[Type here]
Qualification Module number and title
Cardiff Metropolitan University Level 4 and 5
SRI 4154 – Accounting & Costing
Higher Diploma in Business Management
Student name Assessor name
KD/HDBM/CMU/63/06
Ms. Harshani Chathurika
Manoharan Sathyapriya
Date issued Completion date Submitted on
26/08/2021 30/09/2021
Assessment type Duration/Length of Weighting of Approximate Date of
Submission
Individual Assessment Assessment
Assignment End of Semester
1500 words 50%
Learner declaration
I certify that the work submitted for this assignment is my own and research sources are fully
acknowledged.
Student signature: Sathyapriya Date: 2021/09/30
Marks awarded
First assessor
Second assessor
Agreed grade
IV Signature Date
pg. 1
[Type here]
First assessor feedback
Assessors name & Date
signature
Second assessor feedback
Assessors name & Date
signature
Task 01
pg. 2
[Type here]
Sigma PVT ltd
1. as at 21st of May
Income statement (Marginal costing)
Rs.
Sales [8.50* 11600] 98 600
(-) cost of sales opening inventory
production
Direct material cost (12 000*2.40) 28 800
Direct labor (12 000*1.30) 15 600
Total marginal cost 44 400
(-) Closing inventory (3.70*400) (1 480)
42 920
Fixed production ( 2.90*12000) 34 800 (77 720)
20 880
Gross profit
(-) Administrative cost 10 000
Selling and distribution 6 800 (16 800)
Net profit 4080
Sigma PVT ltd
2. as at 21st of May
Income statement (Absorption costing)
pg. 3
[Type here]
Rs
98 600
Sales (11 600*8.5)
28 800
(-) Cost of sales 15 600
Direct material(12000*2.40) 34 800
Direct labor (12000*1.30) 79 200
Fixed production overhead
Absorption cost
(2 640) (76 560)
(-) Closing inventory(6.60*400)
Gross profit 22 040
10 000
(-)Administrative cost 6 800 (16 800)
Selling and distribution cost 5 240
Net profit
Task 02
pg. 4
[Type here]
Food and Beverage Company cost classification
Development team of leading food beverage manufacturing company introduce new herbal
drinking product. Which would strengthen the natural immune system of human being. According
to that following are the cost classification of this proposed product.
Direct cost
Indirect cost
Manufacturing cost
Non-manufacturing cost
Fixed cost
Variable cost
I. Direct cost
Direct cost can be specifically identified with a specific cost object.
Direct material cost: - This can be identified in the product that can be conveniently measured
and directly charged to the product.
Following are the direct material costs of the proposed herbal drinking product.
Primary packing materials of herbal drinking. (wrapping ,carton)
Natural herbal elements that use to produce the proposed herbal drink, which help to
develop natural immune system of human being.
Direct labor cost: - The total cost incurred by the company for paying the wages and other
benefits to the employee of the company. (Wages, health insurance)
The labors who provide their direct service to produce the herbal drink.
Direct expenses: - Following are the examples for direct expenses of herbal drink.
Row material cost ( that used to produce herbal drink product for sale)
The commission and payroll taxes related to the sale of herbal drink.
II. Indirect cost
pg. 5
[Type here]
These costs are cannot be specifically traced to the cost object. All indirect cost are called
manufacturing overhead costs.
Following are the indirect cost of proposed herbal drink.
Indirect material cost: - cost of advertising, maintain the herbal drink department cost.
Indirect labor cost: - Indirect cost is not directly related to the production of goods and the
performance services.
Legal advisers cost for this herbal drink.
Quality control staff salary.
Cost for drivers and delivery vans.
Indirect expenses: - telephone expenses, legal fees, and factory and equipment supplies
expenses.
III. Manufacturing cost
Manufacturing cost consist of prime cost and manufacture overhead cost, that means
Direct and indirect cost.
Following are the manufacturing cost of the proposed herbal drink.
Material handling costs
Salaries and wages for quality assurance
Equipment/ machines repair cost
IV. Non-manufacturing cost
Non-manufacturing cost is the total of the administrative expenses, selling and distribution
expenses and finance expenses. Following are the non-manufacturing cost of proposed
herbal drink.
Selling expenses: - Advertising cost, storage cost of herbal drink.
General expenses: - Expenses related to research and development of herbal drink,
Salaries of administrative staff.
Identification of cost is most important, especially if it is a new product. Through the
identification can reduce the wastages, can following budgetary control methods.
Task 03
pg. 6
[Type here]
01.
Importance of budgeting
Budgeting is important for all the businesses. Budgeting guided to the business organizations
to achieve the long term as well as short term goals. Following are the proposes of budgeting.
Planning
Decision making
Communication
Resource allocation
Coordination
Performance evaluation
Budgeting is a “plan of action.” All type of managers should well know about budgeting
process. Top management must clearly bring the message in movements as well as in words
that budgeting is important. Budgeting is important to everyone in the business organization
to understand what is expected from the business organization.
