ACC00146 Management Accounting

MAJOR ASSIGNMENT, (Session 3 2019)

Weighted 30% of overall marks

See MySCU for due date & submission details

Coastal Dental is a (fictional) dental practice on the Gold Coast.

Your management accounting consulting firm has been hired by the managing director of Coastal Dental to make recommendations for improving its operations.

The following information has been gathered about the practice:

Coastal Dental Balance Sheet As at 31 December 2019
Assets
Cash	32,250
Accounts Receivable	83,400
Dental Equipment	250,000
Less: Accumulated Depreciation	( 90,000)
Total Assets	$275,650
Liabilities & Shareholder Equity
Accounts Payable	39,979
Bank Loan	200,000
Retained Earnings	35,671
Total Liabilities & Shareholders’ Equity	$275,650

The dental surgery is located in Coolangatta and operates out of rented premises. The following table outlines the operating costs for the year.

	Operating Costs	Payment
Utilities (Water & Electricity)	$80 / month	Paid quarterly
Insurance	$6 000 / year	Paid monthly
Lead Dentist Salary x2	$186 000 / year excluding on-costs	Paid monthly
Graduate Dentist x 1	$90 000 / year excluding on-costs	Paid monthly
Dental Assistant x 2	$60 000 /year excluding on-costs	Paid monthly
Administration Staff Wages	$2 500/month	Paid monthly
General Office Expenses	$500 /month	Paid monthly
Rent	$1 000 /month	Paid monthly
Dental supplies	$400 / month	Paid quarterly

Salaries: There are three dentists (one who is a graduate) and two dental assistants. They are all paid an annual salary. It is estimated that their on-costs are 30% of their annual salary. They work 37.5 hours per week. Each appointment requires a lead dentist and an assistant. The graduate dentist always works along-side one of the lead dentists when they carry out the long one hour appointments.

Each employees allowance for annual leave, public holidays and sick leave amounts to 8 weeks per year. They are also given an allowance for non-billable time of 2 hours per week which includes professional development, department meetings and idle time.

Payments: It is estimated that 30% of all operating expenses will be paid in the month they are due and the remaining 70% will be paid in the following month.

Loan: The business has an interest only loan. The interest is paid monthly. The principle can be repaid at any time. The interest rate payable on the loan is 15% per annum.

Dental Equipment: Depreciation on the dental equipment totals $20,000 for the year. Depreciation is recorded monthly.

Repairs and maintenance: related to the dental equipment is estimated to be $700 each quarter payable in March, June, September, and December.

Ignore GST and Income Tax.

Expected patient visits for 2020 are indicated in the table below. 75% of the visits are expected to be half-hour appointments and the remainder will be one hours visits:

	Expected Patients
January 2020	600
February 2020	800
March 2020	400
April 2020	500
May 2020	400
June 2020	800
July 2020	400
August 2020	500
September 2020	400
October 2020	800
November 2020	400
December 2020	500

The average fees received for the two (2) different types of appointments are $90 for half an hour (30 minutes) and $205 for one hour (60 minutes).

Cash collections: Twenty per cent (20%) of each month’s professional services revenue is collected during the month when the services are rendered and the remainder is collected the month following service.

ASSIGNMENT REQUIREMENTS:

PART ONE:

Budget Schedules & Expected Outcomes

(15 marks, weighted 50% of assignment total)

Using the information provided, prepare the following operating and financial budgets for the twelve-month period from January 2020 to December 2020.

Operating Budgets:

Monthly Sales Revenue

Labour Budget (including labour cost per appointment type)

Monthly Operating Expense Budget

Financial Budgets:

Budgeted Income Statement for the year ended 31 December 2020

Monthly Cash flow Budget

Budgeted Balance Sheet for the year ended 31 December 2020

Your budget spreadsheet must be submitted in Excel Format (not as an appendix in your WORD document). The first worksheet should contain your raw/input data and assumptions from this assignment overview sheet. All future worksheets should be linked to this data. Show all calculations and use Excel functions where possible. While you should use examples in your text as a guide, the key to using spreadsheets is that they are structured so that others can use them and follow the flow of information without difficulty.

