Manufacturing Cost Analysis

This assignment requires you to analyze the cost structure of a manufacturing process. You will examine direct labor, variable overhead, and total production costs for various time periods (January to June). The data provided outlines production units, labor hours per unit, labor costs, and variable overhead costs per unit. Your analysis should delve into how these factors contribute to the overall manufacturing costs.

Running Head: Managerial Accounting
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Project Head: Management Accounting

Management Accounting
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Contents
Introduction.......................................................................................................................3
Business plan....................................................................................................................3
Financial feasibility..........................................................................................................3
Operational Budget.......................................................................................................3
Conclusion........................................................................................................................5
References.........................................................................................................................6
Appendix...........................................................................................................................7

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Introduction:
This report briefs about a business plan. This business plan is about a manufacturing
company which produces food products. In this report, financial feasibility analysis has been
done over the company and the study of budget has also been done to identify the level of the
profits of the company. For this report, various sources of the finance and accounts have been
done so that the feasibility of the finance could be done.
Business plan is a blueprint of the business which depict that how would the business
performed in the market and how the departments of the business would perform their
operations.
Business plan:
This business plan depict about a manufacturing company in the UAE market which
produces the food products, the speciality of this company is that, the food would be
manufactured by the company through setting a balance among the traditional and fusion
cooking style. The food manufacturing company would be unique in the market due to its
special products. The food packaging of the business would maintain the freshness and
authentic flavor of food. Through the analysis, it has been found that the food manufacturing
company has to analyze the financial position into the market (Barlow, 2011).
Financial feasibility:
Financial feasibility of this company has been analyzed to identify the position of the
company in the market on the basis of financial constraints. This study depict that would it be
easy for the company to operate its business into the market? How would be the profitability
position? The study of finance of the manufacturing company depicts that would it be easier
for the company to enhance the market position and would the company be able to manage
all the financial constraints? (Bodie, 2013). In this report, financial feasibility of the company
has been done through identifying the various budgets of the company such as direct material
budget, direct labour budget, sales budget, production budget, variable OH budget and fixed
OH budget.
Operational Budget:

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For analyzing the process of the company, study of operational budget has been done
over the company. For this study, direct material budget, direct labour budget, sales budget,
production budget, variable OH budget and fixed OH budget has been done to identify the
position of the company. Operational budget is the summarise form of all the budgets
(Simmonds, 2010). through the analysis over above explains budgets of the company, it has
been analyzed that the total profit of the company would enhance day by day in the UAE
market due to its tasty food and quality food. The sales price of the food of the company is
. .د إ18.60 whereas various variable cost and fixed cost are connected with the product of the
company (Ward, 2012).
Further, it has been analyzed that for preparing the operational budget of the
company, it is required to prepare the direct material budget, direct labour budget, sales
budget, production budget, variable Overhead budget and fixed Overhead budget. This would
help the business to analyze the position of the market (Hansen, Mowen & Guan, 2007).
Following are the calculative table of operational budget of the company:
Operational Budget
Jan Feb Mar Apr May Jun
Sales Units
2,000.00
. .د إ
2,100.00
. .د إ
2,200.00
. .د إ
3,000.00
. .د إ
3,300.00
. .د إ
4,000.00
. .د إ
Selling Price 18.60 . .د إ 18.60 . .د إ 18.60 . .د إ 18.60 . .د إ 18.60 . .د إ 18.60 . .د إ
Sales
37,200.00
. .د إ
39,060.00
. .د إ
40,920.00
. .د إ
55,800.00
. .د إ
61,380.00
. .د إ
74,400.00
. .د إ
Less:
Direct Material
6,000.00
. .د إ
6,300.00
. .د إ
6,600.00
. .د إ
9,000.00
. .د إ
9,900.00
. .د إ
12,000.00
. .د إ
Direct Labour
10,000.00
. .د إ
10,500.00
. .د إ
11,000.00
. .د إ
15,000.00
. .د إ
16,500.00
. .د إ
20,000.00
. .د إ
Varibale
production OH
5,000.00
. .د إ
5,250.00
. .د إ
5,500.00
. .د إ
7,500.00
. .د إ
8,250.00
. .د إ
10,000.00
. .د إ
Fixed
production OH
10,000.00
. .د إ
10,500.00
. .د إ
11,000.00
. .د إ
15,000.00
. .د إ
16,500.00
. .د إ
20,000.00
. .د إ

