a

NATIONAL ECONOMICS UNIVERSITY

BTEC HND IN BUSINESS
Assignment Cover Sheet

GROUP NUMBER 01
1, Pham Hai Linh (I3D – 3357)
2, Nguyen Thi Minh Chau (I4D - 4229)
NAME OF All STUDENTS 3, Do Duc Hoa (I4C - 3346)
4, Nguyen Dat Khue (I4C - 4074)
5, Bui Son Bach (I4C)

REGISTRATION NO
UNIT TITLE Unit 2: Managing Financial Resources and Decisions
ASSIGNMENT TITLE Group Assignment
ASSIGNMENT NO 2 of 3
NAME OF ASSESSOR HAFITAH MANSOR
SUBMISSION DEADLINE 14th December 2009

We, group 01 hereby confirm that this assignment is my own work and not
copied or plagiarized from any source. I have referenced the sources from which
information is obtained by me for this assignment.

________________________________
______________________ Signature of all members
Date

-----------------------------------------------------------------------------------------------------------

FOR OFFICIAL USE

1
ASSIGNMENT GRADE

Unit Outcomes
Evidence for Assessor’s Internal
Outcome the Feedback
decision Verification
criteria
Analyse
the
implication Describe the
s of information
needs of c
finance as different
resource decision makers
within a
business

Analyse
budgets and
Make make a
financial appropriate
decisions decisions
based on
the
financial Calculate unit
information costs and make
pricing
b
decisions using
(3) relevant
information

Explain the
Analyse purpose of the
a
main financial
and statements
evaluate
the
financial
Describe the
performanc differences
e of the between the
business formats of
b
financial
statements for
(4) different type of
businesses

2
 Evidence for Assessor’s Internal
Outcome the Feedback
decision Verification
criteria

Merit grades awarded M1 M2 M3

Distinction grades awarded D1 D2 D3

COMMON SKILLS & COMPETENCIES ASSESSED (indicated by X)

1. Managing own roles & responsibilities X 12. Use information sources

2. Manage own time in achieving objectives X 13. Deal with a combination of routine & non-routine tasks
3. Undertakes personal and career development 14. Identify & solve routine & non-routine problems X
4. Transfer skills gained to new/changing situations &
contexts

B. WORKING WITH & RELATING TO OTHERS E. APPLYING NUMERACY

5. Treat others beliefs and opinions with respect 15. Applying numerical skills and techniques X
6. Relate & interact effectively with individuals & groups X
7. Work effectively as a team member X F. APPLYING TECHNOLOGY

16. Use a range of technological equipment and systems

C. COMMUNICATING

8. Receive and respond to a variety of information X G. APPLYING DESIGN AND CREATIVITY

9. Present information in a variety of visual forms 17. Applying a range of skills and techniques to develop a
variety of ideas in the creation of new / modified products, X
10. Communicate in writing X services or situations

11. Participate in oral & no-verbal communication X 18. Use a range of thought processes X

3
 Task 1

Identify different decision makers in the company and describe the

information needs of the different decision makers

In the future, we will develop to a big company with 5 positions which are
considered as 5 decision maker. They are CEO, production manager,
marketing manager, finance manager and the human resources manager.

• CEO
A CEO or chief executive officer is one of the highest-ranking administrators in
charge of total management. The CEO’s responsibilities are almost everything
because they have the highest rank in the company and often make final
decision as well. There are three main duties of the CEO which require three
kinds of information in order to help the CEO give decision to run company
fluently. The first duty of the CEO is setting strategy and vision. The company can
only run well when its have clear vision and clever strategy. In the position of the
highest rank in company, CEO will need information about the markets which the
company will enter. The more understanding the company is, the better
advantages it will have again other competitors. The next information is about the
company’s competitors and what are their product lines. It is not enough for the
company to only understand the market. The company has to study evidently
about their competitors in order to know their advantages and disadvantages so
they will have the best strategy again their rival. The final and most important

4
information is to analyze and to know what the difference between their company
and the other is. At the end of the day, the CEO will decide, set budgets, form
partnerships and hire a team to steer the company accordingly. The second duty
of the CEO is creating the best working environmental in order to attract and
retain the employees. If the CEO wants to do that, the information needed here is
the expecting of the staffs and their reaction when they work in better
environment. The final duty is allocating capital. Capital is the basic requirement
to run the company so it is important for the CEO to allocate the capital
effectively. The information they need to do that is the information about the
project which CEO will allocate capital, will the project support company’s
strategy or not. At the end of the day, it is CEO decision that determines the
company’s financial fate.

