Oxford College of London EDSML Level- 7

Module Leader: Mr. Rabeel Sabar Academic Year: 2013 Unit No: 13 Assessment Period: Semester 1/2 Title of Modules: MANAGING FINANCIAL PRINCIPLES AND TECHNIQUES Word Limit: None Submission Date: 7th June 2013 Assessment Format: Word Document Report

You are recruited by TESCO as a Junior Financial Consultant. Your line manager recognised your Academic Performance in your BTEC Level 7 course, and thought you could assist him in some of his day to day work. He has requested you to conduct the following activities, and to submit worked assignments as indicated below:

1. TESCO is contemplating to embark on manufacturing and selling low cost lunch

boxes targeting international students in London.

a. Explain the importance of costs in the pricing strategy of TESCO (1.1)

b. Design a suitable costing system for use at TESCO which will provide

15% profit margin at a selling price. (1.2)

c. TESCO suggest they wish to adopt Absorption costing systems for setting

their prices. It is your opinion that this will affect management decision

making with regard to day to day price reduction for products. Propose

improvements. (1.3)

2. In the production process of lunch box TESCO identified the following cost as at

February 2013, and in line with inflationary effects they expect the cost to increase

as identified for the March 2013 production. The management expect such increase

to be accounted in planning for the March 2013 production cost and anticipated

revenue decisions.

Raw materials £0.70 per unit increase of 2.0 %( Mar 2013)

Labour £2.25 per unit decrease of 1.5 %( Mar 2013)

Production overheads £0.85 per unit increase of 3.0 %( Mar 2013)

Fixed Admin Overheads £5000

March 2013 Selling Price £6.00 per unit

March 2013 Sales 10000 units

TESCO Profit margin will remain the same as per current month.

a. Apply forecasting method to determine the new cost per unit after

considering the anticipated changes using an approach and identify the

Contribution per unit in line with new selling price for the month of March

2013. (2.1)

3. Using the information given in Task 2 for March 2013 ,

a. Select appropriate budgetary targets for TESCO to determine how many

units need to be sold in order to generate a Sales Revenue of £80000

each month from March to May 2013 using new selling price.(3.1)

b. Using the March 2013 information in Task 2 for costs and Task 3(a)

information for Revenue, create a Master Budget for March to May

2013. (3.2)

Oxford College of London EDSML Level- 7

c. Compare the Master Budget prepared in Task 3(b) against the actual

results given below for March to May 2013 .(3.3)

Mar

2013

Apr

2013

May

2013

Sales Revenue £80000 £80000 £80000

Cost of Goods Sold:

Raw Materials £6000 £6000 £4000

Labour £15000 £15000 £15000

Fixed Production

Overheads

£10000 £9000 £10000

Total Cost of Goods Sold £31000 £30000 £29000

Gross Profit £49000 £50000 £51000

Fixed Admin Overheads £5000 £5000 £5000

Net Profit £44000 £45000 £46000

d. Evaluate the following budgetary monitoring processes available to

TESCO operations. (3.4)

i. Production budgets

ii. Sales Budgets

4. If TESCO consider a way to reduce the prices for their products due to current

economic conditions affecting its customers spending power

a. kindly recommend processes that could manage cost reduction using an

appropriate costing methods.(4.1) and evaluate the potential use of

Activity-based costing.(4.2)

5. TESCO is to invest £85,000 at a cost of 15%, in any one of the two alternative

investment projects.

