Act 202 Final Project Summer 17 PDF

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ACCOUNTING REPORTCourse: ACT 202 Section : 14 Semester: Fall’Prepared By: Name Id Rifat Alam Dip 1621534030Prepared For Syeda Humayra Abedin (SHA1) Lecturer, Dept. Of Department of Accounting & Finance North South UniversityLETTER OF SUBMISSIONTo,Syeda Humayra Abedin Lecturer, School of Business...

Description

ACCOUNTING REPORT Course: ACT 202

Section: 14 Semester: Fall’20

Prepared By: Name

Id

Rifat Alam Dip

1621534030

Prepared For Syeda Humayra Abedin (SHA1) Lecturer, Dept. Of Department of Accounting & Finance North South University

LETTER OF SUBMISSION

To, Syeda Humayra Abedin Lecturer, School of Business and Economic North South University Subject: “Submission of the Accounting Report on a Burger Shop”

Respected Mam, I’m submitting here the project for the course ACT202. The main purpose of this report was to make a master budget of a product of a restaurant. By doing online interview with the owner of “Burfe” which is a burger shop, I have done all the required calculation with their product.

I hope that this report will merit your approval.

Respectfully yours,

Rifat Alam Dip

TABLE OF CONTENTS

Contents

Executive Summary

Page No.

01

Introduction

02-03

Master Budget

03-11

Executive Summary

The following is an accounting report, on a product of burger shop called “Burfe”. It is located in Bansree, E BLOCK, Road 1. This restaurant Burger is different from other restaurant burger for its unique taste. In this report I had to calculate the budget of Burfe. The budget that I have calculated is based on anticipation and some data I managed to collect from the owner of “Burfe”. The master budget includes – Sales budget, production budget, direct material budget, direct labor budget, manufacturing overhead budget, budgeted income statement, budgeted balance sheet. The entire report is divided into two parts. The report starts with brief details regarding the Burfe’s burger and production process of it. In the second part, I have showed the master budget for the burger shop.

Introduction

Product details Burfe’s main target market is students, employees and young people. It is well located in Banasree area Block E, road 1 it’s a very easy way to find the burger shop. The main reason we focus on our product cost by which we can sell more not profit more. So, customers can take our product more and also our customer demand also increases. That’s why Burfe sell its premium beef burger at 210. “Burfe” do not focus on our profit whereas they focus to provide good quality of food within relevant range of price and their most important thing is when the customer ordered that time they prepare the dish not before because they always try to serve the fresh dish to the customer that customer always seek.

Production process Burfe follow just-in-time production process, which means they start their production process right after a customer place order. Although some parts of the production are done beforehand. First of all, they prepare the bread, beef seasoned with salt and pepper, bacon, lettuce, tomatoes and mayonnaise. Secondly, they make patties from ground beef then after seasoning with salt pepper and they grill it. After that they cut the bread and put the patty inside with fresh vegetables and the mayonnaise. Finally, they put it in the plate or its packaging and it's ready to be served.

Direct Materials:

These direct material of burger of Burfe.      

Bread Beef Seasoning and spices Bacon Lettuce and tomatoes Mayonnaise

Direct labor:

Salary of the Chef/s and assistants who make the burger from preparation until completion of the burger. Manufacturing overhead:  

Utility used for cooking such as electricity and water. Depreciation of the oven, kitchen and other kitchen wares, utensils and equipment.

Costing method Burfe is not following any costing method. It is a small restaurant at present and it doesn’t have any complex accounting system. They have their own simple method for calculating expenses and profit.

Master Budget

Master Budget for the year 2019 (pre corona virus year) 2019

Computation =390x12 x 115 %

5382

Sales Budget Units to be sold x Unit selling price Sales

262.50 =210x125%

1,412,775.00BDT

Remarks/Assumptions:  390 per month was sold in 2018 with 15%  sales growth Selling price increases by 25% every year. Production Budget 2019 5382 0 5382 0

Computation

Units to be sold Add: Desired ending finished goods Total needed inventory Less: Beginning finished goods Units to be produced

5382 units

Remarks/Assumptions:  No ending inventory, made to order basis.

Direct Materials Budget 2019

Units to be produced x Cost of Raw Materials per unit Production needs Add: Desired ending RM inventory Total needed RM inventory Less: Beginning RM inventory Raw materials to be purchased 367,475.60 BDT

Computation

5382 68.04 =210*30%*108% 366,191.28 BDT 6,591.44

=390*115%*20% (68.04*108%)

372,782.72 5,307.12

=390*20%*68.04

Remarks/Assumptions:  

DM is 30% of Unit Selling Price in 2018 with 8% increase. 20% of production needs next month with 8% increase of costs by next year.

Direct Labor Budget Units to be produced x Direct labor time per unit Total hours needed x Rate per hour Total direct labor cost

2019 5382

Computation

.05 2691 63.00

=60*105%

169,533,00BDT

Remarks/Assumptions:  Direct Labor cost is 60 Taka per hour in 2018 with 5% increase. Overhead Budget 2019 Computation Units to be produced Budgeted Manufacturing Overhead

5382 4.70 =210*2%*112%

Total overhead

25,316.93 BDT

Remarks/Assumptions: 

MOH is 2% of Unit Selling Price in 2018 with 12% increase.