• Production manager
A production manager is involved with the planning, coordination and control of
industrial processes. A production manager ensures that goods and services are
produced efficiently; that they are of the right quality, quantity, and cost; and that
they are produced on time, to the satisfaction of the customer, at the right price.
The scope of the job depends on the nature of the production system: jobbing
production, mass production, process production, or batch production. The
information a production manager need to know is about the production process,
the production schedule to ensure that the company can produce the product on
time. He also needs information about the material resources, the cost and the
quality of the products whether they satisfy customers’ needs or not.
Furthermore, the production manager will need information about health and
safety guidelines to ensure the quality of the product, he also needs information
about the subordinates’ skill to provide training class if necessary to help the
employees have their best performance and improve the quality of the products.

• Marketing manager
Marketing manager is the one who determine the demand for products and

5
services offered by a firm and its competitors and identify potential customers.
Develop pricing strategies with the goal of maximizing the firm's profits or share
of the market while ensuring the firm's customers are satisfied. Oversee product
development or monitor trends that indicate the need for new products and
services. The useful information which helps he to do that is the information
about the customers’ needs and wants. Understand exactly the requirement of
the customers is one of the best advantages of the company to earn long-term
profit. He also has to know the information of the product, the information of the
competitors and the information about the distributing channel so that he can
have the right strategy to help the company compete effectively again the other
rivals. If the company has its right strategy, they can develop gradually and have
revenue in order to exist in the market.

• Financial manager
Financial manager is the responsible for providing financial advice and support to
clients and colleagues to enable them to make sound business decisions.
Financial considerations are the basic requirement of all major business
decisions. Definite budgetary planning is necessary for future planning, both
short and long term, and company needs to know the financial implications of
any decision before proceeding. In order to make financial decision, the financial
manager has to know information about the source of finance which company
can use in the future. He will also has to update the information about the
company’s financial in order to manage the budget, monitor cash flow and predict
future trend. The information about the factors which influencing company’s
performance is also affects the manager’s decision.

• Human resources manager

The human resources manager is in charge of recruiting all the staffs in the
company. His job is managing and overseeing the personnel department within a
company, organization or agency. This includes posting advertisements or
approving advertisements for new employees, screening resumes and

6
applications, setting interview appointments and being involved in the hiring
process. The information which a human resources manager needs to know is all
the information about their staffs. Having a definite understanding about the
staffs, about their skills, their weakness and other information is the basic
requirement of the human resources manager. The manager also has to know
the information about safety, insurance and the government law about working
condition to make sure their company will not have any trouble with that problem
in the future. The human resources manager has to update the information about
the performance of the staffs, the staffs expecting in order to have immediate
change to improve the company’s performance.

7
 Task 2
Assuming your company has decided on either manufactoring or trading
company, choose your company product and calculate the unit cost and
make the relevant pricing decisions using relevant information.

• Description of our product

In average, a person spends more than 120000 hours of his/her life to sleep,
which means 8 hours/day for 50 years of living. We can easily recognize the
important of sleep to our life. No matter if you sleep for too long or too little time,
it will affect your performance for the next day. Any time a person mention about
sleeping, you can immediately think of a bed with many pillow and blanket.
Understand that behaviour, our company decided to choose pillow as our
product.

In present, global market has been available with many type of pillow, from neck
pillow to lumbar pillow; each one has their own characteristic. Some provide a
deep area for the head to rest, some are designed to support for the lower back
when you’re sitting. However, our company chose to produce the original pillow,
as known as the neck pillow. It’s the most common type of pillow in the world.
Our company commit to provide not only a comfortable pillow for customer’s
sleep but also a nice pillow with beautiful decoration:

8
Basically, our product is made from draper and cotton. In our opinion, cotton is
the most comfortable, because it offers the advantage of softness and ability to
conform to shapes designed by our designer. More than that, the draper that
cover cotton will be decorated with many types of flowers or cute animal, or it
even can be designed by the customers.

