January Activity

Estimate

raw mat end

all unpaid

600

Production
Sales Revenue
D Material
Direct Labor
Indirect Labo
Electricity
Other overh
Indirect Mate
Factory Insu
office expen
commission

2350
14000
1762.5
2937.5
470
235
1175
1350
562.5
3514.5
1400

Actual
2250
15750
1660
2812
895
325
1600
1570
562
2260
1400

ary Activity
Variance

Variance %
100 4.255319149
-1750
-12.5
102.5 5.815602837
125.5 4.272340426
-425 -90.4255319
-90 -38.2978723
-425 -36.1702128
-220 -16.2962963
0.5 0.088888889
1254.5 35.69497795
0
0

Note:

Straight Line Depreciation assumed

All figures in $

ASSETS
1 Current Assets
2 Cash
3 Receivables
4 Raw Materials
(0.75/unit)
5 Finished good inventory
($4.96/unit)
6 office equpment
7 Factory equipment
8 Land

Total Assets

9,507
15330
525
5208
12029
66625
5000

114223.5

BLACKHEATH MANUFACTURING COMPANY

BALANCE SHEET AS ON MARCH 31

1
2

1
2

LIABILITIES
Accounts Payable
Notes Payable
STOCKHOLDER EQUITY
Capital : Trafalgar Blackheath
Retained Earnings

Total Liab+SE

1500
30000

85687
2490
83197

Err:509

Note :
All figures in $
BLACKHEATH
COMPANY
Cash Budget
As on March 31
JAN
Initial Cash Balance
Collections
Cash Available

10,000
13510
23,510

MARCH
8,848
9,085
14350
14210
23,198
23,295

Payments
DM purchase
Direct Labor
Indirect Labor
Electricity
Indirect Materials
Factory Insurance
Other Overhead
Commisions
Personal
Consulting fee
Salaries
Rent
Utilities

1762.5
2937.5
470
235
1350
562.5
495
1400
1400
900
1800
900
450

1537.5
2562.5
410
205
1350
563
495
1540
1400
900
1800
900
450

1500
2500
400
200
1350
563
495
1330
1400
900
1800
900
450

Total Payments

14662.5

14113

13788

8,848
1,153

9,085
-237

9,507
-422

Ending Cash Balanc

Cash Burn

FEB

Note:

INCOME STATEMENT FOR PERIOD EN

1
2
3
4
5
6
7

Straight Line Depreciation assumed

All figures in $
BLACKHEATH MANUFACTURING COMPANY
INCOME STATEMENT FOR PERIOD ENDING MARCH
JANUARY
Sales Revenue
Cost of good sold
Gross Margin
S,G&A expenses and others
EBIT
Income Tax@25%
Net Income

14000
10900
3100
7214.5
-4114.5
0
-4114.5

FEBRUARY
15400
10060
5340
7354.5
-2014.5
0
-2014.5

MARCH
13300
9920
3380
7144.5
-3764.5
0
-3764.5

QUARTER
42700
30880
11820
21713.5
-9893.5
0
-9893.5

Column1
Jan
cogs
dm
dl
overhead plus

feb
10900
1762.5
2937.5
6200

10060
1537.5
2562.5
5960

Marketing and Sales(Variable)

JAN
FEB
per unit Sale
7
7
Expected unit
2000
2200
Gross Sale
14000
15400
Sales commisi
1400
1540
General admin expenses
per month(*4.5)
781 per week
3514.5
TOTAL SGA expense
Jan
Feb
March
4914.5
5054.5
4844.5
other expenses
Jan
Personal Expenses for T
1400
Consulting fees
900
total /month
2300

march

total
9920
1500
2500
5920

30880
4800
8000
18080

MARCH
7
1900
13300
1330

month(*4.5)

er expenses
Feb

March
1400
900
2300

1400
900
2300

BUDGET
VARIABLE COSTS :
Cost Formula
per unit cost
0.75
1.25
0.2
0.1
0.5

FIXED COSTS :
FACTORY
Indirect labor per week
Indirect materials per week
Electricity per week
Factory Insurance per week
Other overhead per week
Depreciation
Total Cost
Cost/Unit

OFFICE
Salaries (including fringe benefits and payroll tax)
Rent on office
Depreciation on office equipment
Utilities
Total Cost
OTHERS

Personal Expenses for Trafalgar

Consulting fees
TOTAL FIXED COST per month

(assuming 1 month = 28 days)

COSTS
Total Variable Cost of production
Sales commision paid (10% of gross sales)
TOTAL FIXED COST per month
Total estimated costs per month