Cost of Goods Sold Budget 2019

Direct materials Direct labor Overhead Budgeted manufacturing costs Add: beginning finished goods Goods available for sale Less: Ending finished goods Budgeted costs of goods sold

Computation

366,191.28 169,533.00 25,316.93 561,041.21 561,041.21 -

561,041.21 BDT

Remarks/Assumptions:  Based on computed production needs.  No ending finished inventory.

Selling and Administrative Expenses Budget

Rent Utility Depreciation Salaries Total selling and administrative expense

2019 367,200.00

Computation =30,000*12*102%

220,320.00

=18,000*12*102%

36,720.00

=3,000*12*102%

122,400.00

=60*105%

746,640.00

Remarks/Assumptions:  Selling and administration cost increases by 2% Income Statement 2019 1,412,775.00

Sales Less: Cost of goods sold

561,041.21 851,733.79 746,460.00

Computation

Gross margin Less: Selling and admin expenses Operating income

105,093.79BDT

Cash Budget Beginning cash balance Add: Sales Total cash available Less: Disbursements Payment on purchases of raw materials Payment on selling and admin expenses Payment on overhead expenses Payment on Direct Labor Ending cash balance

2019 10000.00 1412775.00 1422775.00 367,475.60 709,920.00 25,316.93 169,533.00

150,529.47BDT

Remarks/Assumptions:    

Assumed beginning balance All sales are on cash basis. All disbursements are paid in cash. Total selling and admin expenses less depreciation

Master Budget for the year 2020 (Corona virus year) Assumptions:  Sales will decrease by 40% from last year.  Selling price will increase by 30% from last year.

Computation

      

Raw materials will increase by 10% from last year. Labor costs will increase as expected by 5% but labor hours will decrease by 40%. MOH will increase by 5% from last year. Salaries of waiter will increase by 2% but will reduce working hours by 40%. Utilities will decrease by 40% from last year. Depreciation will not change. Rent will only increase by 2%.

Reasons:  Less customer traffic and less demand due to the pandemic.  Due to increase costs of materials.  Prices of foods will increase tremendously.  Labor hours will be reduced due to decreased demand.  Due to increase costs of materials.  Skeletal work will be implemented.  Decrease usage of utility due to low activity.  No additional acquisition and disposal of properties.  Based on existing agreement.

Sales Budget 2020

Units to be sold x Unit selling price Sales

3229

Computation =5382*(1-40%) 341.25 =262.50*130%

1,101,896.25BDT

Remarks/Assumptions:  Sales will decrease by 40% from last year  Selling price will increase by 30% from last year

Production Budget 2020

Units to be sold Add: Desired ending finished goods Total needed inventory Less: Beginning finished goods

3229 0 3229 0

Computation

Units to be produced

3229 units

Remarks/Assumptions:  No ending inventory, made to order basis.

Direct Materials Budget 2020

Units to be produced x Cost of Raw Materials per unit Production needs Add: Desired ending RM inventory Total needed RM inventory Less: Beginning RM inventory Raw materials to be purchased 245,079.84BDT

Computation

3229 74.84 =68.04*110% 241,671.28 BDT 10,000.00

=390*115%*20% (68.04*108%)

251,671.28 6,591.44

=390*20%*68.04

Remarks/Assumptions:   

Raw materials will increase by 10% from last year Maintain estimated of 10,000 only. Ending raw materials last year, carried forward.

Direct Labor Budget Units to be produced x Direct labor time per unit Total hours needed x Rate per hour

2020 3229

Computation

.05 1614.5 39.69

=60*105%*(1*40%)

Total direct labor cost 64,079.51BDT Remarks/Assumptions:  Labor cost will increase as expected by 5% but labor hours will decrease by 40%.

Overhead Budget 2020

Units to be produced

3229 4.94

Computation =4.70*105%*

Budgeted Manufacturing Overhead Total overhead

15,935.12 BDT

Remarks/Assumptions: 

MOH will increase by 5% from last year.

Cost of Goods Sold Budget 2020

Direct materials Direct labor Overhead Budgeted manufacturing costs Add: beginning finished goods Goods available for sale Less: Ending finished goods

241,671.20 64,079.51 15,935.12 321,685.90

Budgeted costs of goods sold

321,685.90BDT

Computation

321,685.90 -

Remarks/Assumptions:  Based on computed production needs.  No ending finished inventory.

Selling and Administrative Expenses Budget

Rent Utility Depreciation Salaries

2020 374,544.00

Computation =367,200*12*102%

132,192.00

=220,320*(1-40%)

36,720.00 74,908.80

=122,400*102%(1-40)

Total selling and administrative expense

618,364.80

Remarks/Assumptions:  Selling and administration cost increases by 2%  Utilities will decrease by 40% from last year.  Depreciation will not change.  Salaries of waiter will increase by 2% but will reduce working hours by 40%

Income Statement 2020

Sales Less: Cost of goods sold Gross margin Less: Selling and admin expenses Operating income

Computation

1,101,896.25 321,685.90 780,210.35 618,364.80

161,845.55BDT

Cash Budget Beginning cash balance Add: Sales Total cash available Less: Disbursements Payment on purchases of raw materials Payment on selling and admin expenses Payment on overhead expenses Payment on Direct Labor Ending cash balance

2020 150,529.74 1,101,896.25 1,252,425.72 245,079.84 581,644.80 15,935.12 64,079.51

345,686.47BDT

Remarks/Assumptions:    

Assumed beginning balance All sales are on cash basis. All disbursements are paid in cash. Total selling and admin expenses less depreciation

Computation...