clear, rational and well constructed argument.
60-70%
The report is highly effective in its construction and through
the use of argument convinces the reader of its conclusions
and recommendations.
Updated January 2024
8
70% +
Up to 40%
Various strands of argument are synthesised to provide a
compelling, grounded argument.
Criticality. (25%)
All sources are accepted at face value.
40% – 50%
There is evidence of some limited criticality and analysis of
events and facts, though it lacks depth.
50% – 60%
A broadly critical approach to uncover underlying factors is
used in the analysis to inform proposed recommendations
and their implementation
A strong criticality informs all elements of the proposal,
including the risk register through multiple perspectives and
critical analysis.
60-70%
70% +
A highly analytical criticality underscores the proposal to
synthesise multiple perspectives in a rigorously analytical
proposal.
Presentation (5%)
Up to 40%
40% – 50%
50% – 60%
60-70%
70% +
Updated January 2024
Poor presentation
Poor references which do not follow the correct Harvard
conventions and / or insufficient references
Serious errors in the use of language which makes the
meaning unclear or imprecise
Presentation is somewhat untidy
References contain inconsistencies, errors or omissions
There are errors in the use of academic English which
affect the clarity
Professional presentation standard
References follow correct conventions with one or two
minor errors.
Language is clear and easily understood, sufficient for
complex arguments.
Highly professional presentation
full and appropriate references.
Clear and precise use of language allowing a complex
argument to be easily understood and followed
Outstanding presentation
Precise, full and appropriate references.
Subtle use of language expressing highly nuanced thought
with clarity and precision to a level appropriate for a
submission for publication.
9
PRESENT VALUE TABLE
Present value of £1
Periods
(n)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Interest rates (r)
1%
0.990
0.980
0.971
0.961
0.951
0.942
0.933
0.923
0.914
0.905
0.896
0.887
0.879
0.870
0.861
0.853
0.844
0.836
0.828
0.820
2%
0.980
0.961
0.942
0.924
0.906
0.888
0.871
0.853
0.837
0.820
0.804
0.788
0.773
0.758
0.743
0.728
0.714
0.700
0.686
0.673
3%
0.971
0.943
0.915
0.888
0.863
0.837
0.813
0.789
0.766
0.744
0.722
0.701
0.681
0.661
0.642
0.623
0.605
0.587
0.570
0.554
4%
0.962
0.925
0.889
0.855
0.822
0.790
0.760
0.731
0.703
0.676
0.650
0.625
0.601
0.577
0.555
0.534
0.513
0.494
0.475
0.456
Periods
(n)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
5%
0.952
0.907
0.864
0.823
0.784
0.746
0.711
0.677
0.645
0.614
0.585
0.557
0.530
0.505
0.481
0.458
0.436
0.416
0.396
0.377
6%
0.943
0.890
0.840
0.792
0.747
0705
0.665
0.627
0.592
0.558
0.527
0.497
0.469
0.442
0.417
0.394
0.371
0.350
0.331
0.312
7%
0.935
0.873
0.816
0.763
0.713
0.666
0.623
0.582
0.544
0.508
0.475
0.444
0.415
0.388
0.362
0.339
0.317
0.296
0.277
0.258
8%
0.926
0.857
0.794
0.735
0.681
0.630
0.583
0.540
0.500
0.463
0.429
0.397
0.368
0.340
0.315
0.292
0.270
0.250
0.232
0.215
9%
0.917
0.842
0.772
0.708
0.650
0.596
0.547
0.502
0.460
0.422
0.388
0.356
0.326
0.299
0.275
0.252
0.231
0.212
0.194
0.178
10%
0.909
0.826
0.751
0.683
0.621
0.564
0.513
0.467
0.424
0.386
0.350
0.319
0.290
0.263
0.239
0.218
0.198
0.180
0.164
0.149
17%
0.855
0.731
0.624
0.534
0.456
0.390
0.333
0.285
0.243
0.208
0.178
0.152
0.130
0.111
0.095
0.081
0.069
0.059
0.051
0.043
18%
0.847
0.718
0.609
0.516
0.437
0.370
0.314
0.266
0.225
0.191
0.162
0.137
0.116
0.099
0.084
0.071
0.060
0.051
0.043
0.037
19%
0.840
0.706
0.593
0.499
0.419
0.352
0.296
0.249
0.209
0.176
0.148
0.124
0.104
0.088
0.079
