Mr. Bontoft is a former CEO and business entrepreneur who successfully launched his private business in...

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Mr. Bontoft is a former CEO and business entrepreneur who successfully launched his private business in Melbourne, Australia, in 2010. Over the years, he observed that many of his original business ideas were not proving successful. Some of the causes that brought challenges to his business include rapid change in technology, changes in customer taste, intensifying competition in the market area that led to a decline in sales volume, inflation that aggravated input prices and, more notably, the unpredictability of the pandemic season. After 11 years of running his private business, he is now revising his ideas and wants to explore investing in new areas. As a result, he is considering the following two proposed investment options and has asked his accountant to gather relevant information. The two investment proposals will be presented to business consultants for evaluation and advice. CIC Higher Education has accepted the offer and has appointed your team to review the two investment proposals presented by Mr. Bontoft. Detailed information about the two investment options and related questions you need to answer are presented in Part A and Part B of the assignment file. Option 1: It is clear that the Covid-19 pandemic has impacted the workplace and motivated businesses and employees to consider continuing to work from home. As people are no longer required to travel to work, it is plausible that they need to walk around to exercise, and cycling is one of the options they might consider as a fun activity to engage with family members. Mr Bontoft plans to open a store to retail two types of bicycles for a while and see how it goes. The types of bikes he is keen to trade are Road bikes and Mountain bikes. The budgeted per unit sales price and cost information of the business for the year 2022 are presented below: Retail Sales Price Costs: Purchase price Variable Selling & Admin. Road Bike $530 400 80 Mountain Bike $750 550 100 The proposed budgeted for 2022 includes sales volume of 376 for Road bikes and 564 for Mountain bikes. The budgeted annual fixed store-relate costs are $60,000 and fixed selling and administrative costs are $24,800. The income tax rate applicable to the retail business is 30 per cent. The proposal states that sales price will remain the same for each type of bike, but volume is expected to increase by 4% in 2023 and by 5% for 2024 compared to the 2022 values. Purchase price of bikes is likely anticipated to rise by 2% for every successive year after 2022. The budgeted annual fixed storing costs will rise by $5,000 in 2023 and by $8,000 in 2024 from the amount budgeted for 2022. Fixed selling and administration costs are expected to remain the same every year. Page 2 of 4 BBAC501 Management Accounting - Assignment Term 4 2023 CIC HIGHER ci EDUCATION Option 2: During the current pandemic and recovery season, it is observed that online shopping has become a trend, and many people are buying what they want via online shopping. This situation has opened an opportunity to increase business volumes on delivery services. It has become a possibility to sub-contract delivery services from Australian Post. The main task is to provide a range of reliable, timely and customized regular courier services in Melbourne CBD, including the wider metro areas. To conduct courier services, it is required to have its delivery trucks or hire owner drivers to do the job for an agreed price. Delivery service is highly diverse due to differences in the distance (between pickup and delivery), the timeframe needed to complete delivery and the quantity of the item. The average price ranges from $15 to $18 per delivery item (or parcel). As the business Mr. Bontoft is just starting, it has decided to classify delivery by area postcodes so that an average price of $15 is uniformly paid to each owner-driver. The budgeted average fee to be collected from the Australian Post for each delivery item is $21.50. It is expected that the average delivery of items could reach about 150 parcels per day from Monday to Friday. No deliveries are made during the weekends. Australian post does not pay for parking, tolls, ferries, or fines incurred by subcontractors. Similarly, Mr Bontoft is also passing these expenses to owner drivers and the average price paid is meant to cover all expenses incurred by owner drivers. To start the business of delivery services, it requires renting or own a warehouse, electronic registering facilities, gadgets that should be used by owner drivers, store employees to facilitate the activity, etc. Loading and unloading is part of the owner driver's responsibility, and the business does not incur costs. Store and management costs are expected to reach about $4,487.50 per week. The delivery business is planned to operate every week for the entire year of 2022. Required: as part of the consultancy services, you are required to conduct a thorough analysis and provide solutions and recommendations to Mr Bontoft in relation to the proposed two options presented above. 