MBA 7060 - Financial Management and Decision Making Assessment

Assessment Task Scenario

International accounting regulations, Costing techniques and budgeting

Business operations are expanding beyond organisations national borders and normal operational grounds. This ever-increasing globalisation means that, although businesses can outsource manufacturing and access more customers all over the world, the need to manage costs and price product appropriately, develop a fitting budgeting system and understand in more detail the international regulatory and accounting requirements have never been so crucial. 

Assignment Tasks:

Fastrack Ltd is a UK-based manufacturing organisation. The directors believe that there is a need to develop a new costing and product pricing system to reduce costs and maximise shareholders wealth. They are also seeking to develop better budgeting systems and have a clear and better understanding of requirement of international financial accounting regulations.

As the financial director of the organisation, the CEO has asked you to write a report to advise Fastrack Ltd on the best costing and pricing technique, a new and better budgeting system, and the company’s obligations on the international regulatory and legal standards in financial accounting.

Using data provided by the organisation, you are to produce a marginal and absorption costing profit statement, a cash budget in Microsoft Excel and use the results to advise and suggest improvements for Fasttrack Ltd.

In your report, you are required to, among other things, cover the following:

1. Introduction: Explain what the report is about and parameters to be covered in the report including the definitions of costs, budgeting and their importance in business, as well as the legal and regulatory framework in financial accounting (10 marks)

1. Examine the main international financial accounting regulatory bodies, and critically evaluate the standards and financial accounting principles for financial statements. (15 marks)

1. Evaluate the main costs classifications that may be used in Fasttrack Ltd. (10 marks).
2. Using Excel spreadsheet, produce Profit statements using both the marginal and absorption costing techniques for the organisation. (An additional excel case study information is provided for this (10 marks)
3. Critically evaluate the differences between marginal and absorption costing systems and why profit figures are different in absorption and marginal costing techniques. (10 marks)
4. Using Excel spreadsheets, prepare a cash budget. (An additional excel case study information is provided for this (10 marks)
5. Critically evaluate the benefit and drawbacks in budgeting. (10 marks)
6. Suggest about three ways to improve cashflows in cash budget preparations tacking into account the cash budget closing balances of Fasttrack. (5 marks).
7. Reflecting on your report, evaluate how your understanding of international legal and regulatory framework in financial accounting, budgeting, as well as costing techniques has helped your professional development. (10 marks)
8. References (in-text and bibliography), and quality of work (10 mark)
9. Appendix

Important and helpful information

Important and helpful information

Please refer to the Module Guide for information regarding indicative reading, guidelines for the preparation and submission of assignments, and the assessment criteria.

Submission

Electronic copies of assignments should be submitted via “Turn-it-in” NO LATER THAN THE DEADLINE.

Please ensure you follow the instructions provided by your module tutor and on the assessment brief. Submission of assessments must be done by submission date. Assignments not available at this time will be considered late unless an extension has been previously agreed.

Students who fail to submit assessments by the specified date (without an extension being granted or without accepted Mitigating Circumstances) will be subject to the following penalties:

• Up to 7 calendar days late = 10 marks subtracted but if the assignment would normally gain a pass mark, then the final mark to be no lower than the pass mark for the assignment.
• More than 7 calendar days late = This will be counted as non-submission and no marks will be recorded.

Please note that it is your responsibility to ensure that the assignment is submitted in the format/s specified in the Module Guide or on the Assessment Brief.

YOU SHOULD ALWAYS ENSURE YOU KEEP A COPY OF ANY ASSIGNMENT SUBMITTED.

In the case of exceptional and unforeseen circumstances, an extension of up to 14 days after the assessment deadline may be granted. This must be agreed by your Programme Leader, following a discussion the Module Tutor. You should complete an Extension Request Form available from Student Services and attach documentary evidence of your circumstances, prior to the published submission deadline.

Extensions over 14 calendar days should be requested using the Mitigating Circumstances procedure.

Some students with registered disabilities will be eligible for revised submission deadlines. Revised submission deadlines do not require the completion extension request paperwork.

Please see the Programme Handbook for further details.

Declaration:

 At the end of the assessment, you must declare any software tools including Generative AI (GAI) applications that you used in developing and completing the assessment

Minimum Secondary Research Source Requirements:

References

Level HE7 - It is expected that the Reference List will contain between fifteen to twenty sources . As a MINIMUM the Reference List should include four refereed academic journals and five academic books.

Level 7 Grid

Assessment Requirements and Key Pointers

The assessment requires a report for Fastrack Ltd , a UK-based manufacturing company. As the financial director, the student must advise the company's CEO on improving costing, budgeting, and understanding international accounting regulations . The report needs to be comprehensive, covering specific sections with allocated marks.

