BAAc-NAW[1]

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Beacon College *

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COST ACCOU

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Management

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Nov 24, 2024

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Question 1. a. Introduction of the Company: Raysut Cement is a noticeable player in the cement industry, operating with a fiscal years from January to December. With a rich history spanning several year, the business has established itself as a key contributor to the construction sectors. b. Mission and Vision of the Company:

Mission: Raysut Cement is dedicated to being a leading providers of superior quality cements products, consistently meeting the evolving need of our consumers. We strive to contributes to sustainable developments, fostering a cultures of innovation and environmental accountability. Vision: Our vision is to be the preferred choices in the cement industry, recognize for our ethical practices, commitment to excellence, and environmental stewardships. Raysut Cement aim to be a key player in shaping the future of constructions and infrastructures development. c. Financial Ratios (Based on Latest Financial Statement): 1. Current Ratio: 2. Liquid Ratio: 3. Gross Profit Ratio: 4. Operating Profit Ratio: 5. Net Profit Ratio:

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6. Return on Assets (ROA): 7. Earnings Per Share (EPS): d. Analysis of Overall Financial Performance: Raysut Cement's financial performances for the fiscal year 2022 reflects a challenging economics situation. The company face notable liquidity concerns as indicated by a unusually low current ratios of 0.037, suggesting potential difficulties in meeting short-term obligation. The quick ratio, which excludes inventory, is even low, emphasizing the reliances on inventories for liquidity. Also, the company exhibits distressing signs of unprofitability, with a negligible gross profit margin of 0.11% and negative operating and net profit margins. Operational efficiency, measured by the Accounts Receivable Turnovers, appear relatively sound, but the negative growths in account receivable raise question about the effectiveness of credits and sale management. On the solvency front, the substantial increase in long-term debt by 4146660.00% is alarming, raising concern about the company's abilities to manages its debt obligation effectively. The equity structure also pose a challenge, with a common equity to total asset ratio of 0%, indicating a heavy reliance on debt financing other than equity. The return on asset (ROA) is extremely negative, underscoring the inefficiency in utilizing asset to generate profit. e. Conclusion

Raysut Cement is in a unwarranted financial position, necessitating strategic measure to reduce reliance on debt, and improve liquidity, enhance overall profitability. A more comprehensive analysis would benefits from additional context, industry benchmark, and a detailed examinations of the business's operational and strategic initiative. Consulting the business's industry analyses, annual reports, and seeking professional financial advice is sensible for a more nuanced understanding of the challenge and potential solution. Question 2. Cash Budget for the Three Months Ending 31st December 2019 Starting Cash Balance:  October 1st, 2019: OMR 8,000 Cash Receipts: 1. Collections from Sales:  October:  Cash Sales: 10% of OMR 23,000 = OMR 2,300  Credit Sales Collected: 50% of (OMR 23,000 - OMR 2,300) = OMR 10,350  November: 50% of (OMR 25,000 - OMR 2,500) = OMR 11,250  December: 50% of OMR 30,000 = OMR 15,000 2. Advance Received and Other Income:  December: Advance for vehicles (OMR 20,000) + Income Tax Received (OMR 5,000) = OMR 25,000 Total Cash Available: Total Cash Available=Starting Cash Balance+Cash ReceiptsTotal Cash Available=Starting Cash Balance+Cash Receipts Cash Disbursements:

1. Payments for Materials, Wages, and Overheads:  For each month (August to December) 2. Machinery Instalment:  October: OMR 5,000 3. Dividend Payment:  December: Dividend on Preference Shares (10% of OMR 300,000) = OMR 30,000 Total Cash Disbursements: Total Cash Disbursements=Cash PaymentsTotal Cash Disbursements=Cash Payments Ending Cash Balance: Ending Cash Balance=Total Cash Available−Total Cash DisbursementsEnding Cash Balance=T otal Cash Available−Total Cash Disbursements Cash Budget Summary: Months October November December Cash Receipts 17,650 26,250 40,000 Cash Payments 20,500 23,500 25,500 Net Cash Flow -2,850 2,750 14,500 Ending Cash 5,150 7,900 22,400 Key Points: 1. The cash budget shows a negative net cash flow in October, indicating a potential need for external financing or utilizing existing reserves. 2. Subsequent months (November and December) demonstrate positive net cash flows, contributing to an increasing cash balance. Question 3.

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1. Variable Overheads:  Indirect Labor: $1,200,000 (constant)  Stores including spares: $4,000 (constant) 2. Semi-variable Overheads:  Power:  Fixed (30% of $20,000): $6,000  Variable (70% of $20,000): $14,000  Repairs and Maintenance:  Fixed (60% of $2,000): $1,200  Variable (40% of $2,000): $800 3. Fixed Overheads:  Depreciation: $11,000 (constant)  Insurance: $3,000 (constant)  Salaries: $10,000 (constant) 4. Total Overheads at 80% Capacity:  Total Variable Overheads: $1,200,000 + $4,000 + $14,000 + $800 = $1,219,800  Total Fixed Overheads: $11,000 + $3,000 + $10,000 = $24,000  Grand Total Overheads: $1,219,800 + $24,000 = $1,243,800 5. Overhead Rates:  At 70% Capacity: ($1,219,800 / 1,24,000 hrs.) * 70%  At 80% Capacity: ($1,219,800 / 1,24,000 hrs.) * 80%  At 90% Capacity: ($1,219,800 / 1,24,000 hrs.) * 90% 1. Total Variable Overheads at 80% Capacity:

 $1,200,000+$4,000+$14,000+$800=$1,219,800$1,200,000+$4,000+$14,000+ $800=$1,219,800 2. Total Fixed Overheads at 80% Capacity:  $11,000+$3,000+$10,000=$24,000$11,000+$3,000+$10,000=$24,000 3. Grand Total Overheads at 80% Capacity:  $1,219,800+$24,000=$1,243,800$1,219,800+$24,000=$1,243,800 4. Overhead Rates: Overhead rates References Cost Accounting: A Managerial Emphasis" by Charles T. Horngren, Srikant M. Datar, and Madhav V. Rajan.

Wild, J., & Shaw, K. (2020). Management Accounting: Principles and Applications. Publisher. Horngren, C. T., Datar, S. M., & Rajan, M. V. (2020). Cost Accounting: A Managerial Emphasis. Publisher.

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