1. For each option, compute the breakeven volume for the year 2022 by showing all computations. Compare the results of the two options and advise which one is more beneficial. Mr. Bontoft is a former CEO and business entrepreneur who successfully launched his private business in Melbourne, Australia, in 2010. Over the years, he observed that many of his original business ideas were not proving successful. Some of the causes that brought challenges to his business include rapid change in technology, changes in customer taste, intensifying competition in the market area that led to a decline in sales volume, inflation that aggravated input prices and, more notably, the unpredictability of the pandemic season. After 11 years of running his private business, he is now revising his ideas and wants to explore investing in new areas. As a result, he is considering the following two proposed investment options and has asked his accountant to gather relevant information. The two investment proposals will be presented to business consultants for evaluation and advice. CIC Higher Education has accepted the offer and has appointed your team to review the two investment proposals presented by Mr. Bontoft. Detailed information about the two investment options and related questions you need to answer are presented in Part A and Part B of the assignment file. Option 1: It is clear that the Covid-19 pandemic has impacted the workplace and motivated businesses and employees to consider continuing to work from home. As people are no longer required to travel to work, it is plausible that they need to walk around to exercise, and cycling is one of the options they might consider as a fun activity to engage with family members. Mr Bontoft plans to open a store to retail two types of bicycles for a while and see how it goes. The types of bikes he is keen to trade are Road bikes and Mountain bikes. The budgeted per unit sales price and cost information of the business for the year 2022 are presented below: Retail Sales Price Costs: Purchase price Variable Selling & Admin. Road Bike $530 400 80 Mountain Bike $750 550 100 The proposed budgeted for 2022 includes sales volume of 376 for Road bikes and 564 for Mountain bikes. The budgeted annual fixed store-relate costs are $60,000 and fixed selling and administrative costs are $24,800. The income tax rate applicable to the retail business is 30 per cent. The proposal states that sales price will remain the same for each type of bike, but volume is expected to increase by 4% in 2023 and by 5% for 2024 compared to the 2022 values. Purchase price of bikes is likely anticipated to rise by 2% for every successive year after 2022. The budgeted annual fixed storing costs will rise by $5,000 in 2023 and by $8,000 in 2024 from the amount budgeted for 2022. Fixed selling and administration costs are expected to remain the same every year. Page 2 of 4 Mr. Bontoft is a former CEO and business entrepreneur who successfully launched his private business in Melbourne, Australia, in 2010. Over the years, he observed that many of his original business ideas were not proving successful. Some of the causes that brought challenges to his business include rapid change in technology, changes in customer taste, intensifying competition in the market area that led to a decline in sales volume, inflation that aggravated input prices and, more notably, the unpredictability of the pandemic season. After 11 years of running his private business, he is now revising his ideas and wants to explore investing in new areas. As a result, he is considering the following two proposed investment options and has asked his accountant to gather relevant information. The two investment proposals will be presented to business consultants for evaluation and advice. CIC Higher Education has accepted the offer and has appointed your team to review the two investment proposals presented by Mr. Bontoft. Detailed information about the two investment options and related questions you need to answer are presented in Part A and Part B of the assignment file. Option 1: It is clear that the Covid-19 pandemic has impacted the workplace and motivated businesses and employees to consider continuing to work from home. As people are no longer required to travel to work, it is plausible that they need to walk around to exercise, and cycling is one of the options they might consider as a fun activity to engage with family members. Mr Bontoft plans to open a store to retail two types of bicycles for a while and see how it goes. The types of bikes he is keen to trade are Road bikes and Mountain bikes. The budgeted per unit sales price and cost information of the business for the year 2022 are presented below: Retail Sales Price Costs: Purchase price Variable Selling & Admin. Road Bike $530 400 80 Mountain Bike $750 550 100 The proposed budgeted for 2022 includes sales volume of 376 for Road bikes and 564 for Mountain bikes. The budgeted annual fixed store-relate costs are $60,000 and fixed selling and administrative costs are $24,800. The income tax rate applicable to the retail business is 30 per cent. The proposal states that sales price will remain the same for each type of bike, but volume is expected to increase by 4% in 2023 and by 5% for 2024 compared to the 2022 values. Purchase price of bikes is likely anticipated to rise by 2% for every successive year after 2022. The budgeted annual fixed storing costs will rise by $5,000 in 2023 and by $8,000 in 2024 from the amount budgeted for 2022. Fixed selling and administration costs are expected to remain the same every year. Page 2 of 4 BBAC501 Management Accounting - Assignment Term 4 2023 CIC HIGHER ci EDUCATION Option 2: During the current pandemic and recovery season, it is observed that online shopping has become a trend, and many people are buying what they want via online shopping. This situation has opened an opportunity to increase business volumes on delivery services. It has become a possibility to sub-contract delivery services from Australian Post. The main task is to provide a range of reliable, timely and customized regular courier services in Melbourne CBD, including the wider metro areas. To conduct courier services, it is required to have its delivery trucks or hire owner drivers to do the job for an agreed price. Delivery service is highly diverse due to differences in the distance (between pickup and delivery), the timeframe needed to complete delivery and the quantity of the item. The average price ranges from $15 to $18 per delivery item (or parcel). As the business Mr. Bontoft is just starting, it has decided to classify delivery by area postcodes so that an average price of $15 is uniformly paid to each owner-driver. The budgeted average fee to be collected from the Australian Post for each delivery item is $21.50. It is expected that the average delivery of items could reach about 150 parcels per day from Monday to Friday. No deliveries are made during the weekends. Australian post does not pay for parking, tolls, ferries, or fines incurred by subcontractors. Similarly, Mr Bontoft is also passing these expenses to owner drivers and the average price paid is meant to cover all expenses incurred by owner drivers. To start the business of delivery services, it requires renting or own a warehouse, electronic registering facilities, gadgets that should be used by owner drivers, store employees to facilitate the activity, etc. Loading and unloading is part of the owner driver's responsibility, and the business does not incur costs. Store and management costs are expected to reach about $4,487.50 per week. The delivery business is planned to operate every week for the entire year of 2022. Required: as part of the consultancy services, you are required to conduct a thorough analysis and provide solutions and recommendations to Mr Bontoft in relation to the proposed two options presented above. 1. For each option, compute the breakeven volume for the year 2022 by showing all computations. Compare the results of the two options and advise which one is more beneficial. BBAC501 Management Accounting - Assignment Term 4 2023 CIC HIGHER ci EDUCATION Option 2: During the current pandemic and recovery season, it is observed that online shopping has become a trend, and many people are buying what they want via online shopping. This situation has opened an opportunity to increase business volumes on delivery services. It has become a possibility to sub-contract delivery services from Australian Post. The main task is to provide a range of reliable, timely and customized regular courier services in Melbourne CBD, including the wider metro areas. To conduct courier services, it is required to have its delivery trucks or hire owner drivers to do the job for an agreed price. Delivery service is highly diverse due to differences in the distance (between pickup and delivery), the timeframe needed to complete delivery and the quantity of the item. The average price ranges from $15 to $18 per delivery item (or parcel). As the business Mr. Bontoft is just starting, it has decided to classify delivery by area postcodes so that an average price of $15 is uniformly paid to each owner-driver. The budgeted average fee to be collected from the Australian Post for each delivery item is $21.50. It is expected that the average delivery of items could reach about 150 parcels per day from Monday to Friday. No deliveries are made during the weekends. Australian post does not pay for parking, tolls, ferries, or fines incurred by subcontractors. Similarly, Mr Bontoft is also passing these expenses to owner drivers and the average price paid is meant to cover all expenses incurred by owner drivers. To start the business of delivery services, it requires renting or own a warehouse, electronic registering facilities, gadgets that should be used by owner drivers, store employees to facilitate the activity, etc. Loading and unloading is part of the owner driver's responsibility, and the business does not incur costs. Store and management costs are expected to reach about $4,487.50 per week. The delivery business is planned to operate every week for the entire year of 2022. Required: as part of the consultancy services, you are required to conduct a thorough analysis and provide solutions and recommendations to Mr Bontoft in relation to the proposed two options presented above. 1. For each option, compute the breakeven volume for the year 2022 by showing all computations. Compare the results of the two options and advise which one is more beneficial.

Answer rating: 100% (QA)

Option 1 Bicycle Retail Store Calculate Total Variable Costs Variable Cost for Road Bikes 400 Purchase price 80 Variable Selling Admin 480 Variable Co... View the full answer