PART TWO:

Analysis & Report to Managing Directors of Coastal Dental

(15 marks, 50% of assignment total)

Write a report (Maximum 1,500 words, 10% (+/-) will be accepted with no penalty) for the managing director of the dental practice. The report should include:

an overview of the expected results for the 2020 year including total sales, operating expenses and expected cash position;

a cost-volume-profit (CVP) analysis to indicate the breakeven point (in patients and sales) and provide recommendations regarding how to improve the current margin of safety.

an analysis of the business operations (i.e. current incomes and expenses) and recommendations regarding how to improve the profitability of the dental practice. Use industry data (e.g. market rate for salaries) to support any recommendations for changes.

Use visual aids such as tables and graphs to enhance your report presentation.

The report should be submitted as a WORD (not PDF) document.

Assessment Criteria	Poor	Unsatisfactory	Satisfactory	Good	Excellent
Preparation of Budgets (15 Marks)
For each Budget: Appropriate layout (monthly); Clear Headings; Accurate calculations for monthly totals and annual totals. Spreadsheet Layout including Raw Assumptions & Data, appropriate tabs correctly named for each section of the budget and use of Excel tools in spreadsheet.	Budgets are mostly inaccurate and incomplete. An understanding of the application of the course content in a business context has not been demonstrated. Insufficient data. Spreadsheet has not been separated into worksheets. Inappropriate layout. Poor use of Excel tools. 0-3.25 Marks	Some Budgets are accurate but there are inconsistencies in the data or basic calculations are incorrect. Assignment instructions have not been followed and key items have been left out. Use of Worksheets but layout is difficult to follow. Worksheets have not been named. Limited use of Excel tools. Inconsistencies throughout. 3.5-7 Marks	Most budgets are accurate but there are inconsistencies in the data or basic calculations. Key items have been included and a reasonable understanding of the application of course content has been demonstrated. Use of appropriately named Worksheets. Reasonable use of Excel tools but application is inconsistent. Reasonable layout. 7.5-11 Marks	All budgets have been prepared and are mostly accurate – minor errors arising from careless mistakes and lack of attention to detail. A very good understanding of the application of course content has been demonstrated. Use of appropriately named Worksheets. Consistent use of Excel tools. Layout appropriate but lacks consistency in some areas. 11.25-12.75Marks	All budgets have been accurately prepared. An excellent understanding of course content has been demonstrated and executed. Use of appropriately named Worksheets. Very good use of a range of Excel tools. All worksheets are linked resulting in a consistent flow of data between worksheets. 13-15 Marks
Report for the Managing Director (15 Marks)
The report must be professionally presented and cover all issues raised in the assignment instructions. A business report format must be used along with visual aids such as tables and graphs.	Presentation is unprofessional with numerous spelling and grammatical errors and it does not cover the key requirements set out in the assignment instructions. Inadequate analysis. Not presented in the format of a business report. Very limited use of visual aids. 0-3.25 Marks	Presentation is reasonable but the key issues have not been adequately addressed. Spelling and grammatical errors make the report unpresentable requiring the report to be rewritten before it could be presented. Opinions expressed lack insight, are unsupported (inadequate referencing) or referenced external sources lack relevance. Not all aspects of a business report format have been utilised. Limited use of visual aids. 3.5-7 Marks	Presentation is reasonable and the key issues have been addressed but more insight into the business could be demonstrated. Opinions expressed are unsupported (inadequate referencing) or referenced external sources lack relevance. Some minor spelling and grammatical errors. Most components of a business report format have been incorporated. Reasonable use of visual aids. 7.5-11 Marks	Good, well written presentation and all issues have been covered. Demonstrates a solid insight into the business and recommendations are appropriate. Relevant external sources have been used to support recommendations and these have been appropriately referenced. All components of a business report format have been incorporated. Good use of visual aids. 11.25-12.75Marks	Excellent presentation with no spelling or grammatical errors. Demonstrates excellent insight into the business operations and external issues that may affect the business. Extensive use of relevant external resources to support recommendations. Appropriate referencing. All components of a business report format have been incorporated. Excellent use of visual aids. 13-15 Marks