70.2K

Verified Solution

Link Copied!

Question 1 Management Accounting is an integral part of management concerned with identifying, presenting and interpreting information used for various decision-making and strategic purposes within an organization. a) Discuss the decision-making process of management [15 marks] b) Explain five (5) qualities of good management accounting information [10 marks] Question 2 Saadi Ventures Ltd produces general merchandise and has prepared the following flexed budget for on? The company currently operates at 40% capacity but indications are that operating level for 2023 will 55% due to improved economic conditions. The projected sales at this level is A127,116. The Directors have the option of shutting down the factory for one year to allow for the business environment to improve. If the factory is shut, the following are relevant: i. All fixed cost would be reduced by 45%. ii. Closing down cost amount to N2,500,000. iii. Outstanding products will be sold off for N4,750,000. iv. A special insurance of N1,350,000 will be paid. v. A government tax refund of N9,000,000 will be received. vi. A part of the factory can be rented out for N7,000,000 for the period. vii. Reopening cost is estimated at N5,500,000. Required: a) Prepare the flexed budget for 55% production capacity. [15 marks] b) Make a recommendation to the Directors on whether to operate or shut down the factory in 2023. [10 marks]

Answer & Explanation Solved by verified expert

See Answer