• Costs incur in our business

Normally, to make a pillow need three main ingredients, draper, cotton and
thread. The two ingredients that are the main cost are draper and cotton. In the
market, price for draper and cotton (purchase with large amount) is about
4000VND/m2 and 60000/kg. With that price, each product will cost 20000VND of
draper and 18000VND of cotton. To reduce the cost in produce pillow, in order to

9
take the advantage of price for our product, we decide to make contract with
some sewing company; with the cost for one product is 10000. Besides these
direct costs, producing pillow also cost the package for delivery. And the indirect
cost which is a small amount in the cost for one product is thread, package with
the cost of 116VND each.

Not only the manufacture contains cost, but also the shop. It is the cost that
suffers for sale pillows. We decided to hire two people as the sellers. Each of
them will be paid 1300000VND/month. The company made the decision to rent a
shop in Pham Ngoc Thach Street, with the rental price is 8million VND/month.
Having a shop which means it will cost the extra fee for electricity, water, security
and the fee for parking place. The total cost that we estimated for that is
1600000/month.

Last but not least is the salary for the one who keeping the business floating.
That’s salary for CEO, CPO, CFO, CMO, HR manager and the designer for the
product. All the cost will be illustrate in this sheet:

Cost
Draper 20,000VND/unit
Cotton 18,000VND/unit
Thread, package, decoration 10,116VND/unit
Labour 10,000VND/unit
Rental 8,000,000VND/month
Electricity, water, security, parking 1,600,000VND/month
Seller 1,300,000VND/seller
Total salary 18,800,000VND
Marketing cost 2,000,000VND
Depreciation for infrastructure 350,000VND/month
Total variable cost: 58,116
Total fixed cost: 33,350,000

• Profit margin for the product

The profit margin shows the relationship between profit and sales of a company.
It measures the amount of money in the sales that a company retains in earning.

10
Increase in sales do not guarantee for the increase in profit. Follow this profit
margin; we can know the profitability of each company in the same industry. The
higher profit margin is, the more profitability they are. Our company calculate the
profit margin base on all of the cost above and assume the sale for the first
month at 719 units with the selling price in the market is 104,500VND. For that,
our profit margin for the first month is 0.

Profit margin for 6 months

January February March April May June
0,0% 10,5% 12,1% 14,1% 17,1% 20,4%

Task 3
As requested by your uncle, prepare a six (6) month relevant budget and
make appropriate decisions. Comments on the decisions that you need to
make in order to make the business afloat.

• Budget
A budget is a useful tool for planning and controlling the finance of the company.
The budget consists of the forecast of the revenues and expenditures. Based on
that, the managers can set out a suitable plan; apply the strategy to control the
finance effectively. In addition, the actual performance of the company can be
compared. It provides the opportunity to review the performance and make
improvement. In any kind of business, budgeting is essential, especially for the
start-up business. A practical budget can help develop the business.
When start up the business, based on the capital that we have, we prepare the
budgets for the first six months of running business (the first half of 2010).
First of all, we prepare the sales budget which is the forecast of sales quantity for
each month and the first half of 2009. We assume that sales in January will be
break even. Quantity for sales increases 2%, 4%, 5%, 8%, and 10% respectively
in each month from February to June. From July, the quantity still remains 10%
increasing in sales:

11
 SALES BUDGET

The forecast of sales

1st half of
January February March April May June
2010
Units 719 733 763 801 865 951 4,832
Price

Quantity needed for sales (unit)

104,500 104,500 104,500 104,500 104,500 104,500 627,000
(VND)
Revenue
(VND)
75,135,500 76,638,210
1.000 83,688,925 90,384,039 99,422,443 504,972,856
79,703,738

900
800
700
600
500
400
300
200of sales for six month.
Chart1. The forecast
100
(To know how to calculate, see Appendix 3.1)
0
Secondly, the production budget is created in order to estimate the quantity

ay
y

ch

il
needed for production meeting the sales forecast. It also consists of the opening
ry

r
ar

Ap
ua

ar

M
nu

inventory and the closing inventory. Assuming that the opening inventory of
M
br
Ja

January is zero and the desired ending inventory equals to 10% of the following
Fe

month’s sales.

Month
PRODUCTION BUDGET
1st half of
January February March April May June
2010
Quantity needed
719 733 763 801 865 951 4,832
for sales
Opening stock 0 73 76 80 86 95 411

Closing stock 73 76 80 86 95 105 516

12
 Production
792 736 767 807 874 961 4,937
units
(To know how to calculate, see Appendix 3.2)

Hereafter are the budgets for direct material needed for production. In order to
produce one unit of pillow, 1metre draper and 300gram soft cotton are needed.
The cost of material is listed as the table below. We also assume that the
opening stock of January is zero and the closing stock equals to 10% of the
following month’s quantity material needed for production.

