### Solution: ASSESSMENT TASK – Coursework

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 Module Code: BFH1027 Module Title: Professional Skills and Finance Assessment Task(s) Coursework Academic Year 2019/20

Learning Outcomes

On completion of this module students will:

1. Recognise the skills necessary for effective undergraduate study
2. Explain the importance of self-evaluation and PDP in career development
3. Explain the needs of different users of accounting information and how financial information is prepared and presented to meet these needs.
4. Explain the concept of investment appraisal

Ability Outcomes

On completion of this module students will be able to:

1. Present information effectively to others in a variety of formats
2. Work with others
3. Manage their own time effectively and evaluate their own performance
4. Apply their knowledge of costs and market structures to their industrial sector
5. Prepare reports, using ratio analysis on the financial performance of a business.
6. Use financial and non-financial information for planning, decision making and control

This assessment task addresses the following learning outcomes from the module specification

Learning outcomes 3,4,8,9 and10 – 50% of module

Assessment brief

Coursework Instructions:

You are required to answer ALL 4 QUESTIONS.

Each question is marked out of 25.

Question 1

a)    Robinson’s Hotel Ltd has the following information on the Non-current (fixed) assets at the start of financial year 2019.

 Asset Group Original Cost £000 Net Book value at start of the year £000 Plant 500 500 Property 150 130 Vehicles 100 75

The following depreciation policies apply:

i)      The depreciation rate of the plant is 6% of the original cost each year.

ii)     Property is depreciated on a straight-line basis over 7 years. It was expected that the plant would be sold at the end of 7 years for residual value of £80,000.

iii)    Vehicles are depreciated on a reducing balance basis at the rate of 25%.

Calculate the depreciation charge for the year and the Net Book Value at the end of the year for each asset group.

(6 marks, 2 each)

b)    Robinson’s Hotel Ltd also has the following information on stock balances and purchases:

£000

●      Opening Stock            37,000

●      Closing Stock             27,000

●      Purchases                   115,000

Calculate the Cost of Sales for the financial year.

(1 mark each correct element, total 3 marks)

c)     You have the following information on sales and expenses:

£000

Sales Revenue                                         532

Wages & Salaries                                     140

Utility Costs                                               13

Marketing Costs                                        9

Maintenance Costs                                   21

Using this information and relevant information (Cost of Sales and Depreciation) from parts a) and b) in this question, set out the Income Statement for Robinson’s Hotel for the financial year by filling into the statement below:

 Stone’s Hotel Ltd, Income Statement 2019 £000 Sales Revenue Cost of Sales Gross Profit Less Expenses Wages & Salaries Business Rates Utility costs Marketing Costs Maintenance Costs Depreciation Operating Profit

(10 marks)

d)    You have the following summarised information for Robinson’ Conferencing. Working capital total is £90,000:

Extract from Statement of Financial Position

£000

Non-current assets                       £450

Current assets                              £120

Non-current liabilities                    £350

Current liabilities                           ?

Equity & Reserves                        ?

i)      Calculate the value of Current liabilities

(2 Marks)

ii)     What is the value of Equity & Reserves?

(2 Marks)

iii)    Which of the following would not be required to calculate depreciation of a non-current asset?

## a)    The residual value

b)    The depreciation method.

c)     The ownership of the asset.

d)    The cost of the asset

(1 Marks)

iv)   Depreciation is used so that:

a.     Non-current assets are valued fairly on the balance sheet

b.     Non-current assets are shown at market value on the balance sheet

c.     The cost of an asset is spread over the periods which benefit from its use

d.     There is sufficient cash available to replace non-current assets

(1 Marks)

Total : 25 Marks

Question 2

Managers of HBS Ltd is reviewing some options for new catering equipment.

There are two alternative project options (Project A & Project B) have been identified, each involving significant capital investment. The initial cash investment, project life, expected residual values and estimated cashflow benefit over the life of each project are summarised in the table below.

