Category: Accounting

How does a public sector organisation which produces different types of (related) products (such as different types of trips with different priced tickets), set prices in order to break even and cover its fixed and operating costs?

Question 2C – Question 5.
How does a public sector organisation which produces different types of (related) products (such as different types of trips with different priced tickets), set prices in order to break even and cover its fixed and operating costs?

• Convert everything on the revenue and cost sides to single ticket equivalents.

• Constraints: a single visit ticket cannot be lower than R20 which will be the lowest price and attract the greatest number of commuters.

• As prices increase, the quantities of tickets sold will decrease (relative to the maximum ticket sales) but the variable costs will decrease.

• As prices increase, and commuter numbers decline, fewer ferries will need to be commissioned.

Individual assignment 1: Liberty Island and Museum (2) • LIAM exercise: For Question 6 use USP = FC/Q + UVC
 USP = You must determine USP for breakeven, but USP minimum R20 per single ticket  Q of physical tickets = 2 million single visit tickets + 4 million family tickets + 2 million small group tickets (note the value of physical tickets is different depending on their price)  If the price is R20 for single, then it will be R40 for family and R60 for small group tickets  Now, recalculate total Q of the three types of physical tickets as a single ticket equivalent  Total FC = overheads + buses = R50 000 000 + (R3 852 110 x 50 buses)  UVC = Variable costs R10 per ticket; note that UVC is per REAL physical ticket, not the total single ticket equivalents (dispensing each ticket at vending machines costs the same,irrespective of the value/price of the ticket)  UVC = Calculate total VC and recalculate UVC for total single ticket equivalents  If USP exceeds R20.00, recalculate with reduced Q and FC as indicated until you are within breakeven parameters
• For Question 7, use Q of your answer to Question 6 and recalculate as given
sales mix
• Question 8 use OI = (USP x Q) – (UVC x Q) – FC and keep on increasing USP and
with it reducing Q and FC as indicated, until OI no longer increases

Explain and describe the various costing methods used in management accounting. Outline their

1) Explain and describe the various costing methods used in management accounting. Outline their
advantages and disadvantages. Provide real time examples by using data from listed companies in the
UK.
Marking criteria: Element Weight %
Presentation (General presentation and APA
referencing)
Essay content 60
Essay structure and organization 20
Language clarity and accuracy 10Guidelines for Assignment 2
This is an individual assignment. Ground your answers in relevant theory.
Plagiarism and reproduction of someone else’s work as your own will be penalized.
The report should be your own work and properly referenced according to the requirements of
the APA Referencing system.
Structural elements should include a cover page, introduction, main body, conclusion and reference page.
Literature should be sourced from a variety of external sources such as textbooks and journal articles.
The report must be submitted in a single word document using the corresponding link found in the toggle
titled ‘‘Submission Link: Assignment 2” and it will be automatically checked with “Turnitin”. Accurate
referencing of sources is crucial in this examination.
REFERENCE all sources using the APA referencing system and make sure that you are familiar
with this.
familiarize yourself with the regulations on late submission.
This assignment carries a weight of 20% of the final module grade.