Managerial Accounting

reports of mba in managerial accounting.

Here I attached with my details and info which need to add in my report of my assignments. According my assignment question a & b must show calculation to support my arguements .

While question c & d are more on explains without showing calculation.

These are the additional info which my lecturer need me to add this info into my assignment.

Answer come with this:

If the product are giving positive contribution, it should not be close. Even though they are given profit, it will have to spend a lot of time, to invest or advertisement. I would rather spend more time to invest or spend in the other potential products.

Pipe and bathroom are only contribute 4% to the company profit. The market share is very low for these two products. So I might as well channel to the other product which are contribute more higher profit given to the company.

The reason to close is these two products.

  1. A) low return 7.1% + 1.7%
  2. B) Low marketshare profit at 4%.

To develop at market share

More resources and capital and not share whatever we can successfully gain market share.


However management seriously consider the reliability of the two divisions for long term, these two divisions may be into more profitable to spend more time building the market share.

In Question A huge working capital investment pls stated the figure in dollar.

Gearing ratio- Long term liability/ equity + long term liability


Equity + LTL

=48/80 = 60%

Gearing in a company must have at least 40% in text book or googles found .


  1. C) Long term liability = loans that are more due for more than one year.

Gearing ratio = L+L/L=L + SEquity

48/48+32 = 60%


  1. C) Payback period =

Investment outlay/ Cash inflows

How fast should the company get back their investment

Factors influencing payback period

  1. a) Equipment replacement

– Economy is the economy allow to replace

– Competitor doing the same thing

– managers confidence


  1. b) New development project

– Can staff handle new staff

– Learning curve

– Impact on existing product

– Economy

– competitor- how would competitors react to our coming new product to the market

– managers confidence- wheather our company managers confidence or not, if they are not confidence to sell new product, they will delay to the payback period.


Payback period should be stated in 2 or 3 years.

Question C (i) To reduce gearing , to invest in modernisation program- to use money

Important to reduce gearing

-Pay less interest – profit increase, boost investors confidence

– able to raise capital easily because of positive investors/ creditors confidence

– the higher the gearing , bank would hestitate to province further funding- suitable gearing about 40%


After saying about above 3 points, to conclude, say company can issue new shares to the public for funding.


Why invest in modernisation program?

  • Efficiency to keep cost low
  • reduce labour cost
  • increase product output- reduce lower cost per unit
  • keep abreast of market competitiveness
  • to equip employers with better knowledge as how technology brings about positive impact on them.
  • To attract new customers particular overseas.
  • To claim tax deduction on capital allowance.



Question (D)

Our company hope to cut from 48 to 20 staff. To cut down labour cost.

Disadvantages of financial ratio

  1. a) Financial ratio is of historical in nature and business is dynamic therefore results maybe of not relevant anymore.




This is some answers to my assignments, if possible could u pls add it to ur answer of my coursework. Thank you very much.


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