## Unit 5: Module 5 – M5 Assignment 1 Assignment 1: LASA 2: Executive Presentation

The management team was so impressed with the report you submitted a couple of weeks ago, that they have asked you to prepare another report in the form of a Microsoft PowerPoint presentation which addresses additional questions they have about some of their products.

They would like to use this information at the next Board meeting so they have asked you to prepare a PowerPoint presentation using the information below. They want to make sure they have talking points available when they deliver the presentation so they have asked you to use the notes section of PowerPoint to clearly explain the information presented on each of the slides.

They would like for you to design a title slide which captures the audience’s attention, an introduction slide(s) which contains executive summary information, slides which support each of the four sections below including talking points, and a solid conclusion.

They have asked that you contain your presentation to approximately 15 slides. The management team may be asked to justify the information you present so it is imperative that you show your calculations. You may want to compute your calculations in Excel and copy that information into your PowerPoint.

PART 1: The following information is available for GFI’s maintenance cost over the last seven months. Use the high low method to estimate the fixed and variable components of its maintenance cost. Would this be an effective way to estimate these costs? Justify your answer by explaining why this is an effective way or why it is not.

Month

Operating Hours

Maintenance cost

February

27

11,000

March

54

13,800

April

36

10,200

May

45

12,000

June

63

13,800

July

72

18,000

August

19

7,400

PART 2: In 2001, Ms. Kelle, the head of aerobic equipment sales, started a fitness magazine called the Dancing Elephant. The magazine sells 50,000 copies a month. The total variable costs at that volume are \$40,000 and fixed costs are \$20,000. An additional storage cost of \$2,000 will be incurred if production exceeds 55,000 units.

You have been asked to forecast the following costs for two possible production runs of (a) 52,000 units and (b) 57,000 units:

• Total variable costs
• Variable cost per unit
• Total fixed cost
• Fixed cost per unit

Budget

Forecast A

Forecast B

Production

50,000

52,000

57,000

Total variable costs

Variable cost per unit

Total fixed cost

Fixed cost per unit

PART 3: GFI manufacturers ping pong tables and has a JIT policy that ending inventory must equal 10 percent of the next month’s sales. It is estimated that April’s actual ending inventory will consist of 40,000 ping pong tables. May and June sales are estimated to be 400,000 and 350,000 tables respectively. Compute the number of tables to be produced that would appear on GFI’s production budget for the month of May.

Good management includes good budgeting. Explain why the bottom-up approach to budgeting is considered a more successful management technique then a top down approach. Provide an example of implementation of the bottom-up approach to budgeting.

PART 4: Computer A has a book value of \$1,500 and a current resale value of \$800. The computer is needed to fulfill a client order, but if it's used on this project then its resale value will be zero. The project contract is valued at \$5,000. \$2,000 has already been spent on specialized software, which will be used on the project and which has no value for any other use. A printer costing \$400 is needed for a separate project.

Comment on and determine the costs which are relevant to the decision regarding whether or not to commit to complete the project. Based upon the information at hand, determine whether this project is profitable. Show your calculations.

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