Management Accounting

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Management Accounting

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Part A: Marginal Costing Statement of the product
The new skin care product launched by “Hadison Beauty” will have selling price of
$150.00 and it is estimated that the marginal cost to sales (Inclusive of all expenses except fixed
expenses) will be around 45% of sales. Cost of sales will include both variable cost and fixed
expenses that will occurred during the period. In order to lay down the marginal cost statement
of the skin care product it is very essential to break down the cost structure into variable cost and
fixed cost (Brigham and Michael, 2013).
Expected Sales during the year 16051 Units
Unit Price
£
150.00
Total Sales
£
2,407,650.00
(Products, 2019)
Marginal Costing Statement (Per Unit)
Particulars Amount Amount
Selling Price £ 150.00
Less: Variable cost
Material £ 22.50
Labour £ 30.00
Variable overhead £ 15.00
Marginal Cost £ 67.50
Contribution £ 82.50
Less: Fixed Cost (Total Fixed
cost/number of units) £ 51.19
Profit £ 31.31
(Damodaran, 2011)
Marginal Costing Statement (Per Year)
Particulars Amount Amount
Revenue £ 2,407,650.00
Less: Variable cost
Material £ 361,215.00
Labour £ 481,620.00
Variable overhead £ 240,810.00
Marginal Cost £ 1,083,645.00
Contribution £ 1,324,005.00

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Less: Fixed Cost (Total Fixed
cost/number of units) £ 821,610.00
Profit £ 502,395.00

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Part B: Financial Statements for first 12 months of trading
B.1: Cash Budget (Month by month)
Income Statement (Month Wise)
Months TOTAL
Units Sales Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Total Sales Units 750 825 908 999 1099 1209 1330 1463 1609 1770 1947 2142 16051
Online Web Sales
(55%) - All Cash 413 454 499 549 604 665 732 805 885 974 1071 1178 8829
Store Sales (15%) 113 124 136 150 165 181 200 219 241 266 292 321 2408
Sale through agents
(30%) 225 248 272 300 330 363 399 439 483 531 584 643 4817
Unit Selling Price £
150.00
£
150.00
£
150.00
£
150.00
£
150.00
£
150.00
£
150.00
£
150.00
£
150.00
£
150.00
£
150.00
£
150.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Revenue
Online Web Sales
(55%) - All Cash
£
61,950
£
68,100
£
74,850
£
82,350
£
90,600
£
99,750
£
109,80
0
£
120,75
0
£
132,75
0
£
146,100
£
160,650
£
176,700
£
1,324,35
0
Store Sales (15%)
£
16,950
£
18,600
£
20,400
£
22,500
£
24,750
£
27,150
£
30,000
£
32,850
£
36,150
£
39,900
£
43,800
£
48,150
£
361,200
Sale through agents
(30%)
£
33,750
£
37,200
£
40,800
£
45,000
£
49,500
£
54,450
£
59,850
£
65,850
£
72,450
£
79,650
£
87,600
£
96,450
£
722,550
Total Revenue
£
112,65
0
£
123,90
0
£
136,05
0
£
149,85
0
£
164,85
0
£
181,35
0
£
199,65
0
£
219,45
0
£
241,35
0
£
265,650
£
292,050
£
321,300
£
2,408,10
0
Expenses
Labour charges or
Wages
£
22,530
£
24,780
£
27,210
£
29,970
£
32,970
£
36,270
£
39,930
£
43,890
£
48,270
£
53,130
£
58,410
£
64,260
£
481,620
Material
£
16,898
£
18,585
£
20,408
£
22,478
£
24,728
£
27,203
£
29,948
£
32,918
£
36,203
£
39,848
£
43,808
£
48,195
£
361,215
Indirect variable
cost
£
11,265
£
12,390
£
13,605
£
14,985
£
16,485
£
18,135
£
19,965
£
21,945
£
24,135
£
26,565
£
29,205
£
32,130
£
240,810
Depreciation
£
9,167
£
9,167
£
9,167
£
9,167
£
9,167
£
9,167
£
9,167
£
9,167
£
9,167
£
9,167
£
9,167
£
9,167
£
110,000