The Crumbling Cookie Co

11.08.2014
Management Accounting Assignment
BA (Hons) Accountancy and Finance
Student ID’s:
26527
26194
24793
Lecturer Name: Asare Amaning

The Crumbling Cookie Co.
Est. 2013
1 | P a g e S t u d e n t s I D ’ s : 2 6 5 2 7 2 6 1 9 4 2 4 7 9 3
Contents
1. Introduction .................................................................................................................2
2. Company Background...................................................................................................3
2.1. Company History .......................................................................................................3
2.2. Market Conditions.....................................................................................................4
3. Company’s Strategies ...................................................................................................5
3.1. Company’s Pricing......................................................................................................5
3.2. Company’s Cost Card .................................................................................................6
3.3. Company’s Labour hours............................................................................................7
3.4. Company’s Production Schedule ................................................................................7
3.5. Company’s Overheads ...............................................................................................8
3.6. Company’s Budgeted Cash Flow Statement.............................................................. 10
3.7. Company’s Income Statement.................................................................................. 12
4. Motivational theories ................................................................................................. 13
4.1. The Content Theories............................................................................................... 13
4.2. The Process Theories ............................................................................................... 14
4.3. Budgetary Process ................................................................................................... 15
5. Conclusion.................................................................................................................. 16
Reflection....................................................................................................................... 17
Appendices .................................................................................................................... 18
References ..................................................................................................................... 23

Est. 2013
1. Introduction
This report will introduce a fictional company, already established in an industry, which
wants to launch a new product. It will provide information about the selected industry and
the market conditions, the location of the business, the target customers and the general
price in that market.
The report will outline the company’s strategies for the:
 Pricing
 Cost Card
 Overheads
 Cash Flow Statement
 Production
Then the report will look at the two types of motivational theories: the content theories and
the process theories. And afterwards it will exemplify how this theories affect the budgetary
process.
In the end the report will provide recommendation and will have a brief reflexion essay about the
work and the research that has been done.

Est. 2013
2. Company Background
2.1. Company History
The Crumbling Cookie Co. was founded in 2013 by three university student who were
disillusioned with the choice of sweet treats in their university café and decided to do
something about it. With a shared passion for healthy eating they decided to form a
company to produce biscuits and brownies using organic ingredients, locally sourced where
possible. Initially supplying their university café with their tasty treats it wasn’t long before
they approached local cafes and coffee shops at the train stations they travelled through
and managed to talk the proprietors into stocking The Crumbling Cookie Co. products. The
Crumbling Cookie Co. are proud to use the Soil Association organic logo on their products.
Recently the company signed a contract with Planet Organic and Whole Foods to have their
product range sold in store, and are currently in negotiations with Abel & Cole, and
Riverford Organic to supply their products via their organic produce box schemes.
Having been in operation for a year the company has decided to introduce a new product
line aimed at a younger audience, and therefore “JR’s All-stars” was created. JR’s All-stars
are small packets of biscuits for young people. With five small star shaped biscuits per pack,
JR’s All-stars are aimed at mums on the go who want a small treat for their children to snack
on, safe in the knowledge that no nasties are lurking in our food. Because the founders do
not agree with the addition of preservatives, all products only have a week long shelf life.
The products are handmade in small batches throughout the week to ensure freshness, and
one of the main attractions or selling points is that the products are “like mum or nana used
to make”. They are home baked goods for the busy consumer. The company believes that
organic products taste better, are better for people, and are better for the environment.
At the start of 2014 the company rented premises in Essex to enable an increase in
production to meet customer demand. After researching premises around London the
directors decided on premises in Essex due to the proximity to the M25 and as the rental
prices were significantly lower than renting in London. To avoid tying up all the cash in the
bank accounts the decision was made to lease kitchen equipment over a five year period.
The company also purchased two vans for making deliveries.

