Business Finance: Examining Costing Methods and Cash Flow Forecast for Dysonica

Time constrained
project business
finance

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK...............................................................................................................................................3
Task 1...............................................................................................................................................3
Examining and classifying the cost to identify variable, fixed or semi variable costs and
illustrating the types of costing methods................................................................................3
Task 2...............................................................................................................................................7
Discussing the judgments and conclusions drawn from the analysis and recommendations.7
Task 3...............................................................................................................................................8
Preparing the 12 month cash flow forecast for the organisation till 30 April, 2023..............8
Task 4.............................................................................................................................................12
Evaluating the performance of Dysonica based on the above prepared budgets.................12
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Business finance are the funds and credits utilised by an enterprise. Funds are the base of
a company. Financial requirements are for raw materials, commodities, assets and other lines of
economical activity. The meaning of corporate finance consists of corporate activities related to
obtaining as well as maintaining capital resources to meet the financial requirements and overall
goals of the company. Business is equated with the creation and distribution of products and
services that meet the requirements of society. In order to successfully complete a business, it
needs funds called corporate finance. Therefore, finance is known as the lifeblood of an
enterprise. A business cannot function without sufficient money available (Beaumont, 2019).
Dysonica is a global creative organisation based in UK that now has a worldwide presence.
Many price efforts have been implemented because of the competitive pressure comprising of
the migration of operations in the UK.
TASK
Task 1
Examining and classifying the cost to identify variable, fixed or semi variable costs and
illustrating the types of costing methods
Cost is a monetary measure of the number of resources used to produce goods or provide
services. The term cost in accounting refers to the monetary price of expenses on raw materials,
supplies, equipment, services, products, etc. It is the amount recognized as an expense for
accounting purposes.
Costs fall into three categories based on volume as follows:
Fixed cost: It is the type of cost that remains constant despite changes in production within a
specified period and area of activity. The per unit fixed cost fluctuates as output volume changes.
If the production volume rises, the per unit fixed cost will fall, and if the production volume falls,
the per unit fixed cost will rise. Examples of fixed costs include rent and insurance for buildings,
depreciation for factories and machinery, and salaries for employees (Chris Kraft and PMP,
2018).
Rent of factory and storage: 18000 p.m. = 18000 * 12 = 216000
Insurance: 500 p.m. = 500* 12 = 6000

Machinery: 1500 p.m. = 1500* 12 = 18000
Sales and office staff: 9000 p.m. = 9000* 12 = 108000
Variable cost: These are costs that change in direct proportion to changes in output. Costs
increase or decrease at the same rate as the units produced and are called variable costs. Direct
materials, direct costs, and variable overheads are examples of variable costs.
Direct labour: 17500 p.m.
Raw material: 15000
Semi-variable cost: Cost rates contain both variable and fixed components and are hence
partially influenced by variations in activity levels. These are costs that are partly fixed at a
particular level of production and partly variable with changes in output, but not proportional to
changes in output (Gan and Chen, 2021).
Utilities: 500 p.m. = 500 * 12 = 6000
Logistics cost: 3000 p.m.
Absorption costing: It is also said as full costing, is utilised by a company to assess the
total cost of manufacturing a particular product. In this costing method, all fixed and variable
costs are assigned to cost objects and the company's total overhead costs are obtained based on
the activity level of the organization. In this type of calculation, manufacturing overhead is
distributed by product and included in the organisation's valuation of inventory, irrespective of
whether the good was sold in the time period covered. Types of costs inclusive in this type of
costing are wages of worker who bring together products, indirect costs related with
manufacturing products, raw materials necessary for manufacturing products (Ghosh and