ASSIGNMENT QUESTIONManaging Business Performance CourseworkQuestion 1 (55 marks)Coldarindesigns, develops and sells PC games. Games have a short lifecyclelasting around 3 years only. Performance of the games is measured by reference to the profits made in each of the expected three years of popularity. Coldarinaccepts a net profit of 25% of turnover as reasonable. A rate of contribution of 75% is also considered acceptable.Coldarinhas a large centralised development department which carries out all the design work before it passes the completed games to the sales and distribution department to market and distribute the product.Coldarinhas developed a brand-new game called PCDand this has the following budgeted performance figures.The selling price of PCDwill be a constant £50 per game. Analysis of the costs show that at a volume of 10,000 units a total cost of £130,000 is expected. However,at a volume of 14,000 units a total cost of £150,000 is expected. If volume exceed 15,000 units the fixed costs will increase by 50%.PCD’s budgeted volumes are as follows:Year 1 Year 2 Year 3Sales volume 7,500 units16,800 units 4,200 unitsIn addition, marketing costs for PCDwill be £80,000 in year one and £50,000 in year two. Design and development costs are all incurred before the game is launched and has a cost of £400,000 for PCD. These costs are written off to the income statement as incurred (i.e. before year 1 above).1.1Explain the principles behind lifecycle costing and briefly state why Coldarinin particular should consider these life cycle principles.(20marks)1.2Produce the budgeted results for PCDand briefly assess the game’s expected performance, taking into account the whole lifecycle of thegame.(20 marks)1.3Explain why incremental budgeting is a common method of budgeting and outline the main problems with such an approach.(15 marks)Question 2 (45 marks)2.1. “Environmental management accounting: Innovation or Managerial Fad”?Discuss the role environmental management accounting can play within an organisation in the modern business environment. (20marks)
2.2 Explain the concept of Total Quality Management and list its fundamental features. (15 marks)
2.3Pamtasian, a manufacturer of video games, is in the process of developing a new game called ‘The Sims’ and has undertaken market research to find out about customers’ views on the value of the product and also to obtain a comparison with competitor’s products. The results of this research have been used to establish a target selling price of £60and an estimated life time volume of 300,000 games.Cost estimates have also been prepared based on the proposed product specification:£Direct materials 5.21Direct labour 3.23Direct machining costs 0.12 Ordering costs 1.23Quality assurance 3.60Design 19.80Marketing costs 8.15Distribution costs 3.25Warranty costs 1.30The target profit margin is 20% of the proposed selling price.Calculate the target cost of The Sims and discuss the implications of the resul
