Business Finance: Methods to Reduce Costs and Cash Flow Forecast

Time constrained project
Business Finance

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Methods of attributing indirect costs...........................................................................................4
TASK 2............................................................................................................................................9
Methods to reduce costs...............................................................................................................9
TASK 3..........................................................................................................................................11
Preparing the Cash Flow Forecast of 12 months.......................................................................11
TASK 4..........................................................................................................................................14
Evaluating performance of company based on information of budget......................................14
Considering the financial and non-financial implications with external factors affecting cost
base............................................................................................................................................15
Recommendations to the company............................................................................................16
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................18

INTRODUCTION
Business finance is defined as the process of raising and managing the funds of the
company. By planning, analysing and controlling the operations are the main functions of the
financial manager that they must perform to attain goals. The current assignment is based on the
Dysonica which is the successful international company used to do innovations. This report will
outline the examination of cost information in order to identify variable costs, fixed cost or semi-
variable costs. Further this current report will outline the methods in order to reduce the cost in
the organization. Moreover, this report will also include the cash flow forecast that is based on
12 months’ budget to have proper spending, cost reduction and finance management. At the end
this report will outline the performance of the organization by budget forecasted. It will also
consider financial and non- financial implications with external factors that impact the cost.
TASK 1
Expense Type Reason
Raw Materials Variable Cost Raw materials are the variable
cost as the amount of raw
materials used varies with the
level of production by the
company.
Machinery Fixed Cost Machinery expense is a fixed
cost because the cost incurred
does not change with the level
of production.
Factory and Storage Rent Fixed Cost Factory and storage has to be
paid even if the production
units are zero. Hence it is

categorised as fixed cost.
Direct labour Variable Cost Direct labour is a type of
variable cost. Because as the
number of units produced
increases the labour cost also
increases.
Utilities Semi Variable Cost Utilities includes electricity,
water, etc. expenses. It is
categorised under semi
variable cost because a certain
amount is fixed as required to
be paid even at zero level of
production and rest amount is
incurred in accordance with
the level of production.
Office and Sales Staff Fixed Cost Office and sales staff have to
be paid at all levels of
production at same rate.
Hence it is fixed cost.
Insurance Fixed Cost Insurance cost is constant at
all levels of production as it is
a fixed cost.
Logistics Variable Cost Transportation cost are
covered in logistics. Hence it
is a variable cost dependent of
the production units.
Methods of attributing indirect costs
Absorption costing: The absorption costing is also known as full costing which is the
best managerial accounting method in order to capture the costs that is associated with the
manufacturing of the product (Nan, 2019). This cost used to allocate the fixed overheads to the
units that is produced over the period. This cost helps the company to allocate the fixed