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MAA103: Accounting for Decision Making - Business Planning and Budget Report Writing Assessment Answer
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Internal Code: 1AGHED
Code: MAA103
Accounting for Decision Making Assessment Answer
Assignment Task: Assessment 1: MAA103 You (and your team) work in a boutique firm called ‘Business Advisory Pty. Ltd.’, a business that provides advisory services to other businesses. Your role in the firm is that of a business consultant; i.e. you provide business advice to business clients. To this end, you are often required to produce budgetary reports and present such reports to clients. Mr. James Hunter and Dr. Olivia Ng own an Optometry business trading under the name “i-Optometry” and they have approached you (and your team). Being a brick and mortar store located in Burwood, Victoria, i-Optometry is a business that has traditionally focused on selling eyewear such as sunglasses and prescription glasses. The business also provides optometry services to customers, mainly a comprehensive eye examination. James is in charge of the management of the business while Dr. Ng manages the optometry aspects of the business. MAA103 As part of their business operations, i-Optometry retails the following types of eyewear: MAA103- Sunglasses retail on average for $200 per pair of glasses. It costs $60 per pair and the business purchases these from a local supplier. MAA103
- Prescription reading glasses retail for $150 each. It costs $80 to secure from the same local supplier. MAA103
- Both James and Olivia are partners within the business and draws an amount of $2000 per month each. They plan on increasing their drawings to $4,000 each per month starting in January 2020.
- As the manager, James keeps a close eye on inventory management and would like to always maintain a monthly ending inventory requirement of 30% of next month’s sales. Additionally, all purchases with the current supplier are on a credit basis with 50% of the account settled in the same month of purchase and the remaining 50% settled one month after the month of purchase.
- The business typically will have 80% of their sales as cash, with the remaining 20% on credit.Of the credit sales, 70% is collected in the month of sale, 20% is collected one month after the sale, and 10% is collected two months after the sale.
- All customers coming in for an eye check are assumed to pay cash 100% of the time as the business does not provide bulk billing.
- Specialized optometry equipment to provide comprehensive eye-tests. On average, the equipment costs $11,000 and generally is expected to last 5 years with zero residual value.
- Other office equipment has a historical cost of $25,000 and depreciates at 25% per annum.
- Store furniture and fittings were originally purchased at $65,000 and depreciate at 10% per annum.
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