Question: Is it now 5 July 2 0 2 4 . The SMT has concluded that while the production facility could be performing better, demand for

Is it now 5 July 2024. The SMT has concluded that while the production facility could be performing better, demand for the PB-V range shows
that the product is likely to be a commercial success, and sales have far exceeded expectations.
You have the following conversation with Akida Agu, Finance Manager:
"Sales for our PB-V range have been exceptional. To keep up with demand, Ben Morales, Production Director, has suggested transferring
an old mixing machine from our original facility to our new facility.
There are two potential options for this transfer. Option A involves transferring the machine and using it for six months. At the end of the six
months, we would lease a new mixing machine that is larger and more efficient. Option B involves leasing the larger, more efficient mixing
machine and selling the existing machine now. I have attached some financial information relating to this (Exhibit 1).
I have a meeting with the SMT later on. Could you draft me a report before the meeting that explains:
How the figures shown in Exhibit 1 would be used to make a decision on whether to choose Option A or Option B, giving reasons
why each item is relevant or irrelevant to the decision. (sub-task (a))
If trends continue, the exceptional demand for our PB-V range will lead to a short-term cash surplus in a month. The SMT has noted that
they would like to consider short-term investment opportunities for this cash.
In your report, could you also include an explanation of:
The factors that we need to consider when choosing short-term investments and two suggestions of suitable short-term investments
for the surplus cash. (sub-task (b)
Finally, we are preparing the financial statements for the year ending 30 June 2024. We have a legal issue that I believe could have an
impact on these financial statements. I've attached the details of this issue to this email (Exhibit 2).
In the report, could you include a commentary that explains:
How to reflect the court case settlement and the 2,000 boxes of PB-V protein bar inventory in our financial statements for the year
ending 30 June 2024.(sub-task (c))"
Exhibit 1- Financial information regarding the options for transferring machinery
 Is it now 5 July 2024. The SMT has concluded that

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!