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Managing Financial Resources: Assignment
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Added on 2020-12-09
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MANAGINGFINANCIALRESOURCES
Table of ContentsINTRODUCTION ..........................................................................................................................3TASK 1 A........................................................................................................................................31.Various types cost in a business...............................................................................................32. Use of cost volume profit graph..............................................................................................6TASK 1 B........................................................................................................................................71. Break even point in unit and pound sterling...........................................................................72. CVP graph showing break even point.....................................................................................83. Income at desired sales 18500 units........................................................................................94. If managers is paid £6 per blouse, than effect on BEP:..........................................................95. Change in profit when selling 23500 units...........................................................................106. Change in BEP if salaries are increased by 214000..............................................................10TASK 2..........................................................................................................................................101. Cash budget...........................................................................................................................10CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
INTRODUCTION The financial resources are important part of organization and set of liquid assets of anorganization such as cash, liquid financial investment (stocks, bonds), short term bank deposits.These resources are mostly using for move out to operate business operation like as buyinggoods and services, and carry out long term investments. Managing financial resources involvedmanagement of financial resources in organization prospective. It aims to provide terms andtechniques of accountancy to manager to easily understand of financial report sand communicateabout that. In this project the company taken is New Horizons accountants Ltd, which is relatedto UK.This project report included various tasks which are classify in types of costs withexamples, cost information on a cost volume profit graph, calculation of break even point in unitand pound sterling of Beta Company, prepare cash budget of Alpha Ltd and cover alladjustments in task. TASK 1 A1.Various types cost in a businessCost - The word 'cost' means the sum of expenditure(actual or imaginary) incurred onspecified things or activity. It is a monetary amount that a company incurred in order to producegoods and services. It is usually a monetary terms of resources, efforts, risk incurred, time andutilities consumed, materials and possibility forgone in production or the goods and servicesdelivered. All expenditure are considered as a costs but all costs (such as which is obtained byacquiring of an income- generating assets)are not considered as a expenditure. All this expenseswere recorded in bookkeeping records. For example, if we calculate the cost for preparing apizza, it itself incurred many other costs such as the flour cost, labor, other overheads. In thesame way , cost of production of any products or work as specified by the firm can be ascertain.From the buyer's viewpoint, its is also called the price, it simply means that the amount whichthe seller charges for the particular product. Cost is associated with factors of production such ascost of capital, cost of labor, cost of a fixed assets. Cost of capital is measured in terms ofinterest expenses which is specifically used to purchase the fixed assets. Cost of labor, whichwere used to measured the remuneration and welfare basically used for manufacture of servicesand goods. Cost of fixed assets, which measured in depreciation and were used for production.
Elements of costs is categorised in three groups i.e. labour, expenses and material. Labour: It is the essential elements of production. For the process of raw material intothe finished goods, there is the need of human resources as human resources isconsidered as labour. It is basically classified in following two categories:◦Direct Labour, and ◦Indirect labourExpenses: The cost which are incurred to produce the finished goods except the labourand the material costs is known as expenses. It is also classified into the followings:◦Indirect expenses (the overhead items ), and ◦Direct expensesMaterial: To produce or to manufacture anything material is necessary. All material arethe entire part of the finished products. The component by which the product were madeis material, it can be in a manufacture state or in a raw state. It is of two types:◦Direct material, and ◦Indirect materialTypes of cost:Fixed cost: Fixed costs is the cost which is fixed it doesn't vary with the changesoccurred in the output. If there is variations in the output level no changes occurred inthe volume. Fixed cost also change, if the period of time is considered for the longerperiod to modify the firms capability. With the variation in the production value than theper unit of fixed cost will also vary accordingly. If the production decreases than thefixed costs increases and if there is increase in production than fixed cost will decrease.For Example- salary of employees, building rent, depreciation on plant and machinery,building insurances. Sometimes fixed cost are considered as the overhead costs. Whetherthe organisation produce 100 widgets or 10000 widgets it incurred. Depreciation, salariesand rent were included in fixed assets when the budget of any firms were prepared andalso property taxes and insurances were enclosed in manufacturing overheads.Variable cost: The cost were variable inputs were exploited is termed as variable costs.These costs directly depends on the output they fluctuate with the changes occurred inoutput level. During the process of production, the ratio between the output and variablecosts depends upon the resources and fixed facilities used in the firms. For example –
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