Est. 2013
2.2. Market Conditions
The 2014 Soil Association Organic Market Report published in March 2014 reports steady
growth in the organic market:
 Sales of organic products in the UK grew by 2.8% in 2013
 The UK organic market is now worth £1.79billion in sales
 The rate of growth was above the annual inflation rate of 2%
Other findings from the report were:
 6.9% increase in sales through independent outlets in 2013
 4 out of 5 households buy organic produce
 73% of shoppers expect to buy more organic products in 2014
 Young shoppers are key to growth (SAOM, 2014)
According to The Guardian newspaper, organic food is back in vogue as sales have increased
due to shoppers being more concerned with the quality of what they eat. Supermarkets
and food associations report that after a sustained decline, demand for organic fruit,
vegetables and dairy produce is on the rise, as consumers become more willing to pay a
premium for food produced to higher farming standards. Consumers want traceability,
being able to identify where there food has come from, as well as sustainability and organic
products give them an assurance that their food has been produced to high and stringent
standards.
“Not only is the sector back in growth, but businesses that carry the Soil Association organic
logo are experiencing relatively buoyant year-on-year growth of 5.3%. There is great
potential in the organic sector and, in particular, a growing public demand for organic and
food logos they can trust” (SAOM, 2014)

Est. 2013
3. Company’s Strategies
3.1. Company’s Pricing
JR’s All-stars sales price is £0.85 and suggested retail is £1.00-£1.25 per packet. A review of
the market indicates that the product is mid-range with regards to price and the company
considers this acceptable as the biscuits are not mass-produced like the competitors but are
instead hand-made weekly in batches. It was also discovered that the majority of biscuits
produced for children are directed at the very young (around 12mths-2 years) whereas JR’s
All-stars are aimed at 2-10 year olds.
Competitor Pack Size Price
Organix Goodies Mini
Gingerbread Men
25g £0.50
Dr Lucys Gluten Free Organic
Cookies
37g – approx. 7-8 biscuits £1.19
Hipp Organic Apple Elephant
Biscuits
150g £1.59
Ellas Kitchen Yum Yummy
Milk & Vanilla Cookies
108g £2.00

Est. 2013
3.2. Company’s Cost Card
The sales price was derived by preparing a cost card based on absorption costing. The first
stage was to create a Standard Recipe Cost Card to calculate the direct materials price per
unit.
JR's All Stars Vanilla Biscuits Standard Recipe Cost Card
Standard Yield: 300 Biscuits
Quantity Unit Cost £ Unit Cost £ Unit
2.5 kg Flour 21.50 25kg 0.86 kg 2.15
1.85 kg Sugar 59.00 25kg 2.36 kg 4.37
1.25 kg Butter 120.00 25kg 4.80 kg 6.00
10 unit Egg 3.88 30 eggs 0.13 1 1.29
50 ml Vanilla Essence 7.19 50ml 0.14 ml 7.19
Total Ingredient Cost £21.00
Yield 300
Wastage per batch 3%
Adjusted Yield 290
Cost per biscuit £0.07
Biscuits per pack 5
Packaging 0.03
Cost per pack £0.38
Recipe Invoice RecipeIngredient Individual
Ingredient Cost £
After an allowance for wastage per batch was included the total cost of direct materials per
biscuit was £0.07. One pack consists of 5 biscuits and after packaging the direct materials
cost is £0.38 per pack.

Est. 2013
3.3. Company’s Labour hours
The company anticipates that over an eight hour day they can produce 3770 biscuits, or 754
packs of biscuits, utilising one director and one apprentice on this particular production line.
Demand for biscuits for the year is anticipated to be 251,010 biscuits or 50,202 packets,
with production increasing over the holiday periods. Director salaries are classified as an
overhead expense and apprentice wages are classified as direct labour. Apprentices are
paid £6 per hour. As production increases over the year – and it is expected that demand
will be higher in school holidays as parents are travelling more with their children –extra
staff may be required. Direct Labour costs have been calculated as follows:
(Hours worked per day x hourly rate)/daily output rate
Direct labour Hours
Hours Rate Total Cost
Cost per
Biscuit
Cost per
pack
8 £6.00 £48.00 £0.01 £0.05
3.4. Company’s Production Schedule
Production Schedule
Month Biscuits packs
Direct
Labour
Hours Batches
Direct
materials
@
£21/batch
Direct
labour
@ £6/hr
Overhead
absorption
@0.23/pack Total Costs
Sales @
£0.85/pack Profit
January 15,080 3,016 32 52 £1,092.00 £192.00 £693.68 £1,977.68 £2,563.60 £585.92
February 15,080 3,016 32 52 £1,092.00 £192.00 £693.68 £1,977.68 £2,563.60 £585.92
March 18,850 3,770 40 65 £1,365.00 £240.00 £867.10 £2,472.10 £3,204.50 £732.40
April 22,000 4,400 46.68 76 £1,593.10 £280.11 £1,012.00 £2,885.21 £3,740.00 £854.79
May 20,000 4,000 42.44 69 £1,448.28 £254.64 £920.00 £2,622.92 £3,400.00 £777.08
June 20,000 4,000 42.44 69 £1,448.28 £254.64 £920.00 £2,622.92 £3,400.00 £777.08
July 23,000 4,600 48.81 79 £1,665.52 £292.84 £1,058.00 £3,016.36 £3,910.00 £893.64
August 30,000 6,000 63.66 103 £2,172.41 £381.96 £1,380.00 £3,934.38 £5,100.00 £1,165.62
September 22,000 4,400 46.68 76 £1,593.10 £280.11 £1,012.00 £2,885.21 £3,740.00 £854.79
October 20,000 4,000 42.44 69 £1,448.28 £254.64 £920.00 £2,622.92 £3,400.00 £777.08
November 20,000 4,000 42.44 69 £1,448.28 £254.64 £920.00 £2,622.92 £3,400.00 £777.08
December 25,000 5,000 53.05 86 £1,810.34 £318.30 £1,150.00 £3,278.65 £4,250.00 £971.35
Totals 251,010 50,202 532.65 790.00 18,176.59 3,195.88 11,546.46 £32,918.93 £50,202.00 £9,752.77

