Managerial Accounting: Analysis of On the Beach's Expected Results, Contribution Margin, Cash Position, and Predictions for 2020

Managerial Accounting
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Contents
Introduction...........................................................................................................................................3
Overview of the expected results of 2019..............................................................................................4
Analysis of contribution margin of the products....................................................................................6
Analysis of the cash position of the business.........................................................................................8
Analysis and predictions for 2020.......................................................................................................10
Conclusion...........................................................................................................................................11
Bibliography........................................................................................................................................12
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Introduction
In order to manage a production facility smoothly, it is important the management plans and
budgets the requirements beforehand. We have been presented with the projected data of “On
the beach” manufactures. Using this data we have calculated various budgets of the company.
Budgeting is a very important part of financial planning (Adelaja, 2015). Budgeting helps the
management lay down a path which helps them to achieve the goals. It is a complex process
which requires collection of data and then application of such data in order to retrieve
information (Atkinson, 2012). In our discussion below we have discussed about the projected
results of “On the Beach”.
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Overview of the expected results of 2019
We have used the projected data of the company related to its various segments in order to
calculate the expected results for the upcoming year. To start with the planning, the
management has first estimated the units which are expected to be sold, for various products
over the year2019.
The following graph shows the units which are expected to be sold for various products over
the year 2019:
Jan/19
Feb/19
Mar/19
Apr/19
May/19
Jun/19
Jul/19
Aug/19
Sep/19
Oct/19
Nov/19
Dec/19
Jan/20
Feb/20
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
One-piece
Board shorts
Towels
Beach Bags
The graph above shows that the maximum demand of the product is expected to be in January
in2019 after which the demand is expected to decline.
Taking this as the base requirement all the functions like purchase, distribution, production
etc are to be planned. Using these production units the purchase of materials and availability
of labour will be planned.
The management has planned to maintain the inventory level at 50% of the requirement of
the next month, using which we have calculated the production which is required to take
place.
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