Session 2

ABC is a platform company that specialises in crowdfunding (like debt and equity) to businesses that cannot find funding from their own facilities (retained earnings and banks). ABC employs a number of engineers who are skilled in different social media techniques that enable ABC to provide a full range of crowdfunding facilities to its customers. Some of the work undertaken by ABC is unique to each of its customers, often requiring specifics for its customers, and some is more generic (eg crowdfunding for games, videos or books). As a result most of ABC’s work is short-term, with some jobs being completed within hours while others may take a few days.

To date ABC has adopted a cost plus approach to setting its prices. This is based upon an absorption costing system that uses computer hours as the basis of absorbing overhead costs into individual job costs. The Managing Director is concerned that over recent months ABC has been unsuccessful when quoting for work with the consequence that there has been an increase in the level of unused capacity. It has been suggested that ABC should adopt an alternative approach to its pricing based on marginal costing since “any price that exceeds variable costs is better than no work”. Required:

With reference to the above scenario discuss the validity of the comment “any price that exceeds variable costs is better than no work”.   (approx. 300 words)

Session 3

As the financial director of a non-profit company that provides services with short lifecycle, critically discuss how budgeting help management in setting corporate strategies. (approx. 300 words)

Session  4

Critically discuss the relationship between solvency and profitability in a manufacturing business (around 100 words).