DIRECT MATERIAL BUDGET FOR DRAPER (m)

1st half of
January February March April May June
2009
Quantity needed
792 736 767 807 874 961 4,937
for production
Opening stock 0 73 77 81 87 96 414

Closing stock 73 77 81 87 96 106 520

Purchase
866 740 771 814 882 971 5,043
quantity
Cost/m (VND) 20,000 20,000 20,000 20,000 20,000 20,000 120,000

Purchase (VND) 17,313,520 14,792,568 15,412,034 16,277,776 17,646,078 19,410,686 100,852,662

(To know how to calculate, see Appendix 3.3)

DIRECT MATERIAL BUDGET FOR COTTON (kg)

1st half of
January February March April May June
2010
Quantity needed
238 221 230 242 262 288 1,481
for production
Opening stock 0 22 23 24 26 29 124

Closing stock 22 23 24 26 29 32 156

Purchase
260 222 231 244 265 291 1,513
quantity
Cost
60,000 60,000 60,000 60,000 60,000 60,000 360,000
per/kg(VND)
Purchase (VND) 15,587,448 13,308,031 13,870,830 14,649,999 15,881,470 17,469,617 90,767,396

(To know how to calculate, see Appendix 3.4)

13
 The wages for direct labor is under the direct labor budget. The budget is
expressed in term of rate per unit. A labor will receive the wage based on the
finished products. When the labor produces one unit of pillow, they will get the
wage of 10,000 VND.

DIRECT LABOUR BUDGET

1st half of
January February March April May June
2010
Quantity needed
792 736 767 807 874 961 4,937
for production
Rate/unit (VND) 10,000 10,000 10,000 10,000 10,000 10,000 60,000

Total (VND) 7,923,380 7,363,135 7,665,288 8,072,578 8,735,682 9,609,250 49,369,313

(To know how to calculate, see Appendix 3.5)

Variable overhead budget covers the variable overhead cost. In our business,
they are needle, thread and package used to make the finished pillow.

VARIABLE OVERHEAD BUDGET

1st half
January February March April May June
of 2010
Needle, thread and package
116 116 116 116 116 116 696
cost per unit
Total units 792 736 767 807 874 961 4.937
TOTAL VARIABLE
91.911 85.412 88.917 93.642 101.334 111.467 572.684
OVERHEAD COSTS
(To know how to calculate, see Appendix 3.6)
Fixed overhead budget covers the production overhead, administration overhead
and selling overhead costs. They are the fixed cost that our company has to pay
every month.

14
 FIXED OVERHEAD BUDGET

1st half of
1st 2nd 3rd 4th 5th 6th
2010
Production
overheads

Indirect wages
Store staff 2.600.000 2.600.000 2.600.000 2.600.000 2.600.000 2.600.000 15.600.000

Security and parking 600.000 600.000 600.000 600.000 600.000 600.000 3.600.000

Total indirect
3.200.000 3.200.000 3.200.000 3.200.000 3.200.000 3.200.000 19.200.000
wages

Indirect expenses
Renting a store 8.000.000 8.000.000 8.000.000 8.000.000 8.000.000 8.000.000 48.000.000

Utility 1.000.000 1.000.000 1.000.000 1.000.000 1.000.000 1.000.000 6.000.000

Total indirect
9.000.000 9.000.000 9.000.000 9.000.000 9.000.000 9.000.000 54.000.000
expenses

Total production 12.200.000 12.200.000 12.200.000 12.200.000 12.200.000 12.200.000 73.200.000

overheads

Administration
overheads
Office salary 18.800.000 18.800.000 18.800.000 18.800.000 18.800.000 18.800.000 112.800.000

Depreciation for
350.000 350.000 350.000 350.000 350.000 350.000 2.100.000
infrastructure
Total
adminstration 19.150.000 19.150.000 19.150.000 19.150.000 19.150.000 19.150.000 114.900.000
overhead

SELLING

15
 OVERHEADS

MKT and
2.000.000 2.000.000 2.000.000 2.000.000 2.000.000 2.000.000 12.000.000
Advertising
Total selling
2.000.000 2.000.000 2.000.000 2.000.000 2.000.000 2.000.000 12.000.000
overheads

TOTAL FIXED
33.350.000 33.350.000 33.350.000 33.350.000 33.350.000 33.350.000 200.100.000
OVERHEAD
COSTS
(To know how to calculate, see Appendix 3.7)

Finally, we prepare the income statement budget which is the summary of the
revenues, expenses of the company each month, and how much net profit we
get. In detail, we assume that sales for January will be breakeven, then the net
profit equals to zero.

