Why is forecasting so important in business? Explain the application of forecasting for long term decisions

                                                                                                                                            

MBA

Quantitative Analysis for Managerial Applications

ASSIGNMENT

 

Course Code: MMPC-005

Assignment Code: MMPC-005/TMA/JULY/2022 

Coverage : All Blocks

2. Why is forecasting so important in business? Explain the application of forecasting for long term decisions.

Forecasting is a critical process in any business. It is the process of predicting future events and trends based on historical data and statistical models. It is used to make decisions about future actions that can have significant impacts on the business. Forecasts are important because they allow businesses to make informed decisions based on what is most likely to happen in the future. There are many reasons why forecasting is important in business. 

First, it helps businesses to plan for the future. Forecasting enables businesses to predict the demand for their products or services and make necessary adjustments to their production schedules or staffing levels. It also helps businesses to plan for future investments, such as capital expenditures or expansion plans. Without accurate forecasts, businesses would be flying blind and making decisions based on incomplete or inaccurate information.

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The income of a group of 10,000 persons was found to be normally distributed with mean Rs.750 per month and a standard deviation of Rs. 50, show that of this group about 95% has income exceeding Rs. 668 and only 5% had income exceeding Rs. 832. (area between 750 and 668 = 0.4495, area between 750 and 832 = 0.4495)

                                                                                                                                           

MBA

Quantitative Analysis for Managerial Applications

ASSIGNMENT

 

Course Code: MMPC-005

Assignment Code: MMPC-005/TMA/JULY/2022 

Coverage : All Blocks

1. The income of a group of 10,000 persons was found to be normally distributed with mean Rs.750 per month and a standard deviation of Rs. 50, show that of this group about 95% has income exceeding Rs. 668 and only 5% had income exceeding Rs. 832. (area between 750 and 668 = 0.4495, area between 750 and 832 = 0.4495).

The problem provides us with information about a normally distributed group of 10,000 persons with a mean income of Rs.750 per month and a standard deviation of Rs.50. The goal is to calculate the proportion of the group with income exceeding Rs. 668 and Rs. 832. 

To begin, we can use the formula for the z-score: z = (x - mu) / sigma where x is the income value, mu is the mean income, and sigma is the standard deviation. Using this formula, we can calculate the z-score for an income of Rs.668 as: z = (668 - 750) / 50 = -1.64 Similarly, we can calculate the z-score for an income of Rs.832 as: z = (832 - 750) / 50 = 1.64

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Calculate cash from operations

                                                                                                                                           

MBA

Accounting for Managers

ASSIGNMENT

 

Course Code: MMPC-004

Assignment Code: MMPC-004/TMA/JULY/2022 

Coverage : All Blocks

5. From the following calculate cash from operations:

To calculate cash from operations, we need to adjust the net profit for non-cash items and changes in working capital. 

Starting with the net profit of Rs. 10,000, we need to add back the non-cash expenses and losses, which are: Depreciation: Rs. 2,000 Loss on sale of plant: Rs. 1,000 Goodwill written off: Rs. 4,000 So, the total adjustments to net profit are: 2,000 + 1,000 + 4,000 = Rs. 7,000. 

Next, we need to adjust for changes in working capital, which include changes in current assets and liabilities such as accounts receivable, inventory, accounts payable, and accrued expenses

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Various contents of an Annual Report

                                                                                                                                          

MBA

Accounting for Managers

ASSIGNMENT

 

Course Code: MMPC-004

Assignment Code: MMPC-004/TMA/JULY/2022 

Coverage : All Blocks

4. Explain in detail the various contents of an Annual Report.

An annual report is a comprehensive document that companies produce once a year to provide shareholders, investors, and other stakeholders with a detailed overview of the company's financial and operational performance. 

The annual report typically contains the following sections: Introduction: This section usually contains a letter from the company's CEO or chairman, in which they discuss the company's achievements over the past year, outline its goals for the future, and thank stakeholders for their support.

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What is CVP analysis? Does it differ from break even analysis? How is break-even point calculated?

                                                                                                                                         

MBA

Accounting for Managers

ASSIGNMENT

 

Course Code: MMPC-004

Assignment Code: MMPC-004/TMA/JULY/2022 

Coverage : All Blocks

3. What is CVP analysis? Does it differ from break even analysis? How is break-even point calculated?

CVP analysis is a powerful financial modelling technique that enables managers to understand how changes in sales volume, costs, and selling price impact a company's profitability. The primary focus of CVP analysis is to understand the relationship between sales volume, costs, and profit. By understanding this relationship, managers can make more informed decisions regarding pricing, product mix, and resource allocation. The basic components of CVP analysis are fixed costs, variable costs, selling price, and volume of sales. 

Fixed costs are costs that do not change with changes in sales volume, such as rent, salaries, and insurance. Variable costs, on the other hand, are costs that vary with changes in sales volume, such as raw materials, direct labor, and sales commissions. Selling price is the price at which the product or service is sold, and volume of sales is the number of units sold.

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Activity Based Costing

                                                                                                                                        

MBA

Accounting for Managers

ASSIGNMENT

 

Course Code: MMPC-004

Assignment Code: MMPC-004/TMA/JULY/2022 

Coverage : All Blocks

(b) Activity Based Costing

Activity-based costing (ABC) is a cost accounting method that assigns indirect costs to products or services based on the activities required to produce them. This approach recognizes that not all costs are directly related to the volume of output or production, and therefore, a more precise allocation of overhead costs is needed to determine the true cost of a product or service. 

