Assignment Front Sheet

Qualification

Unit number and title

Pearson BTEC Level 7 Diploma in Strategic

Management and Leadership (QCF)

Unit 13: Managing Financial Principles and Techniques

Unit Code: A/602/2334

Student name

Assessor name

Date issued

Completion date

Submitted on

Assignment title

Management Consultant Co.

Word Count

Hand-in Policy
You must complete this assignment on time. If you experience difficulties, you must inform your tutor accordingly.
Late Work Policy
Consideration will be given to students who have valid reasons for late submission (e.g. illness)
Plagiarism
In case of plagiarism, college regulations will be applied. You must declare that this work is your own by signing the
following statement:

Learner declaration
I certify that the work submitted for this assignment is my own and research sources are fully
acknowledged.
Student signature:

Date:

Assessment Criteria
Learning
Outcome

LO1

LO2

Learning
Outcome

Be able to apply
cost concepts to
the decision
making process

Be able to apply
forecasting
techniques to
obtain
information for
decision making

Assessm
ent
Criteria
1.1
1.2
1.3
2.1
2.2
3.1

LO3

Be able to
participate in the
budgetary
process of an
organisation

3.2
3.3
3.4

LO4

LO5

LO6

Be able to
recommend cost
reduction
and
management
processes for an
organisation

Be able to use
financial
appraisal
techniques to
make strategic
investment
decisions for an
organisation

Be able to
interpret
financial
statements for
planning and
decision
making

4.1
4.2

5.1

5.2

5.3
6.1
6.2

6.3

In this assessment you

will have the opportunity
to present evidence that
shows you are able to:
Explain the importance of costs in
the pricing strategy of an
organisation
Design a costing system for use
within an organisation
Propose improvements to the
costing and pricing systems used
by an organisation
Apply forecasting techniques to
make cost and revenue decisions
in an organisation
Assess the sources of funds
available to an organisation for a
specific project
Select appropriate budgetary
targets for an organisation
Participate in the creation of a
master budget for an organisation
Compare actual expenditure and
income to the master budget of
an organisation
Evaluate budgetary monitoring
processes in an organisation
Recommend processes that could
manage cost reduction in an
organization
Evaluate the potential for the use
of activity-based costing
Apply financial appraisal methods
to analyse competing investment
projects in the public and private
sector
Make a justified strategic
investment decision for an
organisation using relevant
financial information
Report on the appropriateness of
a strategic investment decision
using information from a post
audit appraisal
Analyse financial statements to
assess the financial viability of an
organization
Apply financial ratios to improve
the quality of financial information
in an organisations financial
statements
Make recommendations on the
strategic portfolio of an
organisation based on its financial
information

Task
no.

Evidence
Page

Assignment brief
Unit number and title

Unit 13: Managing Financial Principles and Techniques

Unit Code: H/602/2330

Qualification

Pearson BTEC Level 7 Diploma in Strategic Management and Leadership

Start date
Deadline/hand-in
Assessor

Assignment title

Specific Project Guidelines

This assignment consider learner as Management Consultant and require them to perform below task
on separate organisation (as a consultant). Note each task has its own hypothetical organisation and
required learners to demonstrate in depth understanding. Also it is required to write report on each
task mentioning there addressee.
Task 1:
ARQ Ltd. is construction company and struggling to design a costing system. Previously company was
using absorption costing system and due to that cost allocation was not appropriate. Company also had
difficulties in understanding pricing strategies and currently base their prices on competitors prices.
Company hired you as consultant to perform following tasks. (Note you are required to write a report
to the senior management of ARQ LTD.)
1.1

Explain the importance of costs in the pricing strategy of ARQ Ltd.

1.2

Design a costing system for use within an ARQ Ltd.

1.3

Propose improvements to the costing and pricing systems used by an ARQ Ltd.

Task 2:
You were approached by a local company ESCON Ltd. to perform below mentioned tasks. ESCON Ltd. is
media company which was established ten years back. Currently company is trying to forecast its
revenues and costs but finding difficulties in making reasonable estimates (Mainly due to lack of
understanding of techniques). ESCON Ltd. wants to finance an upcoming project FM Radio for which
they acquired licence for PKR 10 Million last year. Currently company does not have enough equity
finance to support infra-structure cost that is PKR 29 Million for layout in 3 Major cities of Pakistan.
Given below is the informations you were required by the company to analyses with appropriate
discussion on findings and use of specific techniques,

Scenario 1: Sale Revenue and Cost Forecasting

ESCON Ltd. is selling documentaries over the seven years from 2008 till 2014 were as follows.

Year

Sales of Documentaries (units)

Revenue

Total

(PKR00

Cost

0)

(PKR00
0)

2008

22

5500

1600

2009

25

6250

1750

2010

24

6000

1700

2011

26

6500

1800

2012

29

7250

1950

2013

28

7000

1900

2014

30

7500

2000

As per management there is high correlation between time and the volume of sales. You were asked by
management to calculate and explain trend lines by calculating forecasted sales revenue and costs for
2015 and 2016.
2.1

Apply forecasting techniques to make cost and revenue decisions in an organization

2.2

Assess the sources of funds available to an organisation for a ESCON Ltd. radio project.

