(Approved) Ugb163 Ia Mdist Ay2021-22

UNIVERSITY OF SUNDERLAND
AND
MANAGEMENT DEVELOPMENT INSTITUTE OF SINGAPORE
IN TASHKENT
Module Code and Title : UGB163 Intro to Accounting and Finance
MDIS Module Leader : Mr Yang Xiao Qi
Assessment : Individual Assignment
Submission Due Date : 06 May 2022
Word Guidance : 3000 words (+/- 10%)
Weighting within Module : 100%
Assignment Submission
Students are required to submit their coursework through JIRA. Only assessments submitted
through JIRA will be marked. Any other submission including submission to your study
centre in hard copy will be treated as a non-submission.
If your centre supports Turnitin©, a copy of your Turnitin© originality report must be
submitted in conjunction with your assignment.
PLAGIARISM/INFRINGEMENT STATEMENT
All Assessments are subject to the University’s Policy on 'Cheating, Collusion and
Plagiarism'. Students found guilty of this are subject to severe penalties.
This is an INDIVIDUAL piece of work - If there is evidence that the work is not wholly
attributable to you, the University's policy on 'Cheating, Collusion and Plagiarism' will
be applied
Link to University Academic Integrity and Misconduct Policy
 https://docushare.sunderland.ac.uk/docushare/dsweb/View/Collection-8155
Outcomes Assessed: All module learning outcomes, knowledge and skills, are
assessed in this assignment.
This assessment is in three parts, please answer all elements.
Question 1
Edwin Ltd. is a new business that started trading on 1 January 2021. You have recently been
appointed as an accountant and have been presented with the following summary of
transactions that have occurred during the first year of trading:
1) The owners introduced £220,000 of equity, which was paid into a bank account opened
in the name of the business.
2) Premises were rented from 1 January 2021 at an annual rate of £80,000. During the
year, rent of £100,000 was paid to the owner of the premises.
3) A delivery van was bought on 1 January 2021 for £60,000. This is expected to be used
in the business for five years and then to be sold for £8,500.
4) Rates (a tax on business premises) were paid during the year as follows:
For the period 1 January 2021 to 31 March 2021 £1,200

For the period 1 April 2021 to 31 March 2022 £4,800
5) Electricity bills for the first three quarters of the year were paid totalling £3,500. After
31 December 2021, but before the financial statements had been finalised for the year,
the bill for the last quarter arrived showing a charge of £1,100.
6) Wages totalling £65,000 were paid during the year. At the end of the year, the business
owed £3,800 of wages for the last week of the year.
7) Sales revenue on credit totalled £326,000 (cost of sales £131,000).
8) Cash sales revenue totalled £88,000 (cost of sales £32,000).
9) Inventories totalling £280,000 were bought on credit.
10) Inventories totalling £35,000 were bought for cash.
11) Receipts from trade receivables totalled £258,000.
12) Payments to trade payables totalled £226,000.
13) The delivery van travelling expenses paid totalled £34,000.
At the end of the year it was clear that a credit customer (trade receivables) who owed £6,500
would not be able to pay any part of the debt. All of the other trade receivables were expected
to settle in full.
The business uses straight-line depreciation for non-current assets.
Required:
Prepare a Statement of Financial Position as at 31 December 2021 and a Statement of Profit

and Loss for the year to that date. (20 marks)
MDIST AY2021/22 Sem 2 | UOS Y1 | UGB163 Intro to Accounting and Finance | IA Page 2 of 4
Question 2
Powell and Sons manufactures a single product.

The following budgeted information has been prepared (per unit) for the next period:
£
Selling price 106.00
Direct materials 23.50
Direct labour 38.00
Variable overheads 14.50
Sales and production are planned to be 7,000 units and fixed overheads £102,500 for the period.
Required:
a) Compute the budgeted break-even point in (i) sales units and (ii) sales revenue.
(4 marks)
b) Compute the margin of safety in (i) units and (i) as a percentage of sales. (3 marks)
c) Calculate the profit if sales and production are 7,000 units. (4 marks)
The company is considering installing new machinery, which would reduce the direct materials
costs by 20% and direct labour costs by 25% and increase total fixed overheads by 30%. All
other costs per unit and the selling price would remain unchanged.
Based on the installation of the new machinery

d) Compute the budgeted break-even point in (i) sales units and (ii) sales revenue.
(5 marks)
e) Calculate the profit if sales and production are 10,000 units.
(4 marks)
f) Discuss whether break-even analysis aids in decision making. (15 marks)
Question 3
Dawson Ltd is considering investing in new equipment.

This new equipment will require an initial investment of £2,000,000 and has an expected life
of 5 years.
The expected revenues for this investment are as follows:
Year £’000
1 360
2 640
3 820
4 1,150
5 830
 Additional installation costs of £300 000 would be required before the start of the project.
 Costs (excluding depreciation) of £30,000 per year are expected for years 1 to 5.
 The equipment will have a residual value of £450 000 after 5 years.
 The cost of capital is 15% per annum.
Required:
a) Calculate the net present value of the equipment. (4 marks)

b) Calculate the discounted payback period of the equipment. (3 marks)
c) Calculate the accounting rate of return for the proposed introduction of the equipment.
(3 marks)
d) Advise Dawson as to whether he should invest in the equipment. (2 marks)
e) Discuss the benefits and limitations of each investment appraisal method used in (a) to (c).
(18 marks)
f) ‘Budgets are seen as a relic from the past that can no longer be improved...a customer focus
is essential, and teams need freedom to act...’ (Weetman, 2010)
Discuss the points made by Weetman , explaining why supporters of beyond budgeting
believe that traditional budgeting is out of date, and why organisations need to change to
adapt. (Hint ‘M’form to ‘N’ form) (15 marks)
Students are required to submit their coursework through JIRA. Only assessments submitted
through JIRA will be marked. Any other submission including submission to your study centre
in hard copy will be treated as a non-submission.
If your centre supports Turnitin©, a copy of your Turnitin© originality report must be
submitted in conjunction with your assignment.
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UNIVERSITY OF SUNDERLAND

Module Code and Title : UGB163 Intro to Accounting and Finance

MDIS Module Leader : Mr Yang Xiao Qi

Assessment : Individual Assignment

Submission Due Date : 06 May 2022

Word Guidance : 3000 words (+/- 10%)

Weighting within Module : 100%

For the period 1 January 2021 to 31 March 2021 £1,200

Prepare a Statement of Financial Position as at 31 December 2021 and a Statement of Profit

Powell and Sons manufactures a single product.

Based on the installation of the new machinery

f) Discuss whether break-even analysis aids in decision making. (15 marks)

Dawson Ltd is considering investing in new equipment.

The expected revenues for this investment are as follows:

a) Calculate the net present value of the equipment. (4 marks)

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