Financial Analysis and Planning : Assignment
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Added on 2021-01-02
Financial Analysis and Planning : Assignment
Added on 2021-01-02
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Financial Analysis andPlanning
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1A) Prepare production budget and to revise schedule in order to reduce overtime working.1TASK 2............................................................................................................................................3A) Analysing variances and giving summary on problems identified in preparation of budget3TASK 3............................................................................................................................................5A) Calculation of break-even point .......................................................................................5B) Constructing break-even chart from the data gathered......................................................5TASK 4............................................................................................................................................6A) Producing Cash Budget for six months of Wilkinson Ltd................................................6B) Projected variances............................................................................................................6C) Analyse results of cash budget..........................................................................................6CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................8
INTRODUCTIONFinancial planning and analysis play a crucial role in the company as operational tasksare to be achieved within stipulated time. Present report deals with various scenarios focusing oncore aspects of finance and importance of concepts in the business. Production and sales budgetboth have been prepared which shows units to be manufactured to effectively meet expecteddemand of customers in the best possible manner. Furthermore, flexed budget is formulated andmatched with actual figures to find out variances if any. Break-even analysis is conducted whichprovides clarity to the organisation as to how many sales are to be achieved to attain profits.Furthermore, problems associated while preparing budget are discussed. On the other hand, cashbudget is prepared on projected basis for the period of six months. Thus, financial planning andanalysis is much relevant to analyse performance and take decisions accordingly.TASK 1A) Preparing production budget and revising schedule in order to reduce overtime workingSales Budget for Home Gym Ltd JanFebMarAprilMayJuneJulAugSepOctNovDecSales units150150200400400400500300200200700425Price perunit2.733.653.73.844.14.24.44.855.1Total sales4054507301480152016002050126088096035002167.5Production Budget for Home Gym Ltd ProductionbudgetJanFebMarAprilMayJuneJulAugSepOctNovDecForecastedsales (units)150150200400400400500300200200700425Add: Closingstock275450600550500450300175325475125100TotalProduction4256008009509008508004755256758255251
required (units)Less: Openingstock100275450600550500450300175325475125Units requiredtobemanufactured325325350350350350350175350350350400Cost per unit3.251.180.780.580.640.700.780.5821.080.743.2Production cost1056.25384.09272.22204.17222.73245272.22102.08700376.92257.891280The production budget is quite useful in analysing how products can be manufactured inthe best possible cost so that more units can be manufactured with much ease. This budget listsdown a schedule in which budgeted production units must be generated by the manufacturingunit of organisation leading in order to achieve expected sales in the best possible manner.Moreover, production budget also provide clarity to the organisation how much units are to beproduced for a specific time frame so that planned inventory related to finished goods andexpected demand of sales can be met by the firm in effective way. Thus, production budget isprepared as per the proposed proforma. Another essence of production budget is that it isformulated just after sales budget is prepared. This is evident from the fact that expected salesunits to be achieved in anticipation of demand of the customers in the best possible manner(Dang, Li and Yang, 2018). Sales budget provides expected units of sales and multiplied by price per unit of theproduct in effectual manner. It shows total sales needed to be accomplished by organisation. Thiskind of budget influences several elements of master budget which is an aggregation of all thebudgets. It is evident from the fact that total figure of sales imparted by sales budget forms thebase of elements of budgets in the best possible way. This includes customer receipts, proformaof income statement etc. Thus, estimation of sales required in units can be calculated in effectualmanner. On the other hand, after sales are analysed and estimated, production budget can bemade by estimated sales figures in units to be attained and production of stated units are achievedin effectual way. This budget is prepared in anticipation so that demand can be met with muchease. This is evident from the fact that without sales prediction, entity cannot manufacture2
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