INCOME STATEMENT BUDGET

1st half of
1st 2nd 3rd 4th 5th 6th
2010
Sales 75.135.500 76.638.210 79.703.738 83.688.925 90.384.039 99.422.443 504.972.856
Less cost of
sales
Direct material 27.322.000 20.534.640 21.356.026 22.423.827 24.217.733 26.639.506 142.493.732

Direct labour 7.190.000 7.333.800 7.627.152 8.008.510 8.649.190 9.514.109 48.322.761

Variable
7.273.500 7.407.138 7.703.424 8.088.595 8.735.682 9.609.250 48.817.589
overhead cost
Contribution
33.350.000 41.362.632 43.017.137 45.167.994 48.781.434 53.659.577 265.338.774
margin
Less Fixed
overhead cost
Production
12.200.000 12.200.000 12.200.000 12.200.000 12.200.000 12.200.000 73.200.000
overheads
Administration
19.150.000 19.150.000 19.150.000 19.150.000 19.150.000 19.150.000 114.900.000
overheafds
Selling
2.000.000 2.000.000 2.000.000 2.000.000 2.000.000 2.000.000 12.000.000
overhead
Net profit 0 8.012.632 9.667.137 11.817.994 15.431.434 20.309.577 65.238.774

(To know how to calculate, see Appendix 3.8)

The six budgets above are created based on the company’s capacity and the
real situation. They are “the important source of information” that we can use to

16
make appropriate decisions about financing and measure the achievement of the
company’s objectives. (Managing Financial Resources and Decisions course
book, p171)

• Comment
In order to make the business afloat, we should take into account about
budgeting because it is the useful way for planning and controlling. Planning
helps create objectives and decide what to do in advance. Based on what was
planned, controlling evaluates the current situation and the actual performance
against the plan. It helps make suitable decisions about implementing plans more
effectively.

More detail, for planning, first of all, we know that how many hand-made pillows
we want to sell in order to break even in the first month. Moreover, we can set up
appropriate strategies for next months in order to make profit which increase
month by month. For example, quantity needed for sales in the second month
needs to increase 2% compare to the first month and so on. Then, we can start
making profit from the second month. Secondly, we can absolutely evaluate the
performance by comparing the actual sale to master budget. Then, the CFO can
manage cash flow effectively and makes decision whether needs to seek other
source of finance or not. Another advantage of budget is that it concerns about
the cost. In other words, we can manage the cost if it is too high. For example,
we try to find another material to substitute draper and soft cotton if the price of
material increases too much, or we can consider about other cheaper options
rather than investing in new items. In addition, we’re able to make a long term
plan for handmade pillow production in 3-5 years, and expand the business. For
example, releases more kind of pillow and potential to export to other countries in
the Southeast Asia. Last but not least, we can do better and better by using
suitable marketing policy. Keep in mind that marketing not only increase quantity
for sale at the moment but also give a chance for company continues developing
in future.

17
In conclusion, budgeting is important to do business. It is the tool to plan and
control the performance of the company. If the company can follow the plan, and
control the performance to achieve plan, we can assure that the business will
afloat. However, preparing budgets must be based on the reality. Plan must be
practical and suitable with the capacity of the company.

Task 4

Explain the purpose of the main financial statements and describe the
differences between the formats of financial statements for different types
of businesses.

There are three main financial statements which are commonly called these
“accounts”: a balance sheet, a profit and loss account, and a cash flow
statement. These statements are built for different purposes based on various
types of businesses.

• Balance sheet
A balance sheet is a statement which shows out the assets , liabilities, capital or
shareholders’ equity of a business at a specific moment in time.

Balance sheet generally gives informations about the finance structure of a

company. One of the main aims of its description is consistency between one
accounting period and the next. Moreover, it helps the company to predict the
funds which would be used in the future. It could also reflect the capacity of the
company to raise more capital.

