A major task involves drawing up the following budgets for one year to resource your proposed activities
Budgeting Group Coursework
Scenario
Your team of five students (in seminar) are planning to start up your own business venture, making and marketing a single product using at least two types of both materials & labour; however as you only have £100,000 in cash personally to use towards this, you will need to prepare a summary business plan and supporting budgets in order to raise the additional finance required to meet your budgeted operations. You may assume that you can apply for the funds needed from a bank at their prevailing market interest rate.
A major task involves drawing up the following budgets for one year to resource your proposed activities and to persuade potential lenders to contribute finance to your business venture:
1.Table of Assumptions
•Any and all assumptions made in estimating figures must be researched, referenced, reasonable & clearly stated in this table
2.Budgeted Contribution Statement, Total contribution & C/S ratio
3.Capital Expenditure (Fixed Assets) Budget
4.Sales Budget
5.Production Budget
6.Purchases
7.Direct Labour Budget
8.Overheads Budget
9.Cash Budget
**It is Imperative that budgets 4 - 9 include a total column for the 12- months**
10.Budgeted (Annual) Income Statement
11.Budgeted (Annual) Balance Sheet
12.Calculations showing the Break-Even Point in units, £ of sales & percentage
13.Calculations showing the Margin of Safety in units, £ of sales & percentage
•You must use spreadsheets in Appendices with formulae correctly applied for each of the budgets 2 - 13 above
Hint
Accounting & Finance"Capital expenditure budget is a formal plan which states the amounts and timing of fixed asset purchases by an organization. It is a part of the annual budget used by a firm, which is used to organize activities for the upcoming year, and involves a wide array of expenditures, including the construction of new facilities, upgrades to existing assets, and equipment required...
"Capital expenditure budget is a formal plan which states the amounts and timing of fixed asset purchases by an organization. It is a part of the annual budget used by a firm, which is used to organize activities for the upcoming year, and involves a wide array of expenditures, including the construction of new facilities, upgrades to existing assets, and equipment required by new hires.
Sales budget: In this, the management estimate the sales for a future financial period. A business uses sales budgets to estimate earnings, set department goals and forecast production requirements. It also affects both the overall master budget of the company and other operating budgets.
Production budget calculates the number of units of products that must be manufactured. Production budget is derived from a combination of the planned amount of finished goods inventory to have on hand and the sales forecast. Direct labor budget: it is used to calculate the number of labor hours which will be needed to produce the units itemized in the production budget. And, a more complex direct labor budget will break down this information by labor category along with calculating the total number of hours needed."
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