Both projects have a FIVE years life span. The expected net cash flows from each

project are shown below:

Project 1 Project 2

Year 1 £15,000 £10,000

Year 2 £25,000 £15,000

Year 3 £35,000 £35,000

Year 4 £15,000 £55,000

Year 5 £15,000 £45,000

a. Assess the sources of fund available for TESCO to generate the initial

capital of £85,000 (2.2)

b. Calculate a) Payback Period and b) Annual Rate of Return as financial

appraisal methods for these two projects.(5.1)

c. Comment which project you would recommend and why? (5.2) your

discussion should cover comment on this strategic investment decision

using information from post audit appraisal. (5.3)

6. Using income statement and balance sheet of TESCO Annual Report 2012

(provided on TESCO website)

a. Analyse the financial statements to assess the financial viability of

TESCO using the following types of ratios (6.1, 6.2)

Profitability Ratios

Liquidity Ratios Efficiency Ratios

b. Make recommendations on the strategic portfolio of TESCO based on its

financial information. (6.3)

Oxford College of London EDSML Level- 7

Assessment format:

This assessment is a word processed management report involving appropriate calculations.

Report need to be demonstrating knowledge application relevant to the assessment criteria.

Student should use appropriate referencing systems: Harvard Referencing Systems, if any references used in the academic work.

Assessment Criteria: As prescribed by EDSML –Unit 13 Assessment Grading: As provided by EDSML –Unit 13.

QCF Level 7 explained. Level 7 qualifications recognise highly developed and complex levels of knowledge that enable the development of in-depth and original responses to complicated and unpredictable problems and situations. Learning at this level involves the demonstration of high level specialist professional knowledge and is appropriate for senior professionals and managers. Level 7 qualifications are at a level which broadly compares to the level of demand of Master’s degree, postgraduate certificates and postgraduate diplomas, but do not necessarily involve the same volume of study.

Rules of formatting the coursework Following are the essential rules which need to be complied to when writing and formatting your coursework. You will be assessed not only on the text of the coursework but also how effectively you have formatted your document. These Dos and Don’ts will determine the final grading of your assignment. 1. Harvard Reference System must be used to acknowledge the source of the information and to give credit to the author of the quotation, illustration, and graph etcetera. This system must be used both for references within the text of the document and at the end in order to avoid plagiarism and collusion. 2. Do not use the website Wikipedia to acquire information concerning any topic as the validity and the currency of the information is not guaranteed. 3. There must be a title page of the document which must mention the name, OXF number, deadline date, submission date, your tutor’s name and the unit name and number. The title page must be followed by the table of content enlisting the page numbers of each topic within the document. 4. You should follow the generalized layout of any document to draft your coursework. A general document consists of an introduction, body and the conclusion followed by appendices (if any) and the references in Harvard style. An introduction will inform the reader the purpose of your document and/or what propelled you to write this document. The body will consist of your responses to the assessment criteria. The conclusion should consist your own analysis, or your opinion about the situation given.

Oxford College of London EDSML Level- 7

5. Provide source of any figure/illustration used throughout the document in Harvard style. 6. The font size of the text must be 12. The font size of the paragraph heading may be 14 and in bold. 7. The font style of the text must be Times New Roman. 8. The line spacing throughout the document must be 1.15. 9. Paragraph headings must be numbered and in bold. 10. The entire document must be page numbered. The page numbers can be printed at the bottom or the top of each page of the document. 11. The document must have header and footer. The header must mention the title of the document along with your name and OXF number. The footer must mention the name of the institution. 12. The whole document must be justified. 13. Reference at the end of the document may include books, journals, articles, websites, and newspapers etcetera. Usage of the books would be preferred. 14. If you are starting to respond to a new assessment criterion, the heading of the paragraph must be numbered and clearly state the assessment criteria. 15. Footnote section must be included in the power point presentation with reference. 16. Please ensure that all the spellings are correct. Substantial spelling errors can negatively affect your grading. 17. All the submissions must be attached with the cover sheet on the top. Cover sheet can be obtained from the admissions office.

Plagiarism, collusion and non-compliance with assessment regulations are offences under the awarding body regulations and where suspected will be thoroughly investigated under official procedures. Penalties may be imposed depending on the severity of the offence, as per the awarding body guidance. Appropriate citations of source documents are essential when presenting written/word processed work and it is crucial that you quote the books, journals, websites etc that you used whilst you carried out desk research. For full details on above facts please refer to student handbook and course hand book.

Important