Est. 2013
3.5. Company’s Overheads
For the allocation of overheads per unit the company calculates its total overheads for a
year then divides that total by the number of product lines – which is currently ten products
– and then divides that figure by the anticipated budgeted activity of the product line for the
year. Detailed calculations are as follows:
Operational Costs/Overheads £
Rent 6,000.00
Rates 1,500.00
Utlities (water, Gas, Electricty) 2,000.00
Directors Salaries 63,000.00
Delivery man 19,200.00
Marketing Expenses 1,000.00
Motor Vehicle Expenses 5,000.00
Motor Vehicle Depreciation 1,000.00
Bank Charges 200.00
Leased equipment 3,000.00
Management Accountant 15,000.00
Total Overheads 116,900.00
/10 products 11,690.00
budgeted activity JR's All-Stars 50,202 packs of 5 biscuits
OAR 0.23

Est. 2013
Once the cost components had been individually calculated a Standard Cost card was
produced.
JR's All-stars Vanilla Cookies Absorption Costing Standard Cost Card
per pack of 5 biscuits
£ £
Sales Price 0.85
Direct Materials 0.38
Direct Labour 0.05
Fixed Production Overheads 0.23
Cost of Sales 0.66
Profit per unit 0.19

Est. 2013
3.6. Company’s Budgeted Cash Flow Statement
The following graph illustrates the Budgeted Net Cash Flow for the year. It can be seen that in the
first month of production, the Net Cash Flow is negative due to 30 days credit terms being offered
and the rent and finance leases are paid. The reason of the low levels in July and October is due to
the payments of the rent and finance leases.
In order to get to these figures for each month the following Cash Flow Statement was
produced:

