BTHM3604 Financial Management Group Assignment 2 | MZUZU University

BTHM3604 Group Assignment 2

Instructions

Answer ALL Questions in your already existing Groups
Marks are indicated against each question
Show your workings
Deadline of the Assignment is Friday, 19 December 2025

QUESTION 1

a) You are required to design a Balanced Scorecard for the Hospitality Laboratory at Mzuzu University. Include three (3) goals and three (3) measurements of performance for each of the four aspects of the balanced scorecard and provide a justification for your choices.  (10 Marks)

b) Some commentators argue that: ‘With continuing pressure to control costs and maintain efficiency, the time has come for all public sector organizations to embrace zero-based budgeting. There is no longer a place for incremental budgeting in any organization, particularly public sector ones, where zero-based budgeting is far more suitable anyway. It is often argued that: ‘Budgeting is a waste of time. I don’t see the point of it. It tells us what we can’t afford but it doesn’t keep us from buying it. It simply makes us invent new ways of manipulating figures. If all levels of management aren’t involved in the setting of the budget, they might as well not bother preparing one.

Required

1. Discuss two particular difficulties encountered when budgeting in public sector organizations compared with budgeting in private sector organizations, drawing comparisons between the two types of organizations. (4 marks)
2. Explain the terms ‘incremental budgeting’ and ‘zero-based budgeting. (3 marks)
3. State the main stages involved in preparing zero-based budgets. (3 marks)

Total = 20 Marks

QUESTION 2

a) Using relevant examples briefly describe any two (2) main features or characteristics of the following costing systems

i) Job costing (2 Marks)

ii) Process costing  (2 Marks)        

b) Why is the absorption costing technique often referred to as full costing method? (2 Marks)

c) Is it appropriate to use full costing method as a basis of setting selling prices in the tourism and hospitality sector? Explain. (3 Marks)

d) Under what circumstances will the absorption costing method result in unrealistic profit performance? (3 Marks)

e) Describe any two (2) criticisms frequently raised against the use of traditional costing systems in the 21st century. (4 Marks)

f) You have been hired as a tourism business management consultant and your team is working on an independent assessment of Omi Tour Operation Company. Your assistant has provided you with the following data for the company and their industry.

1. In the annual report to the shareholders, the CEO of Omi Tour Company wrote, “2016 was a good year for the firm with respect to our ability to meet our short-term obligations.  We had higher liquidity largely due to an increase  in highly liquid current assets (cash, account receivables and short-term  marketable securities).”  Is the CEO correct?  Explain and use only relevant  information in your analysis. (5 Marks)
2. What can you say about the firm’s asset management? Be as complete as possible given the above information, but do not use any irrelevant information. (4 Marks)

Total = 25 Marks

QUESTION 3

a) Kaning’ina Hotel company is considering investing in either Project A or Project B. Relevant financial information is as follows:

The company’s costs of capital is 8% and the applicable discount rates are as follows:

Required:

i) Calculate, in years and months, the simple payback period for each project. Assume that there are 12 months in a year, that each month has 30 days and that annual cash flows occur at an even rate throughout the year. (6 Marks)

ii) Calculate, to the nearest K1, the net present value of each project. Assume that net cash inflows are received at the end of each year and the anticipated re-sale value of equipment is achieved. (5 Marks)

iii) Using only the results calculated in (ii) above, recommend which project should be undertaken and give one reason for your recommendation. (3 Marks)

iv) Give two (2) disadvantages of using the simple payback method of appraisal when compared to the net present value method of appraisal. (2 Marks)

b) Describe the first in, first out (FIFO), last in, First out (LIFO) and average cost methods used in stores pricing.(9 Marks)