Business Finance

BUSINESS FINANCE

TABLE OF CONTENTS
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
Calculation of Break Even point ad margin of safety for company XY.....................................3
Amount of profit with help of marginal and absorption costing.................................................4
PART B............................................................................................................................................6
Different types of cost and their relevance.................................................................................6
Calculation of different variance for Sydney manufacturers......................................................7
Preparation of budget for controlling operation..........................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Finance is referred to as the money which is being used within the business and for its
running and proper operations of the company. Without finance not a single work can be
accomplished. In the business, the finance is the blood or lifeline of business as without money
no activity within the business can be undertaken (Bendell and Doyle, 2017). Hence, the proper
and effective allocation and use of many is very necessary for the business and its success.
Thus, the present report will outline some of the calculation relating to the BEP, marginal
and absorption costing and many other related income statement on basis of both these costing
methods. Further the report will outline the different types of cost and there importance for
pricing decision. Also the calculation of different types of variance like material, fixed overhead
and labour rate variance will be calculated.
PART A
Calculation of Break Even point ad margin of safety for company XY
Computation of break- even point
Break- even point can be defined as a point where total costs (expenses) and total sales
(revenue) are equal. Break-even point can be described as a point where there is no net profit or
loss.
Particulars Formula Figures (in £)
Selling price per unit 24
Variable cost per unit 18
contribution per unit
Selling price per unit - variable cost
per unit 6
Budgeted fixed cost 800000
BEP (in units) Fixed cost / contribution per unit 133333
BEP (in £) BEP units * SPU 3200000
Actual sales 3360000
BEP sales 3200000
Margin of safety Actual sales - BEP sales 160000
BEP as a % of Budgeted sales 3200000/3360000*100 95%