Est. 2013
Budgeted Cash Flow for Product: JR's Allstars Organic Vanilla Biscuits
12 Months Forecast
Jan Feb Mar April May Jun Jul Aug Sep Oct Nov Dec Yearly
Total
Budgeted Sales £2,564 £2,564 £3,205 £3,740 £3,400 £3,400 £3,910 £5,100 £3,740 £3,400 £3,400 £4,250 £42,672
Cash Inflows
Cash Sales £641 £641 £801 £935 £850 £850 £978 £1,275 £935 £850 £850 £1,063 £10,668
Receipts from
customers
£0 £1,923 £1,923 £2,403 £2,805 £2,550 £2,550 £2,933 £3,825 £2,805 £2,550 £2,550 £28,816
Other receipts £0 £0
Total Inflows £641 £2,564 £2,724 £3,338 £3,655 £3,400 £3,528 £4,208 £4,760 £3,655 £3,400 £3,613 £39,484
Cash Outflows
Supplier Payments £0 £1,092 £1,092 £1,365 £1,593 £1,448 £1,448 £1,666 £2,172 £1,593 £1,448 £1,448 £16,366
Staff Wages £192 £192 £240 £280 £255 £255 £293 £382 £280 £255 £255 £318 £3,196
Delivery man wages £160 £160 £160 £160 £160 £160 £160 £160 £160 £160 £160 £160 £1,920
Rent £150 £150 £150 £150 £600
Rates £12.50 £12.50 £12.50 £12.50 £12.50 £12.50 £12.50 £12.50 £12.50 £12.50 £12.50 £12.50 £150
Utilities £12 £12 £14 £18 £18 £18 £18 £18 £18 £18 £18 £18 £200
Motor Vehicle Expenses £42 £42 £42 £42 £42 £42 £42 £42 £42 £42 £42 £42 £500
Marketing Expenses £30 £0 £0 £20 £0 £0 £30 £20 £0 £0 £0 £0 £100
Equipment Lease £75 £0 £0 £75 £0 £0 £75 £0 £0 £75 £0 £0 £300
Management
Accountant Salary
£125 £125 £125 £125 £125 £125 £125 £125 £125 £125 £125 £125 £1,500
Directors Salaries £525 £525 £525 £525 £525 £525 £525 £525 £525 £525 £525 £525 £6,300
Total Outflows £1,323 £2,160 £2,210 £2,772 £2,730 £2,585 £2,878 £2,950 £3,335 £2,955 £2,585 £2,649 £31,132
Net Cash flow (in-out) (682) £403 £514 £566 £925 £815 £649 £1,258 £1,425 £700 £815 £964 £8,352
Balance B/fwd £0 (682) (279) 235 801 £1,726 £2,541 £3,190 £4,448 £5,873 £6,573 £7,388
Balance c/fwd (682) (279) 235 801 £1,726 £2,541 £3,190 £4,448 £5,873 £6,573 £7,388 £8,352
Assumptions:
 25% of sales pay cash on delivery
 75% of sales are on credit and are paid in the following month (30 days credit)
 Equipment lease is paid quarterly
 Rent is paid quarterly
 Rates are paid monthly
 For the Cash Flow Statement all the Overheads have been split across the 10 products

Est. 2013
3.7. Company’s Income Statement
The Crumbling Cookie Co, Income Statement for the year ending 31 December 2014
£
Sales 42,672
Cost of sales (note 1) 18,177
Gross Profit 24,495
Operating Expenses (note 2) 14,866
Operating Profit 9,629
Other Income -
Finance Income -
Finance Expenses 20
Profit Before Tax 9,609
Taxation (21%) 1,922
Profit for Shareholders 7,687
Dividend Paid -
Retained Profit 7,687
Notes:
Note 1 - Cost of sales
Opening stock -
+ purchases 18,177
- Closing stock -
18,177
Note 2 - Operating Expenses
Rent 600
Rates 150
Utilities (water, Gas, Electricity) 200
Delivery man 1,920
Staff Wages 3,196
Marketing Expenses 100
Motor Vehicle Expenses 500
Motor Vehicle Depreciation 100
Leased equipment 300
Management Accountant 1,500
Directors Salaries 6,300
14,866

Est. 2013
4. Motivational theories
“Management accounting is the practical science of value creation within
organisations in both the private and public sectors.” (CIMA, 2014)
According to Frank Hawkins (1987), the motivation is “what drives or induces a person to
behave in a particular fashion [...] the internal force which initiates, directs, sustains and
terminates all important activities. It influences the level of performance, the efficiency
achieved and the time spent on an activity.”
Motivation is a factor of a person’s performance as well as their ability to the job. A
motivated person can’t do the job if they don’t have the right skills, and also a skilled person
will not do a good job if they are not motivated.
According to Ahmed (2014), the difference between the financial accounting and the
management accounting is that the financial accounting is used for external stakeholders, in
order to get information about the company, whereas the management accounting is used
by managers to make decisions in running the company. Therefore, because each
department have a different view, it will need a different approach to motivate the
employees.
There are two different types of motivation theories: the Content Theories and the Process
Theories.
4.1. The Content Theories
The Content Theories are concerned with what is motivation and what motivates the
employees. The biggest writers that studied this are Maslow, Alderfer, Mayo, Herzberg and
McClelland.
According to Maslow (1954), the employees will act towards achieving a goal. Based on that,
he created a hierarchy of needs that will help a person to achieve its goal.
The assumptions of this theory are that
higher needs cannot be achieved before
the lower needs have been already met
and once a need has been satisfied it will
not be a motivational force anymore.

