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  • 1. Costing and Management AccountingProject Report On:MASTER BUDGET OFTOP BALL PENSubject : Costing and Management AccountingSubmitted To: Prof. Nadeem MerchantPrepared By: Mohd. Adil (45), Sawant Durgesh (41)Date: 5/12/2010 1
  • 2. Costing and Management Accounting ACKNOWLEDGEMENTFirst and foremost let we sincerely thank ALMIGHTY for the great opportunity andblessings that he has showered up on us for the successful and timely completion of ourproject work.We extent our sincere gratitude to Dr. Vidya Hatangadi Director of AIAIMS institute ofmanagement research and studies for her kind support and guidance for making ourproject great success.We extent our sincere gratitude to guide Mr. Nadeem Merchant, lecturer, AllanaInstitute of Management studies for the kind support and proper guidance without whichthe project would not have been efficiently completedWe render our whole hearted thanks to librarian, for their assistance and co-operationgiven to us in regard to this work. 2
  • 3. Costing and Management AccountingSale Budget: Top Ball Pen Total Projected Sales Sales Budget For the Three Months ending, March 31, 2011 January February March TotalProjected Sales 10,000 15,000 20,000 45,000Unit Price INR 15 INR 15 INR 15 INR 15Total Projected Sales 150,000 225,000 300,000 675,000Production Budget: Top Ball Pen Production Budget For the Three Months ending, March 31, 2011 January February MarchProjected Sales 10,000 15,000 20,000Ending Inventory 3,000 4,000 1,000Total Units Needed 13,000 19,000 21,000Beginning Inventory 1,000 3,000 4,000Projected Production 12,000 16,000 17,000*** Ending inventory is 20% of next months budgeted sales*** Aprils projected sales is 5,000 units*** Decembers ending inventory is 1,000 units 3
  • 4. Costing and Management Accounting Direct Materials Budget: Top Ball Pen Direct Materials Budget For the Three Months ending, March 31, 2011 January February MarchProjected Production 12,000 16,000 17,000Material per Unit (g) 6 6 6Material for Units to be Produced (g) 72,000 96,000 102,000Plus Material in Ending inventory (g) 19,200 20,400 5,000Total Material Needed (g) 91,200 116,400 107,000Less Material in Beginning inventory(g) 4,800 19,200 20,400Total Material to Purchase (g) 86,400 97,200 86,600Unit Price of Material INR 0.80 INR 0.80 INR 0.80Projected 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 months needs*** Decembers 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 MarchDecember Purchases 5,000Januarys Purchases 55,296 13,824Februarys Purchases 62,208 15,552Marchs Purchases 55,424Total 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: 4
  • 5. Costing and Management Accounting Top Ball Pen Direct Labour Budget For the Three Months ending, March 31, 2011 January February MarchProjected Production 12,000 16,000 17,000X Direct Labour Hours 0.07 0.07 0.07Total Direct Labour Hours 840 1,120 1,190X Direct Labour Cost INR 20.00 INR 20.00 INR 20.00Total Direct Labour Cost 16,800 22,400 23,800*** Each Unit requires 0.07 hours of Direct Labour*** Direct Labour INR 20.00/hourManufacturing Overhead Budget: Top Ball Pen Manufacturing Overhead Budget For the Three Months ending, March 31, 20XX January February MarchDirect Labour Hours 840 1,120 1,190Variable Overhead Rate INR 50 INR 50 INR 50Projected Variable Overhead 42,000 56,000 59,500Projected Fixed Overhead 9,000 9,000 9,000Total 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 5
  • 6. Costing and Management AccountingSelling & Administrative Expense Budget: Top Ball Pen Selling & Administrative Expense Budget For the Three Months ending, March 31, 20XX January February MarchSalaries 7,500 7,500 7,500Rent 1,500 1,500 1,500Advertising 1,100 1,100 1,100Telephone 300 300 300Other 500 500 500Total 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 500Cost of Goods Sold: Top Ball Pen Cost of Goods Sold For the Three Months ending, March 31, 2011 January February MarchProjected Direct Materials 69,120 77,760 69,280Projected Direct Labour 16,800 22,400 23,800Projected Manu. Overhead 51,000 65,000 68,500Total 136,920 165,160 161,580 6
  • 7. Costing and Management Accounting Budgeted Income Statement: Top Ball Pen Budgeted Income Statement For the Three Months ending, March 31, 20XX January February March TotalSales 150,000 225,000 300,000 675,000Cost of Goods Sold 136,920 165,160 161,580 463,660Operating Expenses Selling & Administration 10,900 10,900 10,900 32,700Net Income From Operations 2,180 48,940 127,520 178,640Net Income Before Taxes 2,180 48,940 127,520 178,640Federal Income Tax 500 10,800 28,100 39,400Net Income 1,680 38,140 99,420 139,240*** Federal Income Tax 22% Schedule of Accounts Receivable January February March TotalDecember Sales 2,000 2,000January Sales 120,000 30,000 150,000February Sales 180,000 45,000 225,000March Sales 240,000 240,000Total 122,000 210,000 285,000 617,000*** 80% collected in current month*** 20% collected in the following month*** Bad Debts is negligible 7
  • 8. Costing and Management Accounting Cash Budget: Top Ball Pen Cash Budget For the Three Months ending, March 31, 2011 January February MarchCash Balance, Beginning 200,000 208,164 285,901Cash Receipts 122,000 210,000 285,000Cash Available 322,000 418,164 570,901Cash 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 39,400Total Cash Payments 113,836 132,263 182,008Cash 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 8
  • 9. Costing and Management Accounting Budgeted Balance Sheet Top Ball Pen Budgeted Balance Sheet For the Three Months ending, March 31, 2011Assets LiabilitiesCurrent 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 450,000.00Total Current Assets 540,553.00 Retained Earnings 61,023.00Fixed 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 83,750.00Total Assets 624,303.00 Total Liabilities and Equity 624,303.00*** Finished Goods = Ending Inventory (Production Budget) multiplied by cost of unit 9