1
2

1
2
3
4

MANUFACTURING OVERHEAD BUDGE

1
2

1
2
3
4

1
2
3
4
5

1
2
3
4
5
6

All Cost In $

Cost Item

January
Projected units produced
2350
Material
1762.5
Direct Labor
2937.5
Indirect Labor
470
Electricity
235
Other overhead
Err:509
Total Variable Cost of production
6580

cost per week

per month(*4.28)
100
300
75
125
110
262.5

428
1284
321
535
470.8
1125

972.5

4163.8

cost per week

per month(*4.28)
400
200
81
100

1712
856
346.68
428

781

3342.68

per month

1400
900
10134.5

JAN

FEB
6580
1400
10134.5

5740
1540
10134.5

18114.5

17414.5

FINAL TABLES
BLACKHEATH MANUFACTURING COMPANY
REVENUE BUDGET
JANUARY
Expected Sale (No. of Units)
Sale price per unit
(FIXED)
Total

2000
7

14000

BLACKHEATH MANUFACTURING COMPANY

DIRECT LABOR BUDGET
JANUARY
Units to be produced
2350
Direct Labor Hours per unit
1
Total DL hours
2350
DL Cost
1.25
Total DL
2937.5

BLACKHEATH MANUFACTURING COMPANY

MANUFACTURING OVERHEAD BUDGET
JANUARY
Variable MOH
Fixed MOH

1880
3195

Depreciation

1125

Total MOH

6200

BLACKHEATH MANUFACTURING COMPANY

PRODUCTION BUDGET
JANUARY
Expected Sale (No. of Units)
EOM Inventory
BOM Inventory
Production Estimate

2000
1100
750
2350

BLACKHEATH MANUFACTURING COMPANY

DIRECT MATERIAL
USE BUDGET
JANUARY
Units Produced
2350
DM per unit
1
Budgeted DM
2350
Cost of DM per unit
0.75
Budgeted DM Cost
1762.5

BLACKHEATH MANUFACTURING COMPANY

DIRECT MATERIAL
PURCHASE BUDGET
JANUARY
DM required
2350
EOM Raw Material
700
BOM Raw Material
800
DM Purchase
2250
DM cost/unit
0.75
Budget DM cost
1687.5

Note:

Column1
Feburary
Raw Material used Projected units produced
2350
2050
1537.5
2562.5
410
205
Err:509
5740

per month(4.5)
450
1350
337.5
562.5
495
1125
4320

per month(4.5)
1800
900
364.5
450
3514.5

MARCH
5600
1330
10134.5
17064.5
BUDGET

FEBRUARY

MARCH
2200
7

1900
7

15400

13300

FEBRUARY

MARCH
2050
1
2050
1.25
2562.5

FEBRUARY

2000
1
2000
1.25
2500

MARCH
1640
3195

1600
3195

1125

1125

5960

5920

FEBRUARY

MARCH
2200
950
1100
2050

FEBRUARY

1900
1050
950
2000

MARCH
2050
1
2050
0.75
1537.5

FEBRUARY

2000
1
2000
0.75
1500

MARCH
2050
700
700
2050
0.75
1537.5

2000
700
700
2000
0.75
1500

Straight Line Depreciation assumed

All figures in $
Column2
Raw Material used

March
Projected units produced
2050
2000
1500
2500
400
200
Err:509
5600

Marketing and Sales(Variable)

JAN
per unit Sale price
Expected unit Sale
Gross Sale
Sales commision paid (10% of gross sa

Variable Manuf Overhead

Indirect Labor
Electricity
Other overhead
Total

7
2000
14000
1400

Jan
470
235
1175
1880

Fixed Manuf Overhead

710 per week
plus depreciation

1125

Column1
cogs
dm
dl
overhead plus depr
Units sold
cost per unit

Jan
10900
1762.5
2937.5
6200
2350
4.6382978723

QUARTER
6100
7
0
Err:508

QUARTER
6400
1
6400
1.25
8000

QUARTER
5120
Err:509

Err:508
18080

QUARTER
6100
1050
750
6400

QUARTER
6400
1
6400
0.75
4800

QUARTER
6400
700
800
6300
0.75
4725

Column3
Raw Material used
2000

Column4

Var
Var
Var
Var
Var

FEB

Dc
DC
OH
OH
OH

MARCH
7
2200
15400
1540

Feb

7
1900
13300
1330

March
410
205
1025
1640

per month(*4.5)
3195
4320

400
200
1000
1600

feb

march
10060
1537.5
2562.5
5960
2050
4.9073170732

total
9920
1500
2500
5920
2000
4.96

Err:508
Err:508
Err:508
Err:508

Contribution Margin
(Revenue- All Variable Costs)

Expected Sale (No. of U

Total Revenues
Total Variable Cost
Contrbution
Contribution Margin(%)

JANUARY
FEBRUARY
2000
2200
14000
15400
6580
5740
7420
9660
53 62.72727273

Depriciation on factory and equipment :

5 years
70000
per month cost of depreciation
1125

60 months
2500

MARCH

QUARTER
1900
6100
13300
42700
5600
17920
7700
24780
57.8947368421 58.03278689

1. Production Budget
for jan,feb,march

Month
December
January
February
March
April

Month
Dec
Jan
Feb
March
April

Expected Sales
1800
2000
2200
1900
2100

BLACKHEATH MANUFACTURING COMPANY

PRODUCTION BUDGET
1 Expected Sale (No. of
2 EOM Inventory
3 BOM Inventory
4 Production Estimate