Key Pointers to be Covered

The assessment is a detailed report with several key sections:

• Introduction (10 marks): Define key terms like costs, budgeting, and the legal and regulatory frameworks in financial accounting.

• International Accounting Bodies (15 marks): Examine and critically evaluate major international financial accounting regulatory bodies and their standards.

• Cost Classifications (10 marks): Evaluate the main cost classifications relevant to Fastrack Ltd.

• Costing Statements in Excel (10 marks): Produce marginal and absorption costing profit statements using provided data.

• Costing Analysis (10 marks): Critically evaluate the differences between marginal and absorption costing and explain why their profit figures vary.

• Cash Budget in Excel (10 marks): Prepare a cash budget using the provided case study information.

• Budgeting Evaluation (10 marks): Critically evaluate the benefits and drawbacks of budgeting.

• Cash Flow Improvements (5 marks): Suggest three ways to improve cash flow, specifically addressing the closing balances from the cash budget.

• Professional Development Reflection (10 marks): Reflect on how the knowledge gained from this report contributes to professional development.

• Referencing and Quality (10 marks): Ensure all in-text citations and the bibliography are correctly formatted in Harvard style, demonstrating a high quality of work and sufficient research.

Academic Mentor's Approach

An academic mentor would guide the student through this complex assignment by breaking it down into manageable steps, focusing on both theoretical understanding and practical application.

1. Initial Briefing and Deconstruction: The mentor would first sit with the student to deconstruct the assignment brief . This involves going through each section to clarify its purpose, the required depth of analysis, and the mark allocation. The mentor would emphasize that this is a practical, advisory report , not just a theoretical essay, requiring the student to adopt the role of a financial director.

2. Theoretical Foundation (Report Sections): The mentor would start with the sections that require foundational knowledge. They would advise the student to begin by researching and writing the theoretical parts of the report first, such as the introduction, the examination of international regulatory bodies, and cost classifications. The mentor would stress the importance of critical evaluation over mere description, pushing the student to analyze why certain standards are important and the implications for a company like Fastrack Ltd.

3. Practical Application (Excel Sections): Once the theoretical framework is established, the mentor would move to the practical, Excel-based tasks.

   • Costing Statements: The mentor would guide the student to understand the formulas for both marginal and absorption costing . They would explain how to classify costs as either variable or fixed and how to handle fixed overheads differently in each method. They would then guide the student through the Excel spreadsheet, ensuring they correctly input data and apply the formulas to produce the profit statements.

   • Cash Budget: For the cash budget, the mentor would explain the concept of a budget as a planning tool and guide the student on how to prepare it in Excel. They would emphasize the importance of distinguishing between cash and credit transactions to accurately forecast cash flows. The mentor would also highlight the section on improving cash flow , linking it directly to the closing balances calculated in the budget.

4. Analysis and Reflection: After completing the practical work, the mentor would guide the student to write the analytical and reflective sections.

   • Costing Analysis: The mentor would help the student articulate the differences in profit figures , explaining the role of inventory and fixed overheads in absorption costing versus marginal costing. This deepens the student’s understanding beyond just a formulaic application.

   • Budgeting Evaluation: The mentor would prompt the student to think about the benefits and drawbacks of budgeting in a real-world context, considering issues like rigidness and potential for manipulation.

   • Professional Development: The mentor would assist the student in reflecting on how this entire process—from theoretical research to practical application—has prepared them for a professional role, covering areas like analytical skills, reporting, and strategic financial thinking.

5. Final Review and Referencing: The final step involves a thorough review of the entire report. The mentor would check for a cohesive structure, logical flow, and professional tone. They would also place a strong emphasis on referencing , ensuring the student has met the Harvard style requirements and has used a sufficient number and variety of academic sources. This reinforces the importance of academic integrity and proper citation.

Outcome and Learning Objectives

The final outcome of this guided process is a well-structured, comprehensive report that not only meets all the assessment requirements but also demonstrates a deep and practical understanding of the core concepts. The student achieves a high-quality result by integrating theoretical knowledge with hands-on application.

This approach ensures the student covers several key learning objectives:

• Applied Knowledge: The student learns to apply complex accounting principles (marginal costing, absorption costing) and budgeting techniques to a real-world business scenario.

• Analytical and Critical Thinking: The student develops the ability to critically evaluate different accounting methods and budgeting systems, understanding their implications and limitations.

• Professional Skills: The student practices preparing a professional report, using a correct format, and adhering to academic standards like proper referencing.

• Practical Proficiency: The student gains hands-on experience with Microsoft Excel for financial modeling, a crucial skill in the finance and accounting fields.

• Holistic Understanding: The student develops a holistic view of financial management by connecting different areas—costing, budgeting, and international regulations—in a single, coherent advisory report.

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