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ACT 202 Final Report
ACT 202 Final Report
2014
Final Assignment
Submitted to: Rakibul Hasan (RKB)
Course: ACT 202
Section: 14
Letter of Transmittal:
10
th
January 2014
Dear Sir,
Here is the report you asked us to prepare a report highlighting on “A Master
Budget for
Manufacturing Product”. At the same time, it is a great pleasure for us to submit
this
report paper.
We are delighted to inform you that we have thoroughly enjoyed working through this
term paper. It has enabled us to gain priceless knowledge and experience and has
also
helped us in overcoming difficulties that would assist us in our knowledge
advancement.
.
Sincerely yours,
Naseeful Islam Dastagir 1220350030
Tanvir Ahmed Niloy 1231071630
Mehruk Hasan 1231137030
Saif Rahman 1230756630
Masrufar Ahmed 1231181630
Executive Summary
The project “A Master Budget for Manufacturing a product “ includes the Master
Budget
for the year of 2014 for a Pharmaceutical company situated at at Shahid Tajuddin
Ahmed Sarani, Gazipur, Dhaka, Bangladesh.
Master Budget consists of a number of separate but independent budgets that
formally lay
out the company’s sales, production and financial goals. The master budget
culminates
the cash budget, a budgeted income statement and a budgeted balance sheet.
The objective of learning managerial accounting is to analyze the performance, plan
for
financial decisions in future, for managing and running the organization smoothly.
The
inside users are the only users of managerial accounting.
The given project includes the master budget for Pharmaceutical Company owned by
Mr.
Naseef Dastagir and run by himself. It was established in the year 1999. It
provides
people globally with high quality health care products at affordable prices in
order to
improve access to medicine and to provide employees an enabling environment that
facilitates realization of their full potential.
Contents
Overview of our
product: ..........................................................................
................. 1
Master
Budget: ...........................................................................
................................ 2
Sales
Budget ............................................................................
................................ 2
Direct Materials
Budget: ...........................................................................
............. 3
Manufacturing
Overhead: .........................................................................
............. 4
Selling and Admin
expense: ..........................................................................
.......... 5
Cash
budget: ...........................................................................
................................ 6
Budgeted Income
statement .........................................................................
........... 7
Budgeted Balance
Sheet: ............................................................................
............ 8
Costing
Method ............................................................................
.............................. 9
Costs .............................................................................
............................................10
Variable
cost: .............................................................................
...........................10
Fixed
cost: .............................................................................
................................10
Direct
cost: .............................................................................
...............................10
Indirect
cost: .............................................................................
.............................10
Conclusion ........................................................................
.......................................11
References ........................................................................
........................................12
Master Budget:
Sales Budget
The sales budget is the begining of the master budget. The sales budget is
constructed by multiplying
budgeted unit sales by the selling price. A schedule of expected cash collections
is prepared after the sales
budget. The sales budget is stated below:
The Sales Budget
50%
Percentage of Sales
collected in the
following month of
Sales
50%
Q1 Q2 Q3 Year End
Account Receivable
0
Sales In Q1
33,000 33,000
Sales in Q2
33,000 33,000
Sales in Q3
33,000
Total Cash
Collection
33,000 66,000 66,000 165,000
Percentage of
Purchase paid In
the current
month.
90%
Percentage of
Purchase paid In
the following
month.
10%
Purchase in Q2
47,520 5,280
Purchase in Q3
47,520
Total Sales
47,520 52,800 52,800 153,120
Manufacturing Overhead:
The MOH budget lists all costs of production other than direct materials and direct
labor. It
contains all the indirect costs. The MOH budget for the shop is below:
Manufacturing Overhead Budget
Cash budget:
The cash budget is the combination of all the budget schedules prepared in this
master budget.
The cash inflow were enough to meet up the business’s liabilties so there were no
need of
external borrowing of cash in this period.
The Cash Budget
Excess(Deficiency)
of cash available over
disbursement
80,180 58,355 14,293 152,828
Sales
198,000
Gross Margin
39,600
Net Profit
6,300
Assets
Current Assets
Cash on Hand
8,000
Accounts Receivable
Combustor
75,000
Furniture
2,700
Other Equipments
10,000
Factory
65,000
Total Assets
160,700
Liabilities
Accounts Payable
12,000
12,000
Owners Equity
Retained Earnings
148,700
148,700
160,700
Costing Method
Job order costing system will be used in Glipta Pharmaceuticals Company Limited.
This is
because many different products are produced each period.
Our company produces many different types of medicines during a month. A particular
order
might consist of 550 box of Antacid. This order is called a batch or job. In a job
order costing
system, costs are traced and allocated to jobs and then costs of the jobs are
divided by the
number of units in the job to arrive at an average cost per unit.
The record keeping and cost assignment problems are more complex when a company
sells
many different products than when it has only a single product. Since products are
different, the
costs are typically different. Consequently, cost records must be maintained for
each distinct
product or job.
Costs
Variable cost: Estimated production per box is 550 every quarter, which is 1650 at
the year
end and variable cost per box is 7. So the total variable cost is 11,550 at the
year end.
Fixed cost: Fixed cost for the year end consists of the followings-
Ad cost-2400, salaries-10,800, sales commission-3600, depreciation cost-687
The total amount for fixed cost is: 17,487
Direct cost: Direct cost consist of salaries-10,800 and sales commission-3600
The total fixed cost is: 14,400
Indirect cost: Indirect cost consists of the costs included in Manufacturing
Overhead.
Total indirect cost is: 40,800
Conclusion
At first we didnot expect we could do this project on pharmaceuticals but after our
long and hard
work on the financial aspects of the industry and the master budget we came up with
at the end
was very interesting and a diffrent practical experience for us. The financial
condition of the
company is well enough, so the we might consider to expand business by investing
more and
increasing its advertisement to raise its sales. As per our research we can say
that our business is
going to do pretty good in the future years.
References
The data were collected by asking some of the basic questions to the experts in the
industry. They
cooperated and provided us with the data as a daily basis. The calculations were
done on the basis
of the approximated figures taken from different sources and budgets of the
future months were based
on what we predicted and from the past records.