0.062
0.052
0.044
0.037
0.031
20%
0.833
0.694
0.579
0.482
0.402
0.335
0.279
0.233
0.194
0.162
0.135
0.112
0.093
0.078
0.065
0.054
0.045
0.038
0.031
0.026
Interest rates (r)
11%
0.901
0.812
0.731
0.659
0.593
0.535
0.482
0.434
0.391
0.352
0.317
0.286
0.258
0.232
0.209
0.188
0.170
0.153
0.138
0.124
12%
0.893
0.797
0.712
0.636
0.567
0.507
0.452
0.404
0.361
0.322
0.287
0.257
0.229
0.205
0.183
0.163
0.146
0.130
0.116
0.104
Updated January 2024
13%
0.885
0.783
0.693
0.613
0.543
0.480
0.425
0.376
0.333
0.295
0.261
0.231
0.204
0.181
0.160
0.141
0.125
0.111
0.098
0.087
14%
0.877
0.769
0.675
0.592
0.519
0.456
0.400
0.351
0.308
0.270
0.237
0.208
0.182
0.160
0.140
0.123
0.108
0.095
0.083
0.073
15%
0.870
0.756
0.658
0.572
0.497
0.432
0.376
0.327
0.284
0.247
0.215
0.187
0.163
0.141
0.123
0.107
0.093
0.081
0.070
0.061
16%
0.862
0.743
0.641
0.552
0.476
0.410
0.354
0.305
0.263
0.227
0.195
0.168
0.145
0.125
0.108
0.093
0.080
0.069
0.060
0.051
10
Cumulative present value of £1 per annum
Periods (n)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Interest rates (r)
1%
0.990
1.970
2.941
3.902
4.853
5.795
6.728
7.652
8.566
9.471
10.368
11.255
12.134
13.004
13.865
14.718
15.562
16.398
17.226
18.046
2%
0.980
1.942
2.884
3.808
4.713
5.601
6.472
7.325
8.162
8.983
9.787
10.575
11.348
12.106
12.849
13.578
14.292
14.992
15.679
16.351
3%
0.971
1.913
2.829
3.717
4.580
5.417
6.230
7.020
7.786
8.530
9.253
9.954
10.635
11.296
11.938
12.561
13.166
13.754
14.324
14.878
4%
0.962
1.886
2.775
3.630
4.452
5.242
6.002
6.733
7.435
8.111
8.760
9.385
9.986
10.563
11.118
11.652
12.166
12.659
13.134
13.590
Periods
(n)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
5%
0.952
1.859
2.723
3.546
4.329
5.076
5.786
6.463
7.108
7.722
8.306
8.863
9.394
9.899
10.380
10.838
11.274
11.690
12.085
12.462
6%
0.943
1.833
2.673
3.465
4.212
4.917
5.582
6.210
6.802
7.360
7.887
8.384
8.853
9.295
9.712
10.106
10.477
10.828
11.158
11.470
7%
0.935
1.808
2.624
3.387
4.100
4.767
5.389
5.971
6.515
7.024
7.499
7.943
8.358
8.745
9.108
9.447
9.763
10.059
10.336
10.594
8%
0.926
1.783
2.577
3.312
3.993
4.623
5.206
5.747
6.247
6.710
7.139
7.536
7.904
8.244
8.559
8.851
9.122
9.372
9.604
9.818
9%
0.917
1.759
2.531
3.240
3.890
4.486
5.033
5.535
5.995
6.418
6.805
7.161
7.487
7.786
8.061
8.313
8.544
8.756
8.950
9.129
10%
0.909
1.736
2.487
3.170
3.791
4.355
4.868
5.335
5.759
6.145
6.495
6.814
7.103
7.367
7.606
7.824
8.022
8.201
8.365
8.514
17%
0.855
1.585
2.210
2.743
3.199
3.589
3.922
4.207
4.451
4.659
4.836
4.988
5.118
5.229
5.324
5.405
5.475
5.534
5.584
5.628
18%
0.847
1.566
2.174
2.690
3.127
3.498
3.812
4.078
4.303
4.494
4.656
7.793
4.910
5.008
5.092
5.162
5.222
5.273
5.316
5.353
19%
0.840
1.547
2.140
2.639
3.058
3.410
3.706
3.954
4.163
4.339
4.486
4.611
4.715
4.802
4.876
4.938
4.990
5.033
5.070
5.101
20%
0.833
1.528
2.106
2.589
2.991
3.326
3.605
3.837
4.031
4.192
4.327
4.439
4.533
4.611
4.675
4.730
4.775
4.812
4.843
4.870
Interest rates (r)
11%
0.901
1.713
2.444
3.102
3.696
4.231
4.712
5.146
5.537
5.889
6.207
6.492
6.750
6.982
7.191
7.379
7.549
7.702
7.839
7.963
12%
0.893
1.690
2.402
3.037
3.605
4.111
4.564
4.968
5.328
5.650
5.938
6.194
6.424
6.628
6.811
6.974
7.120
7.250
7.366
7.469
Updated January 2024
13%
0.885
1.668
2.361
2.974
3.517
3.998
4.423
4.799
5.132
5.426
5.687
5.918
6.122
6.302
6.462
6.604
6.729
6.840
6.938
7.025
14%
0.877
1.647
2.322
2.914
3.433
3.889
4.288
4.639
4.946
5.216
5.453
5.660
5.842
6.002
6.142
6.265
6.373
6.467
6.550
6.623
15%
0.870
1.626
2.283
2.855
3.352
3.784
4.160
4.487
4.772
5.019
5.234
5.421
5.583
5.724
5.847
5.954
6.047
6.128
6.198
6.259
16%
0.862
1.605
2.246
2.798
3.274
3.685
4.039
4.344
4.607
4.833
5.029
5.197
5.342
5.468
5.575
5.668
5.749
5.818
5.877
5.929
11
