ACFI1203 - Management Information for Decision Making - RLG VOSTECK PLC Case Study - Accounting Assignment Help

Assignment Task

 The objectives are:  

•  To test your understanding of the management accounting function
•  To test your understanding of key management accounting concepts and processes
•  To test your ability to analyse and interpret financial information and use them to  make appropriate business decisions. 

(A) What is a Prime Cost? Explain

(B) RLG VOSTECK PLC manufactures supermarket trolleys in three production  departments: Manufacturing, Finishing, and Packaging. RLG VOSTECK PLC also has three  service departments: Quality Control, Stores and Maintenance. The company uses  absorption costing system to analyse product costs and you have been supplied with the following information in relation to the production departments as indicated in Table 1 below:

following information in relation to the production departments as indicated in Table 1 below: Table 1 

(B1) RLG VOSTECK PLC estimates to spend £70,000 for heating the factory during the  year 2021, calculate the heating cost that should be allocated to each of the three production  departments.

The following additional information has been supplied in Tables 2 and 3 respectively: 

Table 2 

Table 3: % Usage of service departments 

(B2) Using the information provided in the tables above about the annual overheads and  usage of each service by the production and other service departments, and If the  overheads allocated to the three service departments are reallocated to the three production departments on the basis of usage, reallocate the service overheads to determine the total  overheads after reallocation for each of the three production departments.

TASK 2 

RLG VOSTECK PLC also produces hospital trolleys in the Tromsko division of the  company. The forecasts for the year 2021 are that fixed costs will be £18,000,000; variable  costs per hospital trolley will be £380; and sales price will be £550 per hospital trolley. Sales  for the year is forecasts at 600,000 hospital trolleys. 

(A) How many hospital trolleys will have to be made and sold for the Tromsko Division to  breakeven? 

(B) Calculate the company’s margin of safety as a percentage of sales. 

(C)The Managing Director of Tromsko Division has declared that the profit target for the year  2021 is to be £70,000,000. How many hospital trolleys does the division need to make and sell to achieve that target profit? 

(D)The Directors of RLG VOSTECK PLC were advised by the company’s external  accountant that for the company to be successful, each unit that the company sells should have a positive contribution. However, the directors do not understand what the accountant  meant by the term ‘contribution’. Provide a brief note for the directors that explains what the  contribution means.

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