Task 3:
You receive an assignment to be performed for Halla Milk Pvt. Ltd. company. You were required by the
company to prepare budget that will be useful for management control purposes. Also perform each
task mentioned below.
Budget Related Information:
The Budgeted and actual results of Halla Milk Pvt. Ltd. for September 2014 were as follows. The
company uses a marginal costing system. There was no opening or closing stocks.

Fixed Budget
10 Million Units
PKR 'M
PKR 'M
200

Actual
7 Million Units
PKR 'M
PKR 'M
142

Direct Material

(80)

(52)

Direct Labor

(40)

(31)

Variable Overheads

(20)

(15)

Sales and production

Variable Cost of Sales

Contribution
Fixed Costs
Profit/(Loss)

(140)
60
(50)
10

(98)
44
(54)
(10)

3.1

Select appropriate budgetary targets for Halla Milk Pvt. Ltd.

3.2

Participate in the creation of a master budget for Halla Milk Pvt. Ltd.

3.3

Compare actual expenditure and income to the master budget of Halla Milk Pvt. Ltd.

3.4

Evaluate budgetary monitoring processes in Halla Milk Pvt. Ltd.

Task 4:
All-in-one Sport Company (AIO) approaches you and need help on way to manage cost in their
organisation. Currently AIO is using marginal costing method and doesnt allocated cost while decision
making. Due to problems in establishing actual cost of products company is charging less mark-up.
This issue has raised serious concerns and company need urgent support.
4.1

Recommend processes that could manage cost reduction in AIO.

4.2

Evaluate the potential for the use of activity-based costing

Task 5:
Telecon Ltd. is telecom company is currently trying making investment decision on project A & B.
Project A is the investment in new towers and project B is the investment in telemetric system (M2M)
project of Govt. of Pakistan with help of International NGO. Required WACC rate for an investment to
be discounted on is 20%. Below is the information on two projects. You are required to evaluate
financials and perform given tasks as below. (Report)
Project A

PKR
Millions
-3100
1000
900
800
500
500

Years
0
1
2
3
4
5
Project B

Years
0
1
2
3
4
5

PKR
Millions
-8500
500
450
600
450
300

There is an opportunity with project B that company can acquire further contracts on M2M and can
open a new stream of revenues.
5.1

Apply financial appraisal methods to analyse competing investment projects in the public and

private sector
5.2

Make a justified strategic investment decision for an organisation using relevant financial
information

5.3

Report on the appropriateness of a strategic investment decision using information from a post
audit appraisal

Task 6:
You were asked by the Alpha Shares Holdings (ASH) to analysis financial position of Pakistan State Oil
(PSO) for investment purposes. Below are the actual financial statements of PSO. (Report to ASH)

Pakistan State Oil (PSO)

Statement of Financial Position of Company
As at June 30,2013

2013
Rupees in '000

NON CURRENT ASSETS

Property, plants and equipment
Intangibles
Long-term investments
Long-term loans, advances and receivable
Long-term deposits and prepayments
Deferred tax
Current assets
Stores, spare parts and loose tools
Stock in trade
Trade debts
Loans and advances
Deposits and short term payments
Mark-up/ interest receivables
Other receivables
Taxation-net
Cash and bank balance

Net assets in Bangladesh

EQUITY AND LIABILITIES
Equity
Share capital
Reserves
NON CURRENT LIABILITIES
Long term loans
Retirement and other service benefits
CURRENT LIABILITIES
Trade and other payables
Provisions

2012
Rupees in '000

5,524,767
30,068
48,253,164
380,213
113,093
2,650,8
05
56,952,110

5,831,993
29,991
1,968,073
385,497
123,740

138,775
106,089,048
76,596,194
490,606
2,405,618
2,251,290
26,570,948
4,586,321
5,227,328
224,356,128

134,431
88,523,794
218,022,292
526,118
2,528,406
21,122,166
5,314,752
1,624,025
337,795,984

1,292,316
9,631,610

281,308,238

347,427,594

2,469,872
59,417,732
61,887,604

1,715,190
48,244,718
49,959,908

1,342,463
2,385,137
3,727,600

1,178,078
2,518,502
3,696,580

197,302,571
688,512

246,767,460
688,512

Accrued interest/mark-up on short term borrowings

Short term borrowings

432,270
17,269,681
215,693,034
281,308,238

TOTAL EQUITY AND LIABILITIES

544,485
45,772,649
293,773,106
347,429,594

Pakistan State Oil (PSO)

Statement of Comprehensive Incomes
For the year ended June 30,2013

2013
rupees in '000

2012
rupees in '000

sales-net of trade discounts and allowances accounting to

Rs. 1,279,813 thousand (2012: Rs. 1,237,662 thousand)

