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



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.



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.



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)



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



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.



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



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:

The Crumbling Cookie Co.

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



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



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:



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



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



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.



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.



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.



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.



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.



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 £



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%



3.

8 direct labour hours will result in 3770 biscuits being produced.

one day a week = four days a month

15080 biscuits a month = 3016 packs

Production Schedule

Month 1 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 We are assuming sales match production

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 Increased production due to School 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 Increased production due to School 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 Increased production due to School 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 Increased production due to school holidays and christmas

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

1 batch of biscuits yields 290 biscuits and cost £21 direct materials as per Standard Recipe Card

4.

The Crumbling Cookie Co.

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



5.

Budgeted Cashflow for Product: JR's Allstars Organic Vanilla Biscuits

January February March April May June July August SeptemberOctober NovemberDecember 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 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



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



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