Balance sheets are nearly always presented in the format shown below, however
because of various types of business there can be some differences in

18
presentation of each balance sheet. The top half of balance sheet which
represents the net assets of the company will be alike for all the types of
business. However, the bottom half which represents the owner(s) stake in the
business is different based on which kind of business belongs to.
For a sole trader, the profits (or losses) are often transferred to the capital which
belongs to only one person, so it is simply shown in balance sheet a line as
below:
Capital 30,000

For a partnership, stakes of each partners will be presented by capital accounts

based on their long-term investment or profit shares, salaries, interest on capital
accounts, etc. In case the company is a partnership, the capital might be
represented as follow:

Partnerships’ capital £
Capital accounts - Fred 2,000
- Sue 3,000
- Billy 4,000
Capital accounts 3,500
- Fred
1,850
- Sue
650
- Billy
15,000
(Source:Managing Financial Resources and Decisions Course book, pg. 100)

For a limited company, part of the net assets of the company is similar to the
two partnerships and sole traders. However, the capital in a limited company’s
balance sheet is quite different. The owners are also shareholders, whose initial
stake is shown as stockholders’ equity and profit earned shown as a balance on
the income statement, as the table below.

Example of balance sheet format

Example Company
Balance Sheet
December 31, 2008

19
ASSETS LIABILITIES
Current Assets Current Liabilities
Cash $ 2,100 Notes Payable $ 5,000
Petty Cash 100 Account Payable 35,900
Temporary Investments 10,000 Wages Payable 8,500
Accounts Receivable-net 40,500 Interest Payable 2,900
Inventory 31,000 Taxes Payable 6,100
Supplies 3,800 Warranty Liability 1,100
Prepaid Insurance 1,500 Unearned Revenues 1,500
Total Current Assets 89,000 Total Current Liabilities 61,000

Investments 36,000 Long-term Liabilities

Notes Payable 20,000
Property, Plant & Equipment Bonds Payable 400,000
Land 5,500 Total Long-term Liabilities 420,000
Land Improvements 6,500
Buildings 180,000
Equipment 201,000 Total Liabilities 481,000
Less: Accum Depreciation (56,000)
Prop, Plant & Equip – net 337,000

Intangible Assets STOCKHOLDERS’ EQUITY

Goodwill 105,000 Common Stock 110,000
Trade Names 200,000 Retained Earnings 229,000
Total Intangible Assets 305,000 Less: Treasury Stock (50,000)
Total Stockholders’ Equity 289,000
Other Assets 3,000

Total Assets $770,000 Total Liabilities & Stockholders’ Equity $770,000

(Source:http://www.accountingcoach.com/online-accounting-course/05Xpg04.html)

• Profit and loss account ( or income statement)

A profit and loss account is a record of business’s revenues and expenses over a
given period of time, such as a year, quarter, month, etc.

A profit and loss account includes an estimate of the company’s sales, cost,
increase or loss in intangible value, taxes, outstanding shares, and how the
resulting net profit is divided up to shareholders. The main purpose of a profit and
loss account is to figure out management whether the company made or lost
money during the given period. Besides that, investors may base on these
statement to make decisions.

About differences between the format of income statement for various types of
businesses, it is said that the non-incorporated businesses (partnerships and

20
sole traders) can present the statement as they want while the limited
companies have to use particular wordings and layouts according to their
activities. In a P&L of partnerships or sole traders will not appear corporation
tax and dividends. Partnerships and sole traders do not have to pay corporation
tax. They only have to pay their personal income tax on their share of the profits,
which is no need to be written on the business statements. They do not have to
pay dividends also because dividends are paid for shareholders, but there are no
shareholders in partnerships or sole traders. The table below is an example of
income statement:

Company A
Income statement
January 1, 20X6 to December 31, 20X6

Income
Gross Sales 346,400
Less returns and allowances 1,000
Net sales 345,400

Cost of Goods
Merchandise Inventory, January 1 160,000
Purchases 90,000
Freight Charges 2,000
Total Merchandise Handled 252,000

Less Inventory, December 31 100,000

Cost of Goods Sold 152,000
Gross Profit 193,400
Interest Income 500
Total Income 193,900
Expenses
Salaries 68,250
Utilities 5,800
Rent 23,000
Office Supplies 2,250
Insurance 3,900
Advertising 8,650
Telephone 2,700
Travel and Entertainment 2,550
Dues & Subsriptions 1,100
Interest Paid 2,140
Repairs & Maintenance 1,250
Taxes & Licenses 11,700
Total Expenses 133,290

Net income $60,110

(http://www.smallbusinessnotes.com/operating/finmgmt/financialstmts/incomeexample.ht

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ml)

• Cash flow statement

A cash flow statement provides information on the change in a business’s cash
activities such as its operating, investing and financing activities and tantamount
cash during the same period of time as income statement.