1,294,503,247

1,199,927,907

sales tax

(178,504,835)

(163,861,410)

inland freight equalization margin

(15,876,094)

(11,642,892)

Net sales

1,100,122,318

1,024,423,605

cost of products sold

(1,063,613,380)

(990,101,083)

Gross Profits

36,508,938

34,322,522

Other Incomes
Operating Costs

5,939,114

9,684,575

Distribution and marketing expenses

(8,461,834)

(8,133,834)

Administrative expenses

(1,865,657)

(1,737,338)

Other operating expenses

(6,011,835)

(9,272,048)

Profit from operations

26,108,726

24,863,877

Finance costs

(7,591,156)

(11,658,928)

Profit after finance costs

18,517,570

13,204,949

Share of profit of associates

571,102

569,468

Profit before taxation

19,088,672

13,774,417

Taxation
Profit for the year

(6,530,727)
(4,618,362)
12,557,945
9,156,055

less:

PKR
Earnings per share ( basic and diluted)

50.84

PKR Restated
36.67

You are required to perform below task and must recommend on strategic portfolio of PSO.

6.1

Analyse financial statements to assess the financial viability of Pakistan State Oil (PSO).

6.2

Apply financial ratios to improve the quality of financial information in Pakistan State Oil (PSO)
financial statements

6.3

Make recommendations on the strategic portfolio of Pakistan State Oil (PSO) based on its
financial information.

Evidence
checklist

Summary of evidence required by student

1.1

Explain the importance of costs in the pricing strategy of an organisation

1.2

Design a costing system for use within an organization

1.3

Propose improvements to the costing and pricing systems used by an

organization

2.1

Apply forecasting techniques to make cost and revenue decisions in an

organization

2.2

Assess the sources of funds available to an organisation for a specific

project

3.1

Select appropriate budgetary targets for an organization

3.2

Participate in the creation of a master budget for an organisation

3.3

Compare actual expenditure and income to the master budget of an

organization

3.4

Evaluate budgetary monitoring processes in an organisation

4.1

Recommend processes that could manage cost reduction in an organization

4.2

Evaluate the potential for the use of activity-based costing

5.1

Apply financial appraisal methods to analyse competing investment projects

in the public and private sector

5.2

Make a justified strategic investment decision for an organisation using

relevant financial information

5.3

Report on the appropriateness of a strategic investment decision using

information from a post audit appraisal

6.1

Analyse financial statements to assess the financial viability of an

organization

6.2

Apply financial ratios to improve the quality of financial information in an

organisations financial statements

6.3

Make recommendations on the strategic portfolio of an organisation based

on its financial information

Evidence
presented

Achievement Summary
Qualification
Unit Number and
title

Criteria
Reference
LO 1

1.1
1.2
1.3

Pearson BTEC Level 7 Diploma in

Strategic Management and
Leadership

Assessor name

Unit 13: Managing Financial

Principles and Techniques

Student name

To achieve the criteria the evidence must show that the

student is able to:
Explain the importance of costs in the pricing strategy of an
organization
Design a costing system for use within an organisation
Propose improvements to the costing and pricing systems used by
an organization

LO 2

2.1
2.2

Apply forecasting techniques to make cost and revenue decisions in

an organization
Assess the sources of funds available to an organisation for a
specific project

LO 3

3.1
3.2
3.3
3.4

Select appropriate budgetary targets for an organisation

Participate in the creation of a master budget for an organisation
Compare actual expenditure and income to the master budget of an
organization
Evaluate budgetary monitoring processes in an organisation

LO 4

4.1
4.2

Recommend processes that could manage cost reduction in an

organization
Evaluate the potential for the use of activity-based costing

LO 5

5.1
5.2
5.3

Apply financial appraisal methods to analyse competing investment

projects in the public and private sector
Make a justified strategic investment decision for an organisation
using relevant financial information
Report on the appropriateness of a strategic investment decision
using information from a post audit appraisal

LO 6

6.1
6.2
6.3

Analyse financial statements to assess the financial viability of an

organization
Apply financial ratios to improve the quality of financial information
in an organisations financial statements
Make recommendations on the strategic portfolio of an organisation
based on its financial information

Achieved?
(tick)

Assignment Feedback
Formative Feedback: Assessor to Student

Action Plan

Summative feedback

Feedback: Student to Assessor

Assessor Signature

Date

Student Signature

Date

Useful Links:
(Note below mentioned link are for guidance only and you should search for more resources to
complete your work)
Books
Financial Management: Theory and Practice (Hardcover) by Eugene F. Brigham
Financial and Accounting Guide for Not-For-Profit Organizations (Hardcover) by Malvern J. Gross Jr.
Manias, Panics, And Crashes by Charles P. Kindleberger
Too Big to Fail by Andrew Ross Sorkin
When Genius Failed by Roger Lowenstein
Stocks For The Long Run by Jeremy Siegel
Web Sites
ACCA Website
CIMA Website
Edexcel Website
CMI Website
Journal
Financial Times
Google Scholars