Project Management Accounting - Progressive Case Study - Project Management Assignment Help

Assignment Task:

Progressive is an Australian business firm that has been manufacturing, designing and installing furniture for over 25 years. The firm has a large team of specialists in two key Divisions; Corporate and Dealership Solutions. The corporate division covers everything from supply and installation of loose office furniture to complete key turn fit-out projects incorporating design, project management, building and fitment to completion. Dealership Solutions provide a total service for multi-franchise organizations requiring programmed rollouts where they design, build and install furniture for some of the largest networks in Australia, nationwide. Progressive Corporate has been designing and building offices for over 25 years and has the experience to deliver projects on time and on budget every time. The in-house design team actively works with clients to create balanced and aesthetic solutions for their space and people requirements and then provide a total project managed plan from inception to completion. 
 
Progressive has approached CIC Higher Education seeking consultancy services for its products. The consultancy project focuses on budgeting and profitability analysis in the manufacturing and sales of Office Furniture mainly chairs for the year 2020. Progressive has shared vital information to enable you to conduct the required analysis in partial completion of your assessment for Management Accounting. The types of chairs made by Progressive include Mesh Office Chairs (MOC), Ergonomic Chairs (EC), Meeting Room Chairs (MRC) and Management Chairs (MC). These office chairs are Australian made and guaranteed to be of best quality with competitive prices. Progressive is proud of the range of comfortable chairs it offers that provide customers with warranties from 3 years to 10 years. Customers are required to choose the style of a chair(s) they want, and Progressive sends a quote and would deliver products straight to customers in Melbourne. Product prices are affected by fluctuations in raw material costs, changes in customer demand and competition in the market place. The following data is available from the records obtained as part of the consultancy project. 

Required:

1. Prepare Progressive's budgeted net profit for the year 2020. (Hint: use the contribution margin approach to the income statement or variable costing statement. Present your answer showing computations for each product and in total). 
 
2. Assuming the sales mix remains constant, how many units of each product should Progressive sell in order to breakeven in the year 2020? 
 
3. Progressive has recently heard that new competitors are emerging in the market and their target is to produce and sell Furniture products (office chairs) in 2020. The increase in competitors will definitely affect the market share of Progressive and thus the sales department expects sales of each product line would fall by 20%. Given this scenario, Progressive wants you to show how the situation would affect the profitability of each product and the budgeted total profit for the firm in 2020? 
 
4. As explained in requirement 3, the introduction of the new competitors will have an additional impact on the market place beyond the decline in market share. It is expected that intense demand for raw materials would cause inflation and variable manufacturing costs are expected to increase by 10%. At the same time, the addition of new suppliers in the market place will give customers a bargaining power that would reduce the estimated unit sales prices by 5%. Your task is to critically analyse the situation and provide your expert advice on the following business problems. 
 
a. How many units of each product should Progressive produce and sell in order to breakeven (considering the decline in market share, an increase in variable manufacturing costs and reduction in unit sales prices)? 

b. If Progressive is determined to prevent loss of market share and maintain the budgeted sales prices of its products for 2020, what actions should the firm consider to take? Please explain the actions you propose and why you think they would help Progressive achieve its goal. (Hint: you need to discuss at least two actions that the firm should consider to take). 

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