The purposes of cash flow statement include:

- to assess the company’s ability to generate positive cash flows in the future
- to assess its ability to meet its obligations to service loans, pay dividends etc
- to assess the reasons for differences between reported and related cash flows
- to assess the effect on its finances of major transactions in the year.
(http://www.fao.org)

With cash flow statement, there is not much differences in format between the
various types of company. For the partnerships or soletraders, some items such
as equity dividends paid or increase in stocks etc will not appear in cash flow
statement.

APPENDIX
In this section, we will make it clear about the calculation how we get those
results above. The calculation is the same for all 6 months so we only give
instruction for the first month of 2009.

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3.1_SALE BUDGET

Total revenue= Quantity for sale (unit) × Price/unit (VND)

= 719 × 104,500 = 75,135,500

3.2_PRODUCTION BUDGET

Production unit= Quantity needed for sales+ closing stock – opening stock
Closing stock= 10% of quantity for sale in February and considered opening of
February
So production unit = 719+733 × 10% = 792 (units)

3.3_DIRECT MATERIAL BUDGET : DRAPER (m)

Purchase quantity = Quantity needed for production + closing stock – opening

stock
Assuming that closing stock is still 10% of quantity in February
So purchase quantity = 792+736 × 10%= 865 (m)
Purchase (VND) = Purchase quantity (m)* cost/m (VND)
= 865* 20,000 = 17,300,000 (VND)

3.4_DIRECT MATERIAL BUDGET: SOFT COTTON (kg)

Purchase quantity = Quantity needed for production +closing stock – opening

stock
= 238+ 221*10% = 260
Purchase (VND) = Purchase quantity (kg)* cost/kg (VND)
= 260*60,000 = 15,600,000 (VND)

3.5_DIRECT LABOUR BUDGET

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Total = Quantity needed for production * Rate/unit (VND)
=792*10,000=7,920,000 (VND)

3.6_VARIABLE OVERHEAD BUDGET

Total variable overhead cost= cost/unit* total unit =116*792=91,872 (VND)

3.7_FIX OVERHEAD BUDGET

Total fix overhead cost = Total production overhead + Total administration + Total
selling overhead
= 12,200,000+19,150,000+2,000,000
= 33,350,000 (VND)

3.8_INCOME STATEMENT BUDGET

Net profit = (Sale-cost of goods sold)-fixed overhead cost

= Contribution margin – fixed overhead cost
In January: Net profit = 33,350,000-33,350,000=0
Net profit in January = 0 because we assume that quantity for sale in Jan will be
break even.

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FOR OFFICIAL USE

Comments By Assessor

Common Skills Grade

A B C D E F G

Assignment
( ) Well-structured
Reference is done properly / should be done (if any)

Overall, you’ve

Areas for improvement:

ASSESSOR SIGNATURE DATE / /

NAME:.........................................................................................

(Oral feedback was also provided)

STUDENT SIGNATURE DATE / /

NAME :........................................................................................

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FOR INTERNAL USE ONLY

VERIFIED YES NO

DATE : ...........................................................
VERIFIED BY : ...........................................................
NAME : ...........................................................

26
27
 Peer review form

UNIT: ………………………………………

Group number:

Please complete peer review form per group

Mark each group members’ contribution and effort towards the group work out of
10 points

5 points = equal contribution

0 – 4 points = less than equal contribution
6 – 10 points = above equal contribution

Do not allocate marks for yourself

Group Members
(List in alphabetical order) Points

Return completed forms to the teachers before the presentation time.

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 MEETING MINUTES
PROJECT
Version #: 1.0 Issue Date: Error! Style not defined.

Minutes of Meeting
Customer:
Project:
Location: Date: Time:
Purpose:
Attendees:

CC:

Review of Previous Action Items (from second meeting onward)

Action Item(s) Who When

Discussion

Action Item(s) Who When

Next meeting
The next meeting will be (date) at (time) at (location), room (room number or “to
be determined”).

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