Project #69591 - Management Accounting

The requirements and case study will be in the attachment.

The work needs a 1250 words report and a buget in excel format.

Here is the case study Case Study Brief: Party Limited Instructions The business development proposal for the Party Limited. You have been employed by Party Limited, as a Consultant/manager, your immediate task was to determine how much financing the business would need in its first six months of operations and to devise a plan of action that will solve their financial problems. Prepare a 1250 word report for the board of directors of Party Limited that analyses the problems faced by the business and which sets out a plan of action for dealing with the financing problems referred to in the case study. The owners are two young entrepreneurs who have just started their own new business in the party planning and catering service. They will cater for all types of events across the Edinburgh area from small, intimate gatherings to large regional events. They want to be established as a luxury caterer and then position itself as one of the leading party planning and catering company in Scotland, delivering exceptional catering for multiple events in the next couple of years. The company wants to achieve brand recognition at the top end of the market and offer its clients an amazing culinary and service experience. Because of this they have hired sales person Andrew Hamer, who was previously executive chef at Gleneagles, to help in propelling the company to that level of success. Andrew will be doing the actual selling, and the owners will be handling the various other business tasks themselves. Their immediate task was to determine how much financing the business would need in its first six months of operations. Since the business had just been formed, there were no historical sales records on which to base sales forecasts for the upcoming year; therefore, party Ltd had to thoroughly research the market which they intended to enter. As a result of their extensive research (which included interviews with many knowledgeable people in the party planning and catering field as well as perusal of some published data), Party Ltd came up with the following sales forecasts for the next six months. Party Ltd. intends to begin trading on 1st July next year as a party planning and catering service. They have initial investment in inventory and start-up costs of £10,000, all of which will have been received by 1st July. In addition, the company has negotiated a bank loan of £10,000 from the 1st July. Sales and Inventory Forecast The company's budget plans include the following: a) The company expects a steady but rapid expansion. The forecast for sales and purchase of food is as follows: Sales Food Purchases £ £ July 40,000 16,000 August 60,000 24,000 September 80,000 32,000 October 100,000 40,000 November 120,000 48,000 December 140,000 56,000 b) 60% of the sales are in cash. The remaining 40% are on credit and debtors are expected to pay in the following month. c) The company has arranged one month's credit from its suppliers. Capital Expenditures d) Equipment costing £40,000 will be purchased on 1st July, and will have to be paid for by the end of the month. Depreciation of Equipment is calculated at the rate of 10% per annum on cost. e) Office furniture costing £9,000 will be bought in July and paid for in August. The same depreciation rate is used for furniture as for equipment. f) Expenditure on the purchase of new premises is planned to take place in November and will be at £145,000. Operating Expenses g) Wages are expected to be £3,000 per month for the first four months and then double for the last two months, and will be paid in the month in which they are incurred. h) A sales person who will be paid a base salary of £50 a week plus a five per cent commission on total sales. Commissions were paid in the month following the month of sale. i) Premises rent amounts to £48,000 per annum and will be paid in monthly instalments at the start of each month. j) Other expenses incurred in the running of the business (excluding food purchases and depreciation) are estimated at £20,000 per month and will be paid one month in arrears. Financial Commitments k) Interest on the bank loan is 20% per annum and will be charged to the company's bank account at the end of each quarter (starting in September). Equity Reductions l) The owners of the business have chosen to take only £5,000 a month starting from August in personal drawings and to keep the remaining cash in the business. Required: 1. Using Microsoft Excel prepare a Cash budget Forecast for Party Ltd. for the six months from July to December for next year. 2. Identify and comment on those areas of the cash budget that you wish to draw to the attention of the Directors of Party Ltd. 3. Explain the benefits from preparing a cash budget forecast and suggest how a cash forecast might be kept up to date, including the advantages of using a spreadsheet when preparing a cash budget. 4. Based on the information you have produced from the entire above task; develop an action plan that has been designed to solve the issues that you have discovered. It is recommended that you complete this plan of action in bullet point format. 5. The budgeted food output for the first six months was 11000 batches but as shown in the table below the company actually produced 10500 batches. The actual data have now been collected and listed under the actual Colum. Complete the data for the Budget Colum from your cash budget and using Microsoft Excel, create a flexible budget and work out the gross profit and variances (favourable/adverse). This should be included in the appendix. Comment on why the variances you have identified have arisen. Total Budget for Party Ltd based on the first six months Budget for first six months based on 11000 batches £000 Actual for first six months based on 10500 batches £000 Flexed budget based 10500 £000 Variance(F/A) £000 Cash Sales 470 Material Cost 165 Gross Profit Instructions To Students For Submission Of This Coursework Be submitted to SHIP, with the name of your seminar tutor on the submission sheet The final report should be 1250 words (+ or - 10%) excluding appendices, and be in a report format. Make sure you include the word count. Be brief and to the point, without neglecting to explain important points as per the marking grid. Appendices should contain; • A financial model (spreadsheet). The model should be designed to cover July to December and any other calculations within the appendix. • Spreadsheets should be printed in normal view and in formula view with your name and page numbers on each view. Formula views should include the row and column headings and the gridlines. Contain a complete reference list for all the sources used within the portfolio Presentation is key and your work needs to be fully referenced Please remember that if you cannot submit your report by the deadline stated within ‘Assessment Diary’ then you need to speak to either Helen Tompkin or Anne Henshaw as soon as possible. Alternatively speak to a member of staff at SHIP.

Subject Business
Due By (Pacific Time) 05/04/2015 03:00 pm
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