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ACCT 2002 Management Accounting : Analyis on Activity Based Costing

It’s now May and you have completed the report required by Brendan Pierce, owner of GEK
Technologies. You were having lunch when you were approached by Jodie, secretary of Brendan. “Hi, Brendan was pretty impressed with your last report,” she said. “He would like to speak to you after lunch to discuss some other issues.”

So after finishing your lunch, you headed for Brendan’s office. “Come in,’ he said, when you knocked on his door. “That was some great work you did previously. I now need you to do something else for me. This is going to get pretty complicated pretty fast, so make sure you understand all that I am asking of you.”
“First up, I was told by someone that we should be having a serious look at something called
Activity Based Costing. The name kinda makes sense but I really need to know more about it. What exactly is it? Why do we need it, or for that matter, do we really even need it? Can you write up something about this Activity Based Costing for me?”

Now, the next thing I need help with is the cash budget. I have no idea what it means, it seems. I thought a cash budget was just a budget that was recording cash instead of accruals. I have been told that apparently, that is not the case. So what is a cash budget really? Do we need to have one? Otherwise we could just do an accrual budget and forget about the cash budget. What do you think?”
Now, we just had an offer from Hills West Surveyors for some of our 3Sixty, after some modifications. I have put the basic information in here (Appendix A). I need you to tell me we should accept their offer or not. Harry Redknapp (Production manager of GEK 3Sixty), seems to think that it is a bad idea to accept the offer. According to him accepting
their offer would mean increasing our break-even point. Isn’t that more risky for us? I am inclined to follow his advice, unless you can show me something different.”

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