Est. 2013
Herzberg (1968) took Maslow system and develops it to a two-factor system. One factor is
called “hygiene factors” and the other is called “motivators”.
The hygiene factors are those factors that need constant attention in order to prevent
dissatisfaction. The factors include the wage, conditions of work, company policies, security,
etc. These factors are important to attract employees, but these factors don’t actively
motivate the employees, however if they are neglected it could lead to dissatisfaction.
The motivators’ factors are those factors that come from internal sources and the
opportunities created by the job to achieve self-fulfilment. The factors include
responsibility, growth, achievement and recognition. According to this theory an employee
can find the job meaningless and could react apathetically, even if the hygiene factors are
met.
4.2. The Process Theories
The Process Theories are about how actually the motivation takes place in a company. The
biggest writers that studied this are Vroom and Locke.
According to Vroom (1970) the individual motivation is in strong relation with the valence of
outcomes, the expectancy that all the hard work will lead to great performance and the
instrumentality of performance is producing valued outcomes.
Force (F) = Valence (V) x Instrumentality (I) x Expectancy (E)
The importance of this theory is that it is mainly focused on the individuality and the
variability of motivational forces, which is very different from the theories of Maslow and
Herzberg, which were too general.
According to Locke (1968) the motivation, which will lead to a better performance, can be
enchased by setting specific and difficult goals, where you can get feedback from.
It is very important that the goals are challenging, but also realistic to complete, to actually
motivate an employee. The goal must be explained and the expectations must be very
clearly understood in order to create a frame of reference for feedback.

Est. 2013
4.3. Budgetary Process
A budget is a quantitative plan of actions taking into consideration the stated objectives and
the available resources for the company to achieve those objectives.
When planning a budget a management accountant must to take into consideration:
 Planning
 Monitoring
 Control
 Communication and Co-ordination
 Motivation
 Performance evaluation
Based on the previous motivational theories the management accountant must create a
budgetary process suited to its company. A proper budgetary process will communicate
organization’s goals, allocate the resources, provide feedback and motivate the employees.
Following the Locke theory, the budget must be a realistic goal, if it’s rushed then an
unrealistic target could be set and the employees will become demotivated. (Shim, Siegel
and Shim, 2011)
The budgetary process will create goals and policies, describe the limits, enumerate the
resources needs, exemplify the requirements, provide flexibility and consider constrains. It
must consider the current status of the organization and the history of past budgets, in
order to have slight adjustments for the current environment, to be a correct forecast.
The budgets should be participative, therefore if the employees will be engaged in the
process, it will increase their motivation, especially for the operating level ones.
Communication is a very important factor in a budgetary process. If the budget is imposed,
instead of everyone taking part in it, it will have negative effects on the motivation. Also the
difficulty of the employee’s part in the process has a correlation with the loss of control due
to bad attitudes.
Following Vroom theory, if the performance of all employees that are taking part in the
process is good, then they must be rewarded with different bonuses or promotion, which
will meet the expectancy of the workers.

Est. 2013
5. Conclusion
Based on the research used to realise the report, a management accountant must take in
consideration many factors when planning a budget, including: market condition, demand,
costing, location, target customers, availability of resources and employees participation.
Motivation of the employees involved in the budgetary process is very important.
Therefore, the budgetary process should be participative, and the communication is another
vital factor for the success of it, which needs to horizontal and vertical.

Est. 2013
Reflection
Overall we believe that it has been an interesting and at the same time challenging group
work to establish a business report for a fictitious company. We successfully managed to
remember what we have learnt in class and applied it to the business report we were ask to
produce. This assignment has enabled us to come up with a potential business plan gaining
enough knowledge to create one again in case we decided to open a business and have to
present to banks or other financial institutions to support or plan. We also believe that it
gave us experience in the role of a management accountant.
One of the main challenges with any group work is assigning roles to the members of group
and ensuring that all group members are contributing equally. To overcome this we
identified the different strengths and weaknesses of each member and ensured continued
communication and meetings to keep motivation and momentum going. One of the
advantages of the group work we discovered is the different perspective on the work and
ideas. The challenging part of this work was to find out the prices of suppliers as well as
making some assumptions about the cost and revenue of the company.