 Project A B Initial Investment £30,000 £50,000 Project Life 3 Years 4 Years Residual Value Nil Nil Cashflow Year 1 +£15,000 +£10,000 Year 2 +£15,000 +£35,000 Year 3 +£25,000 +£35,000 Year 4 Nil +£20,000

a)     Calculate the Payback period for each project (in years and months) and state which project gives the better return under this measure.

(6 marks)

b)     Calculate the Net Present Value for each option (assume a 10% discount rate) and advise on the most suitable investment. Give reasons for your choice.

(10 marks)

c)     Discuss the Payback method and Net Present Value method as appraisal techniques, comparing their relative benefits and drawbacks.

(9 marks)

Total: 25 Marks

Question 3

A summarised Income Statement and Statement of Financial Position for TTD Ltd are shown below.

 Income Statement Year Ending 31st December 2018 2019 £000 £000 Sales Revenue 900 940 Cost of Sales (200) (225) Gross profit 700 715 Operating Expenses (562) (523) Depreciation (49) (47) Operating Profit 89 145 Interest (53) (46) Taxation (13) (30) Dividends (10) (50) Retained Profit for Year 13 19

 Statement of Financial Position As at 31st December 2018 2019 £000 £000 Non-Current Assets 953 925 Current Assets -Inventory 150 175 -Trade Receivables 65 75 -Cash 257 185 Current Liabilities (285) (310) Non-current Liabilities (775) (703) Total Net Assets 365 347 Share Capital 115 115 Reserves 250 232 Total Shareholders’ Funds 365 347

Calculate the following financial performance ratios for each year.

i)      Operating Profit Margin

iii)    Current Ratio

In each case state the formula you are using.

(12 marks)

a)    Calculate the percentage change in Sales revenue and Operating Expenses between 2018 and 2019.

(4 marks)

b)    Budgeted sales for January, to March are £70,000, £75,000 and £75,000. This is a new business, so no sales were made in December It is estimated that sales will be paid for as follows:

40% of the total will be paid in the month that the sale is made.

60% will be paid in the month after the sale was made.

What will be the amount of cash received in each of these months?

(6 marks, 2 each month)

c)     Name the three “master budgets” typically prepared by a business.

(3 marks, 1 mark each)

Total: 25 Marks

Question 4

HUD’s Tours is considering putting on a two-day trip to Manchester. The trip will be all inclusive, including coach travel, entry to tourist attractions, an evening meal and overnight hotel accommodation.

The coach and driver will be hired from a local coach company for the two days at a cost of £2,050. In addition, the hotel will charge £105 per person for the evening meal and hotel room and there will be further costs of £50 per person for entry to tourist attractions.

Requirement:

a)    Calculate the Contribution per unit at a sales price of £180.

(2 marks)

b)    Calculate the Contribution to Sales Ratio.

(2 marks)

c)     At a sales price of £160 per person, calculate the number of tickets HUD’s Tours must sell in order to break even on the trip.

(4 marks)

d)    If actual sales were 100 tickets, what would be the margin of safety in units and also % terms?

(4 marks)

e)    If HUD’s Tours wish to make a profit of £600 from sales of 55 tickets, calculate the price per ticket that must be set.

(6 marks)

f)      Calculate the number of tickets that must be sold at a ticket price of £180 to make a profit of £900.

(7 marks)

Total: 25 Marks

 You are advised of the following: ●       You are required to answer ALL 4 questions ●       Each question is marked out of 25   Answers should:   ●       Be produced using fonts Arial/Calibri/Times New Roman, size 10-12 font. ●       Include a front cover with your name and student number, module, name of module tutor, word count, and submission date. ●       Refer back to your tutorial work and notes where you have covered key issues and developed knowledge that is relevant to the requirement of this assessment.

 Submission information Word Limit: n/a Submission Date: 20th May 2020 Feedback Date: After the CAB in June 2020 Submission Time: 15.00 Submission Method: Electronically via Brightspace.  Papers submissions are not required. Tutor Reassessment TBC

Appendix 1 Generic marking criteria

UG Generic Assessment Criteria (covering a range of types of assessment)