ABC involves identifying the activities that are required to produce a product or service and assigning costs to those activities. The cost of each activity is then allocated to the products or services that consume the activity in proportion to the amount of activity consumed.

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Marginal Costing

                                                                                                                                       

MBA

Accounting for Managers

ASSIGNMENT

 

Course Code: MMPC-004

Assignment Code: MMPC-004/TMA/JULY/2022 

Coverage : All Blocks

2. Explain the following

(a) Marginal Costing

Marginal costing is a cost accounting technique that determines the cost of producing a unit of a product by considering only the variable costs incurred in its production. In marginal costing, fixed costs are treated as period costs and are not allocated to products. Thus, only the direct costs of materials, labor, and variable overheads are considered while determining the cost of a product. 

The term "marginal" refers to the extra or incremental cost of producing one more unit of a product. It is the change in total costs that results from producing one additional unit. The marginal cost includes only the variable costs that change with the level of production, such as direct materials, direct labor, and variable overheads.

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Accrual concept

                                                                                                                                      

MBA

Accounting for Managers

ASSIGNMENT

 

Course Code: MMPC-004

Assignment Code: MMPC-004/TMA/JULY/2022 

Coverage : All Blocks

1. Explain the following accounting concepts

(d) Accrual concept

The accrual concept is a fundamental accounting principle that recognizes and records revenue and expenses in the financial statements of a business when they are earned or incurred, regardless of when cash is received or paid. This concept aims to provide a more accurate representation of a business's financial position and performance by matching the related revenue and expenses in the same accounting period. 

Under the accrual concept, revenue is recognized when it is earned, and expenses are recognized when they are incurred, irrespective of whether cash has been received or paid. This means that revenue is recorded when the business provides goods or services to customers, even if payment has not been received. Similarly, expenses are recorded when they are incurred, even if payment has not yet been made.

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Continuity concept

                                                                                                                                     

MBA

Accounting for Managers

ASSIGNMENT

 

Course Code: MMPC-004

Assignment Code: MMPC-004/TMA/JULY/2022 

Coverage : All Blocks

1. Explain the following accounting concepts

(c) Continuity concept

The continuity concept, also known as the going concern concept, is a fundamental accounting principle that assumes that a business will continue to operate indefinitely, and that its financial statements should be prepared under this assumption. According to this concept, a business is considered to be a going concern, unless there is evidence to the contrary. 

The continuity concept is based on the idea that a business is an ongoing entity with a long-term perspective, and that its financial statements should reflect this. This means that the financial statements of a business are prepared with the assumption that the business will continue to operate in the foreseeable future, and that it will be able to meet its obligations and commitments as they come due.

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Money measurement concept

                                                                                                                                    

MBA

Accounting for Managers

ASSIGNMENT

 

Course Code: MMPC-004

Assignment Code: MMPC-004/TMA/JULY/2022 

Coverage : All Blocks

1. Explain the following accounting concepts

b) Money measurement concept

The money measurement concept is a fundamental accounting principle that states that only those transactions that can be measured in monetary terms should be recorded in the accounting system. According to this concept, any transaction that cannot be expressed in monetary terms is not considered to be significant enough to be recorded in the accounting system. 

In other words, the money measurement concept requires that only those transactions that can be quantified in terms of money or currency should be recorded, and all other transactions should be ignored. This concept assumes that money is the common unit of measurement for business transactions and that monetary values provide an objective and universally accepted measure of the value of a transaction.

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Business Entity concept

                                                                                                                                   

MBA

Accounting for Managers

ASSIGNMENT

 

Course Code: MMPC-004

Assignment Code: MMPC-004/TMA/JULY/2022 

Coverage : All Blocks

1. Explain the following accounting concepts

(a) Business Entity concept

The business entity concept is a fundamental accounting principle that states that a business entity, such as a corporation, partnership, or sole proprietorship, is separate and distinct from its owners or shareholders. According to this concept, the financial transactions and records of the business should be kept separate from the personal transactions and records of the owners. 

This means that the assets, liabilities, revenues, and expenses of the business should be accounted for and reported separately from the assets, liabilities, revenues, and expenses of the owners. For example, if a sole proprietorship purchases a vehicle for the business, the vehicle is considered a business asset, and its cost should be recorded in the business's accounting records. The vehicle does not belong to the owner personally, even if the owner uses it for personal purposes as well.

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Impact of technological environment on international business

                                                                                                                                  

MBA

Business Environment

ASSIGNMENT

 

Course Code: MMPC-003

Assignment Code: MMPC-003/TMA/JULY/2022 

Coverage : All Blocks

6. Write notes on the following: 

b) Impact of technological environment on international business.

Technology has been a driving force behind globalization, and its impact on international business cannot be overstated. The technological environment has facilitated communication, transportation, and information sharing, making it easier for businesses to operate in multiple countries. In this article, we will discuss the impact of the technological environment on international business. 

Communication Advancements in communication technology have made it easier for businesses to communicate with partners, suppliers, and customers in different countries. Video conferencing, instant messaging, and email have made communication faster and more efficient, allowing businesses to collaborate across borders seamlessly. In addition, social media has created new channels for businesses to engage with customers and market their products and services.

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