Page 9 - CIMA OCS August 2018 Day 2 Tasks

MANAGEMENT ACCOUNTING (P1) - PRACTICE TASKS

EXERCISE 2 (DECISION MAKING)

UPDATE

Next week the Thomas Fine Teas Board and other senior managers will be discussing the budget
for 2019 and whether or not changes are required to the product portfolio.

TRIGGER
This morning you received the following email from Ben Jones:

To: You
From: Ben Jones (Sales and Marketing Director)
Subject: Favour

Hi

In preparation for a Board meeting next week I asked Ana Olaf, the Head of Sales and Marketing,
for her thoughts on our product portfolio and she sent me a chart and some notes [See
reference materials below]. Unfortunately she is now on holiday and I must confess that I am
not sure what she is talking about. However, from what I can tell, it looks like it could be quite
useful for discussions with the Board. Normally I talk to Christie or Jack if I get stuck on
something like this but they are both tied up with auditors today and suggested I speak to you.

Ana suggested that we were:

• “over-reliant on black teas”
• “our safety margin was only 35%”
• the performance on infusions was disappointing , and that it was
• “vital that we try to boost the range of tea bags we make”.

As stated above, I cannot see how she made these conclusions from her analysis.

Please send me an email which explains the following:

• What the points A, B, C, D and E represent and the difference between the two lines
shown on the chart. As part of this can you explain what is meant by “C/S ratio” and
“safety margin”
• The usefulness of this chart to us
• Whether Ana’s comments can be deduced from the chart.

Many thanks
Ben

TASK

Respond to Ben Jones’ email.
Time allowed (40 Minutes)

KAPLAN PUBLISHING 31