Est. 2013
Appendices
1.
JR's All Stars Vanilla Biscuits Standard Recipe Cost Card
Standard Yield: 300 Biscuits
Quantity Unit Cost £ Unit Cost £ Unit
2.5 kg Flour 21.50 25kg 0.86 kg 2.15
1.85 kg Sugar 59.00 25kg 2.36 kg 4.37
1.25 kg Butter 120.00 25kg 4.80 kg 6.00
10 unit Egg 3.88 30 eggs 0.13 1 1.29
50 ml Vanilla Essence 7.19 50ml 0.14 ml 7.19
Total Ingredient Cost £21.00
Yield 300
Wastage per batch 3%
Adjusted Yield 290
Cost per biscuit £0.07
Biscuits per pack 5
Packaging 0.03
Cost per pack £0.38
Labour cost per pack £0.05
Cost per pack before Overheads £0.43
Overheads 0.23
Cost price 0.66
Sales price 0.85
Recipe Invoice RecipeIngredient Individual
Ingredient Cost £

Est. 2013
2.
JR's All Stars Vanilla Biscuit Daily Production
Hour Number of batches Biscuit Yield Pack Yield
1 1 290 58
2 2 580 116
3 2 580 116
4 2 580 116
5 1 290 58
6 2 580 116
7 2 580 116
8 1 290 58
Total 3770 754
Direct labour Hours
Hours Rate Total Cost
Cost per
Biscuit
Cost per
pack
8 £6.00 £48.00 £0.01 £0.05 Apprentice
Gross Profit per pack 0.19
Mark up 27.84%

Est. 2013
3.
8directlabourhourswill resultin3770biscuitsbeingproduced.
one dayaweek=fourdaysamonth
15080 biscuitsamonth=3016packs
ProductionSchedule
Month1 Biscuits packs
Direct
LabourHours Batches
Directmaterials
@£21/batch
Directlabour
@£6/hr
Overhead
absorption
@0.23/pack
Total
Costs
Sales@
£0.85/pack Profit
January 15,080 3,016 32 52 £1,092.00 £192.00 £693.68 £1,977.68 £2,563.60 £585.92 We are assumingsalesmatchproduction
February 15,080 3,016 32 52 £1,092.00 £192.00 £693.68 £1,977.68 £2,563.60 £585.92
March 18,850 3,770 40 65 £1,365.00 £240.00 £867.10 £2,472.10 £3,204.50 £732.40
April 22,000 4,400 46.68 76 £1,593.10 £280.11 £1,012.00 £2,885.21 £3,740.00 £854.79 Increasedproductiondue toSchool Holidays
May 20,000 4,000 42.44 69 £1,448.28 £254.64 £920.00 £2,622.92 £3,400.00 £777.08
June 20,000 4,000 42.44 69 £1,448.28 £254.64 £920.00 £2,622.92 £3,400.00 £777.08
July 23,000 4,600 48.81 79 £1,665.52 £292.84 £1,058.00 £3,016.36 £3,910.00 £893.64 Increasedproductiondue toSchool Holidays
August 30,000 6,000 63.66 103 £2,172.41 £381.96 £1,380.00 £3,934.38 £5,100.00 £1,165.62 Increasedproductiondue toSchool Holidays
September 22,000 4,400 46.68 76 £1,593.10 £280.11 £1,012.00 £2,885.21 £3,740.00 £854.79
October 20,000 4,000 42.44 69 £1,448.28 £254.64 £920.00 £2,622.92 £3,400.00 £777.08
November 20,000 4,000 42.44 69 £1,448.28 £254.64 £920.00 £2,622.92 £3,400.00 £777.08
December 25,000 5,000 53.05 86 £1,810.34 £318.30 £1,150.00 £3,278.65 £4,250.00 £971.35 Increasedproductiondue toschool holidaysandchristmas
Totals 251,010 50,202 532.65 790.00 18,176.59 3,195.88 11,546.46 £32,918.93 £50,202.00 £9,752.77
0.012732095
1batchof biscuitsyields290biscuitsandcost£21directmaterialsasperStandardRecipe Card
4.
Operational Costs/Overheads £
Rent 6,000.00
Rates 1,500.00
Utlities (water, Gas, Electricty) 2,000.00
Directors Salaries 63,000.00
Delivery man 19,200.00
Marketing Expenses 1,000.00
Motor Vehicle Expenses 5,000.00
Motor Vehicle Depreciation 1,000.00
Bank Charges 200.00
Leased equipment 3,000.00
Management Accountant 15,000.00
Total Overheads 116,900.00
/10 products 11,690.00
budgeted activity JR's All-Stars 50,202 packs of 5 biscuits
OAR 0.23

