The Management Team at MN Limited Case Study - Management Assignment Help

Assignment Task:

Task:

The management team at MN Limited is considering the budgets it prepared for the year ending 31 December 2014. It has now been revealed that in June 2014 the company will be able to purchase only 10,000 litres of material Q (all other resources will be fully available). In the light of this new information, the management team wants to revise its plans for June to ensure that profits are maximized for that month. MN Limited can produce three products from the same labour and main raw material Q, though different amounts are required for each product. The standard resource requirements, costs and selling prices, and the customer demand for delivery in June (including those orders already accepted) for each of its finished products are as follows:

Product V Product S Product T

Resources per unit:
Material Q 10 litres 8 litres 5 litres
Direct labour 8 hours 9 hours 6 hours
Selling prices and costs: $ per unit $ per unit $ per unit
Selling price   145.00   134.00 99.00
Material Q     25.00     20.00 12.50
Other materials     10.00       4.00   8.50
Direct labour     40.00     45.00 30.00
Overheads:
Variable     10.00     11.25   7.50
Fixed*     24.00     30.00 12.00
  109.00   110.25 70.50
Customer demand 1,100 units 950 units 1,450 units
MN Limited has already accepted customer orders for delivery in June 2014 as follows:
Product V 34 units
Product S 75 units
Product T 97 units
The management team has decided that these customer orders must be satisfied as the financial and non-financial penalties that would otherwise arise are very significant. Given the shortage of material Q, the management team has now set the following inventory levels for June:

Opening inventory Closing inventory

Material Q* 621 litres 225 litres
Product V 20 units 10 units
Product S 33 units 25 units
Product T 46 units 20 units
Required

1. Prepare a production budget for June 2014 that clearly shows the number of units of each product that should be produced to maximize the profits of MN Limited for June 2014.

2. Using your answer to requirement 1 above, calculate the number of units of each product that will be sold in June 2014.

3. Using your answer to requirement 2 above, calculate the profit for June 2014 using:
(a)marginal costing; (b) absorption costing.
The Managing Director of MN Limited is concerned about the effect on cashflow caused by the scarcity of material Q during June 2014. She is aware that monthly profit and cashflow are often unequal and has heard that marginal costing profits more closely resemble cashflow than do absorption costing profits.

4 (a)Explain briefly why there is a difference between cashflow and profit.
(b)Briefly discuss the assertion that marginal costing profits are a better indicator of cashflow than absorption costing profits.

This Management Assignment has been solved by our Management Experts at My Uni Paper. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+Students in Australia, UK & US by helping them to score HD in their academics. Our Experts are well trained to follow all marking rubrics & referencing style.

Be it a used or new solution, the quality of the work submitted by our assignment Experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire an HD either way. You could choose a new assignment solution file to get yourself an exclusive, plagiarism (with free Turnitin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.