There are various type of budgets in a manufacturing firm, they are Sales budget, production
budget, material usage budget, material purchase budget, direct labor budget, factory
overhead budget, operating expenses budget and cash budget.
If making budget of business, first should strictly followed the plan and keep the track with
clear understand where the money is being spent.
To achieve the business goals successfully the business organizations should prepare a
meaningful budget.
A successful budget is helps to gain control over the money, plan and save for recruitment,
keep business organization financial goals as well as prevents unnecessary debts.
02.
Dyson (pvt) limited
pg. 7
[Type here]
Sales budget for
The Quarter ended March 2021
January February March
Forecasted sales 10,000 10,200 10,400
Price per unit (Rs) 2 2 2
Total budgeted sales 20,000 20,400 20,800
(Rs)
Dyson (pvt) limited
Production budget for
The Quarter ended March 2021
January February March
Planned sales unit 10,000 10,200 10,400
(+)closing inventory budgeted 4080 4160 4240
Total production required 10,080 14,360 14,640
(-)budgeted opening inventory (3000) (4080) (4160)
=units to be manufactured 11,080 10,280 10,480
Dyson (pvt) limited
Material purchase budget
pg. 8
[Type here]
For The Quarter ended March 2021
January February March
Budgeted production per unit 11,080 10,280 10,480
(*)DM required per unit (kg) 3 3 3
DM required of 33,240 30,840 31,440
production(kg)
(+)budgeted closing stock DM 9,252 9432 9612
(-) Budgeted opening stock (11,000) (9252) (9432)
(kg)
Budgeted DM purchase (kg) 31,492 31,020 31,620
Cost per unit budgeted 0.15 0.15 0.15
Budgeted DM purchase 4723.8 4653 4743
Dyson (pvt) limited
Direct labor budget for
The Quarter ended March 2021
January February March
Production unit budgeted 11,080 10,280 10,480
(*) direct labor per unit 0.1 0.1 0.1
Total direct labor hour budgeted 1108 1028 1048
(*)direct labor cost per hour 7.5 7.5 7.5
= total direct labor cost 8310 7710 7860
Dyson (pvt) limited
Cash budget for the
pg. 9
[Type here]
Quarter ended March 2021
Receipts January February March
Cash sales 10,000 10,200 10,400
Credit sale 4000 10000 10200
Total receipt 14000 20200 20600
Payments
Purchase raw material (2000) (4723.8) (4653)
Direct labor cost (8310) (7710) (7860)
Total production & non-production (6252) (6252) (6252)
overheads cost
Total payments (16,562) (18685.8) (18765)
Total receipt-total payment (2562) 1514.2 1835
(+) opening cash balance 8,000 5,438 6,952.2
= closing cash balance 5,438 6,952.2 8,787.2
B. when we look into our new product its sales was increase by 200units from 10000units
due to demand expected by increase production capacity. We can see the decrees in
labor cost through this gain extra profit by these types of cost reduction. Cash budgets
beginning there is a drop in cash flow but after January it shows a positive value. I
would propose that this project will be profitable for the company for future.
Task 04
1. (a)
pg. 10
[Type here]
Direct material cost variance = (Actual price – standard price) * Actual quantity
= (500 -400) *17 800
= 1780 000
Direct material usage variance =
(Actual quantity – standard quantity for actual production) *standard
price
= (17 800 - 18 000)*400
= 80 000
(b)
Direct labor rate variance = (Actual hourly rate – standard hourly rate)* actual hours
= (200 -150) *7100
= 355 000 Adverse variance
Direct labor efficiency variance =
(Actual hours – standard hours for actual production)*standard hourly rate
= (7100 – 7200)*150
= 15 000 favorable variance
(c)
Variable overhead variance expenditure O/H=
Actual variable O/H – (Actual hours worked * variable O/H absorption
rate
= 960 000 – (7100*100)
= 250 000 Adverse variance
Variable O/H efficiency variance =
(standard hours for actual production– actual hours worked)*variable absorption
rate
= (7200 – 7100) *100
= 10 000 Favorable variance
pg. 11
[Type here]
(D)
Fixed overhead expenditure variance = Budgeted fixed O/H expenditure – Actual fixed O/H
expenditure
= 1440 000 -1600 000
= 160 000 Adverse variance
Fixed O/H efficiency variance = (Actual hours worked –Standard hours of)* Fixed
production
Production O/H absorption
Rate
= (7100 – 7200)*200
= 20 000 Adverse variance
(E)
Sales price variance = (Actual quantity sold * standard price) – (Actual quantity * actual
price)
= (1 800*12 000) – (1 800 * 13 000)
= 1800 000
Sales volume variance= (Budget quantity sold – Actual quantity sold)* Standard profit per
unit
= (2000 *12 000) – 1 800) *6 200
= 12 840 000
pg. 12
[Type here]
pg. 13
