Accounting and Finance

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ACC4A8BudgetingCourseworkGuidance1.doc

ACC4A8 BUDGETING COURSEWORK – FURTHER GUIDANCE

· Select your business entity that will produce a product that uses two types of materials and labour (Research this and include in Business Plan element).

All FIVE group members must be assigned a specified portion of work on budget preparation in which they are involved and they are accountable for

· Prepare a detailed Contribution Statement - make realistic assumptions about Pricing & Variable Costs and itemise them (Research for Plan)

· Specify your Capital Expenditure (Fixed Assets) needs, their cost, source (from where they will be bought), their useful lives, depreciation. (Capex)

· Consider your projected Sales volume & growth rate (e.g. any seasonality) for the whole year (Table of Assumptions)

· Plan Payment terms for customer receipts & to your suppliers purchases (Assumptions)

· Decide on the Opening & Closing Inventory required to maintain your sales volume (Assumptions)

· Calculate & display details of the Break-Even Point & Margin of Safety, etc (Spreadsheet)

· Prepare a Production Budget and a Purchases Budget, allowing for your Inventory requirements (Spreadsheets)

· Consider ALL of the likely Overhead costs & itemise them (Spreadsheet)

· Prepare a monthly & annual totalled Cash Budget incorporating all of the above relevant items (Spreadsheet)

· Prepare an Income Statement for the year (Spreadsheet)

· Prepare a Balance Sheet as at the year end, reconciling the closing cash balance, the opening & closing inventory, closing debtors/creditors and your projected profit or loss (Spreadsheet)

· BE REALISTIC and TRANSPARENT throughout

· BE PREPARED to SUBSTANTIATE ANY/ALL FIGURES

· TEAMWORK - QUESTIONS MAY ARISE FOR ANY PARTICIPANT