1. Costing and Management Accounting
Project Report On:
MASTER BUDGET OF
TOP BALL PEN
Subject : Costing and Management Accounting
Submitted To: Prof. Nadeem Merchant
Prepared By: Mohd. Adil (45), Sawant Durgesh (41)
Date: 5/12/2010
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2. Costing and Management Accounting
ACKNOWLEDGEMENT
First and foremost let we sincerely thank ALMIGHTY for the great opportunity and
blessings that he has showered up on us for the successful and timely completion of our
project work.
We extent our sincere gratitude to Dr. Vidya Hatangadi Director of AIAIMS institute of
management research and studies for her kind support and guidance for making our
project great success.
We extent our sincere gratitude to guide Mr. Nadeem Merchant, lecturer, Allana
Institute of Management studies for the kind support and proper guidance without which
the project would not have been efficiently completed
We render our whole hearted thanks to librarian, for their assistance and co-operation
given to us in regard to this work.
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3. Costing and Management Accounting
Sale Budget:
Top Ball Pen
Total Projected Sales
Sales Budget
For the Three Months ending, March 31, 2011
January February March Total
Projected Sales 10,000 15,000 20,000 45,000
Unit Price INR 15 INR 15 INR 15 INR 15
Total Projected Sales 150,000 225,000 300,000 675,000
Production Budget:
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Production Budget
For the Three Months ending, March 31, 2011
January February March
Projected Sales 10,000 15,000 20,000
Ending Inventory 3,000 4,000 1,000
Total Units Needed 13,000 19,000 21,000
Beginning Inventory 1,000 3,000 4,000
Projected Production 12,000 16,000 17,000
*** Ending inventory is 20% of next month's budgeted sales
*** April's projected sales is 5,000 units
*** December's ending inventory is 1,000 units
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4. Costing and Management Accounting
Direct Materials Budget:
Top Ball Pen
Direct Materials Budget
For the Three Months ending, March 31, 2011
January February March
Projected Production 12,000 16,000 17,000
Material per Unit (g) 6 6 6
Material for Units to be Produced (g) 72,000 96,000 102,000
Plus Material in Ending inventory (g) 19,200 20,400 5,000
Total Material Needed (g) 91,200 116,400 107,000
Less Material in Beginning inventory(g) 4,800 19,200 20,400
Total Material to Purchase (g) 86,400 97,200 86,600
Unit Price of Material INR 0.80 INR 0.80 INR 0.80
Projected Purchase (Rs.) INR 69,120.00 INR 77,760.00 INR 69,280.00
*** Each Unit requires 6 grams of material
*** Ending Inventory - 20% of next month's needs
*** December's cost of Material in Ending Inventory is 4,800
*** Unit Price of Material is INR 0.80 per gram
Schedule of Expected Cash Disbursement
January February March
December Purchases 5,000
January's Purchases 55,296 13,824
February's Purchases 62,208 15,552
March's Purchases 55,424
Total Cash Disbursements per Month 60,296 76,032 70,976
*** 80% of Purchases are paid in the current month
*** 20% of Purchases are paid in the following month
Direct Labour Budget:
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5. Costing and Management Accounting
Top Ball Pen
Direct Labour Budget
For the Three Months ending, March 31, 2011
January February March
Projected Production 12,000 16,000 17,000
X Direct Labour Hours 0.07 0.07 0.07
Total Direct Labour Hours 840 1,120 1,190
X Direct Labour Cost INR 20.00 INR 20.00 INR 20.00
Total Direct Labour Cost 16,800 22,400 23,800
*** Each Unit requires 0.07 hours of Direct Labour
*** Direct Labour INR 20.00/hour
Manufacturing Overhead Budget:
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Manufacturing Overhead Budget
For the Three Months ending, March 31, 20XX