BLACKHEATH MANUFACTURING COMPANY

DIRECT MATERIAL
1 Units Produced
2 DM per unit
3 Budgeted DM
4 Cost of DM per unit
5 Budgeted DM Cost

BLACKHEATH MANUFACTURING COMPANY

DIRECT MATERIAL
1 DM required
2 EOM Raw Material
3 BOM Raw Material
4 DM Purchase
5 DM cost/unit
6 Budget DM cost

Raw Materials Schedule

Expected Sales
1800
2000
2200
1900
2100

EOM Target Inventory (half of expected sales of next month)

1100
950
1050
#REF!

Final Tables - Production and raw material

TH MANUFACTURING COMPANY
N BUDGET
JANUARY
2000
1100
750
2350

TH MANUFACTURING COMPANY
USE BUDGET
JANUARY
2350
1
2350
0.75
1762.5

TH MANUFACTURING COMPANY
PURCHASE BUDGET
JANUARY
2350
700
800
2250
0.75
1687.5

KEY
EOM
BOM

End of month
Beg of month
Month
october
november

Raw Material Value in BOM Jan($)

Raw Material quantity BOM Jan(units)
cost of raw material(/unit)
EOM Raw Material (not less than 700)

BOM Raw material

700
700
700
700

FEBRUARY

800
700
700
700

MARCH
2200
950
1100
2050

1900
1050
950
2000

FEBRUARY

MARCH
2050
1
2050
0.75
1537.5

FEBRUARY

2000
1
2000
0.75
1500

MARCH
2050
700
700
2050
0.75
1537.5

2000
700
700
2000
0.75
1500

Note:

Straight Line Depreciation assumed

All figures in $

Actual Sales
1500
2300

lue in BOM Jan($)

antity BOM Jan(units)
erial(/unit)

600
800
0.75

BOM Inventory

Production

750
1100
950
1050

QUARTER
6100
Err:509
Err:509
Err:508

Raw Material Use

2350
2050
2000

Err:509
Err:509
Err:509
Err:509

QUARTER
Err:508
1
6400
0.75
4800

QUARTER
Err:508
700
800
Err:508
0.75
Err:508

epreciation assumed

Raw Material to purchase

Cost of Production

Cost of Purchase
4.72

0.75
at the rate of $/unit
at the rate of $/unit
2250
11092
1687.5
2050
9676
1537.5
2000
9440
1500

Rough
Gross Margin = GP/NS
Gross Profit
(prof. measure)
Net margin = np/ns
Profit margin (the ratio of net income to net sales)
COGS = VAR+FIXED COSTS (excluding admin+selling charges)
(cost f sales)

Contribution Margin = Net Sales - VAR(product cost+period) expenses

(analysis f prod costs)(analysis of break even)
Operating margin
Operating costs include employee salaries, cost of facilities or rental costs, and marketing and
operating income
sales - COGS - all selling and administrative expenses (fixed and variable)
(excluding )interest revenue, interest expense, gain or loss on the sale of plant assets, etc.
MAN OVERHEAD indirect factory-related costs that are incurred when a product is manufactur
(cost inc in manuf other than DM DL,incl depr)
cost of direct material cost, direct labor, and manufacturing overhead be considered as the co
Gross profit = Net Sales -COGS
Net sales = Gross sales (Customer Discounts, Returns, Allowances)
Operating Profit = Gross Profit Total operating expenses
Net income (or Net profit) = Operating Profit taxes interest
Net profit = Net sales Cost of goods sold operating expense taxes interest

break even quantity = fixed costs / contribution margin per unit

Fixed over head (must be removed first fr profit)
Total Assets = Liabilities on balance sheet

Net Sales

only prod cost

no

sales-var
(not fixed overhead)

for valuing inventory and for determining the cos

Rev=sales=net sales
income = profit
From an accounting standpoint, sales do not occur until the product
sales=price paid by cx
revenue = total amount of money taken in frm all activities inc sale
overhead, payroll, taxation, and interest payments.

Sales-COGS-other VarCosts

three measures of a company's profit margin

Gross Margin = GP/NS
operating pr margin
net profit margin
Net sales (revenue)
Cost of goods sold
Gross Profit
SG&A expenses (combined costs of operating the company)
R&D
EBITDA
Depreciation and amortization
EBIT
Interest expense (cost of borrowing money)
EBT
Tax expense
Net Income (EAT) BOTTOM LINE

Variable costing is a managerial accounting cost concept. Under this method, manufacturing

account rec

gross profit after prod cost

profit after op costs
debt interest, taxes and any additional costs

Under this method, manufacturing overhead is incurred in the period that a product is produced.

in the period that a product is produced.