Est. 2013
5.
Budgeted Cashflow for Product: JR's Allstars Organic Vanilla Biscuits
January February March April May June July August SeptemberOctober NovemberDecemberYearly Total
Budgeted Sales £2,564 £2,564 £3,205 £3,740 £3,400 £3,400 £3,910 £5,100 £3,740 £3,400 £3,400 £4,250 £42,672
Cash Inflows
Cash Sales £641 £641 £801 £935 £850 £850 £978 £1,275 £935 £850 £850 £1,063 £10,668
Receipts from customers £0 £1,923 £1,923 £2,403 £2,805 £2,550 £2,550 £2,933 £3,825 £2,805 £2,550 £2,550 £28,816
Other receipts £0 £0
Total Inflows £641 £2,564 £2,724 £3,338 £3,655 £3,400 £3,528 £4,208 £4,760 £3,655 £3,400 £3,613 £39,484
Cash Outflows
Supplier Payments £0 £1,092 £1,092 £1,365 £1,593 £1,448 £1,448 £1,666 £2,172 £1,593 £1,448 £1,448 £16,366
Staff Wages £192 £192 £240 £280 £255 £255 £293 £382 £280 £255 £255 £318 £3,196
Delivery man wages £160 £160 £160 £160 £160 £160 £160 £160 £160 £160 £160 £160 £1,920
Rent £150 £150 £150 £150 £600
Rates £12.50 £12.50 £12.50 £12.50 £12.50 £12.50 £12.50 £12.50 £12.50 £12.50 £12.50 £12.50 £150
Utilities £12 £12 £14 £18 £18 £18 £18 £18 £18 £18 £18 £18 £200
Motor Vehicle Expenses £42 £42 £42 £42 £42 £42 £42 £42 £42 £42 £42 £42 £500
Marketing Expenses £30 £0 £0 £20 £0 £0 £30 £20 £0 £0 £0 £0 £100
Equipment Lease £75 £0 £0 £75 £0 £0 £75 £0 £0 £75 £0 £0 £300
Management Accountant Salary £125 £125 £125 £125 £125 £125 £125 £125 £125 £125 £125 £125 £1,500
Directors Salaries £525 £525 £525 £525 £525 £525 £525 £525 £525 £525 £525 £525 £6,300
Total Outflows £1,323 £2,160 £2,210 £2,772 £2,730 £2,585 £2,878 £2,950 £3,335 £2,955 £2,585 £2,649 £31,132
Net Cashflow (in-out) (682) £403 £514 £566 £925 £815 £649 £1,258 £1,425 £700 £815 £964 £8,352
BalanceB/fwd £0 (682) (279) 235 801 £1,726 £2,541 £3,190 £4,448 £5,873 £6,573 £7,388
Balance c/fwd (682) (279) 235 801 £1,726 £2,541 £3,190 £4,448 £5,873 £6,573 £7,388 £8,352
Assumptions:
25% of sales pay cash on delivery
75% of sales are paid the following month
all supplies are purchased on 30 days credit
Equipment Lease is paid quarterly
Rent is paid quarterly
Rates are paid monthly
For the Cashflow all overheads have been split across the 10 products
12 month forecast
6.
JR's All-stars Vanilla Cookies Absorption Costing Standard Cost Card
per pack of 5 biscuits
£ £
Sales Price 0.85
Direct Materials 0.38
Direct Labour 0.05
Fixed Production Overheads 0.23
Cost of Sales 0.66
Profit per unit 0.19

Est. 2013
7.
The Crumbling Cookie Co, Income Statement for the year ending 31 December 2014
£
Sales 42,672
Cost of sales (note 1) 18,177
Gross Profit 24,495
Operating Expenses (note 2) 14,866
Operating Profit 9,629
Other Income -
Finance Income -
Finance Expenses 20
Profit Before Tax 9,609
Taxation (21%) 1,922
Profit for Shareholders 7,687
Dividend Paid -
Retained Profit 7,687
Notes:
Note 1 - Cost of sales
Opening stock -
+ purchases 18,177
- Closing stock -
18,177
Note 2 - Operating Expenses
Rent 600
Rates 150
Utlities (water, Gas, Electricty) 200
Delivery man 1,920
Staff Wages 3,196
Marketing Expenses 100
Motor Vehicle Expenses 500
Motor Vehicle Depreciation 100
Leased equipment 300
Management Accountant 1,500
Directors Salaries 6,300
14,866

Est. 2013
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