January February March
Direct Labour Hours 840 1,120 1,190
Variable Overhead Rate INR 50 INR 50 INR 50
Projected Variable Overhead 42,000 56,000 59,500
Projected Fixed Overhead 9,000 9,000 9,000
Total Projected Overhead 51,000 65,000 68,500
*** Manufacturing Overhead is calculated based on:
*** Variable Overhead Rate: INR 50/Direct Labour Hour
*** Fixed Overhead Rate: INR 9000 per month
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6. Costing and Management Accounting
Selling & Administrative Expense Budget:
Top Ball Pen
Selling & Administrative Expense Budget
For the Three Months ending, March 31, 20XX
January February March
Salaries 7,500 7,500 7,500
Rent 1,500 1,500 1,500
Advertising 1,100 1,100 1,100
Telephone 300 300 300
Other 500 500 500
Total Expenses 10,900 10,900 10,900
*** Monthly Expenses are as follows:
Salaries INR 7,500
Rent INR 1,500
Advertising INR 1,100
Telephone INR 300
Other INR 500
Cost of Goods Sold:
Top Ball Pen
Cost of Goods Sold
For the Three Months ending, March 31, 2011
January February March
Projected Direct Materials 69,120 77,760 69,280
Projected Direct Labour 16,800 22,400 23,800
Projected Manu. Overhead 51,000 65,000 68,500
Total 136,920 165,160 161,580
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7. Costing and Management Accounting
Budgeted Income Statement:
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Budgeted Income Statement
For the Three Months ending, March 31, 20XX
January February March Total
Sales 150,000 225,000 300,000 675,000
Cost of Goods Sold 136,920 165,160 161,580 463,660
Operating Expenses
Selling & Administration 10,900 10,900 10,900 32,700
Net Income From Operations 2,180 48,940 127,520 178,640
Net Income Before Taxes 2,180 48,940 127,520 178,640
Federal Income Tax 500 10,800 28,100 39,400
Net Income 1,680 38,140 99,420 139,240
*** Federal Income Tax 22%
Schedule of Accounts Receivable
January February March Total
December Sales 2,000 2,000
January Sales 120,000 30,000 150,000
February Sales 180,000 45,000 225,000
March Sales 240,000 240,000
Total 122,000 210,000 285,000 617,000
*** 80% collected in current month
*** 20% collected in the following month
*** Bad Debts is negligible
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8. Costing and Management Accounting
Cash Budget:
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Cash Budget
For the Three Months ending, March 31, 2011
January February March
Cash Balance, Beginning 200,000 208,164 285,901
Cash Receipts 122,000 210,000 285,000
Cash Available 322,000 418,164 570,901
Cash Payments
Direct Material 35,136 33,963 39,408
Direct Labour 16,800 22,400 23,800
Manufacturing Overhead 51,000 65,000 68,500
Selling & Admin Expenses 10,900 10,900 10,900
Income Taxes 39,400
Total Cash Payments 113,836 132,263 182,008
Cash Balance, Ending 208,164 285,901 388,893
*** Cash Balance Beginning Rs. 20,000
*** The business prefers to pay the projected Federal taxes in March
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9. Costing and Management Accounting
Budgeted Balance Sheet
Top Ball Pen
Budgeted Balance Sheet
For the Three Months ending, March 31, 2011
Assets Liabilities
Current Assets: Accounts Payable 13,860.00
Cash 388,893.00 Total Liabilities 13,860.00
Accounts Receivable 60,000.00
Raw Materials 69,280.00 Equity
Finished Goods 22,380.00 Common Stock 450,000.00
Total Current Assets 540,553.00 Retained Earnings 61,023.00
Fixed Assets: Net Income 99,420.00
Land 50,000.00 Retained Earnings 160,443.00
Building 45,000.00 Total Equity 610,443.00
Less Depreciation (11,250.00)
Total Fixed Assets 83,750.00
Total Assets 624,303.00 Total Liabilities and Equity 624,303.00
*** Finished Goods = Ending Inventory (Production Budget) multiplied by cost of unit
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