MHC601 Accounting & Finance for Managers
Dr. Zelko Livaic
Blue Mountains International Hotel Management School,
Student Number: 201414094
Due Date: 14th November, 2014 05:00 pm
Submission Date: 14th November, 2014
Individual Assessment Cover Sheet / Plagiarism Declaration Form
This form must be completed and included with each assessment you submit for marking to the School. Although this assessment is submitted electronically, you must still complete and include this form with your assessment.
Student Number: | 201414094 |
Unit Code No.: | MHC601 |
Unit Title: | Accounting and ...view middle of the document...
This analysis assumes that start-up capital, inventory, lease contract & all those cost incur before opening restaurant.
On part one of analysis, it shows various types of regular cost incur in the business which is divided into product cost know the factors that are directly involved in producing the products & period costs which are indirectly affects the product pricing. Different costs are divided into variable costs which are changes occasionally & to know the variable cost per unit whereas total fixed cost which are unchangeable though numbers of product increases or decreases.
The second part of analysis is break-even analysis, which helps to know the break-even point of the business. The good managers always keep in mind about the break-even point, which helps them to know the minimum amount of unit need to be sold to cover all the expenses. Income statement of KTM restaurant of June 30, 2014 calculated, which includes total sales, cost of goods sold, gross profit, total expenses, income before tax & income after tax. It assumes that 30% of government tax. Weighted average contribution margin, weighted average selling price & weighted average variable cost are calculated to know the break-even point of two different products & to decide between two products which offerings are the most profitable. Graphs are used in the report for the better understanding of break-even point.
Table of Contents
Part 1: Identify and classify costs 2
1. List of all costs that the business incurs on a regular basis. 2
2. Classify each cost as product/service costs and period costs. 2
3. Classify each cost as variable, fixed or mixed cost. Develop one or two paragraphs about each set of costs, explaining the behavior and purpose of each cost. 3
4. For each of your expected costs identified in (c), estimate variable cost per unit and total fixed cost. For mixed costs, be sure to identify variable and fixed cost components. 4
Part 2: Break-even Analysis 5
1. What is the weighted average contribution margin per unit? 5
2. What is the contribution margin ratio? 6
3. What is the total fixed cost? 6
4. What is sales volume (in units) at break-even point? 6
5. What is sales volume (in dollars) at break-even point? 6
6. Show breakeven points graphically. 7
7. Perform “what if” analysis of breakeven by considering the following: 7
7.1 Increasing fixed cost by 5% 7
7.2 Decreasing variable costs by 10% 8
7.3 Decreasing selling price by 10% 9
8. For your business, calculate number of products or services sold to earn after tax profit of $70,000. 10
Conclusion & Recommendation 11
Table of Figures
Figure1.1: Estimated fixed cost & variable cost
Figure 2.1: Income Statement
Figure 2.2: Miscellaneous chart
Figure 2.3: Contribution margin ratio
Figure 2.4: Break-even sales