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Total cost
31,000.00
. .د إ
32,550.00
. .د إ
34,100.00
. .د إ
46,500.00
. .د إ
51,150.00
. .د إ
62,000.00
. .د إ
Profit
6,200.00
. .د إ
6,510.00
. .د إ
6,820.00
. .د إ
9,300.00
. .د إ
10,230.00
. .د إ
12,400.00
. .د إ
(Kaplan & Atkinson, 2015)
Through the above calculations, it has been analyzed that the company would start its
operations from Jan and in next 6 months; the profitability position of the company would be
almost double (Garrison, Noreen, Brewer & McGowan, 2010). Further, it has also been
analyzed that the sales of the company would enhance in the market due to higher market
demand and the quality product of the company.
Conclusion:
Through the above evaluation over the business plan, it has been found that it is
required for every start up to analyze the market and financial position before entering into
the market to make various effective and better decisions. Through this analysis, it has been
found that the company would start its operations from Jan, 2018 and in next 6 months; the
profitability position of the company would be almost double. This depict that the position of
the company would be better in the market.
.

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References:
Barlow.J.F.,(2011), Excel models for business and operations management, 2nd edition, John
Wiley and sons ltd, England
Bodie, Z., (2013). Investments. McGraw-Hill.
Garrison, R.H., Noreen, E.W., Brewer, P.C. & McGowan, A., (2010). Managerial
accounting. Issues in Accounting Education, 25(4), pp.792-793.
Hansen, D., Mowen, M. & Guan, L., (2007). Cost management: accounting and control.
Cengage Learning.
Kaplan, R.S. & Atkinson, A.A., (2015). Advanced management accounting. PHI Learning.
Simmonds, K., (2010). Strategic management accounting. Cengage Learning.
Ward, K., 2012. Strategic management accounting. Routledge.

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Appendix:
Operational Budget
Jan Feb Mar Apr May Jun
Sales Units
2,000.00
. .د إ
2,100.00
. .د إ
2,200.00
. .د إ
3,000.00
. .د إ
3,300.00
. .د إ
4,000.00
. .د إ
Selling Price 18.60 . .د إ 18.60 . .د إ 18.60 . .د إ 18.60 . .د إ 18.60 . .د إ 18.60 . .د إ
Sales
37,200.00
. .د إ
39,060.00
. .د إ
40,920.00
. .د إ
55,800.00
. .د إ
61,380.00
. .د إ
74,400.00
. .د إ
Less:
Direct Material
6,000.00
. .د إ
6,300.00
. .د إ
6,600.00
. .د إ
9,000.00
. .د إ
9,900.00
. .د إ
12,000.00
. .د إ
Direct Labour
10,000.00
. .د إ
10,500.00
. .د إ
11,000.00
. .د إ
15,000.00
. .د إ
16,500.00
. .د إ
20,000.00
. .د إ
Varibale
production OH
5,000.00
. .د إ
5,250.00
. .د إ
5,500.00
. .د إ
7,500.00
. .د إ
8,250.00
. .د إ
10,000.00
. .د إ
Fixed
production OH
10,000.00
. .د إ
10,500.00
. .د إ
11,000.00
. .د إ
15,000.00
. .د إ
16,500.00
. .د إ
20,000.00
. .د إ
Total cost
31,000.00
. .د إ
32,550.00
. .د إ
34,100.00
. .د إ
46,500.00
. .د إ
51,150.00
. .د إ
62,000.00
. .د إ
Profit
6,200.00
. .د إ
6,510.00
. .د إ
6,820.00
. .د إ
9,300.00
. .د إ
10,230.00
. .د إ
12,400.00
. .د إ
Direct Material Budget
Jan Feb Mar Apr May Jun
Production units
2,000.00
. .د إ
2,100.00
. .د إ
2,200.00
. .د إ
3,000.00
. .د إ
3,300.00
. .د إ
4,000.00
. .د إ
Less: opening

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stock - . .د إ - . .د إ - . .د إ - . .د إ - . .د إ - . .د إ
Add: Closing
stock - . .د إ - . .د إ - . .د إ - . .د إ - . .د إ - . .د إ
Material units
2,000.00
. .د إ
2,100.00
. .د إ
2,200.00
. .د إ
3,000.00
. .د إ
3,300.00
. .د إ
4,000.00
. .د إ
Material cost 3.00 . .د إ 3.00 . .د إ 3.00 . .د إ 3.00 . .د إ 3.00 . .د إ 3.00 . .د إ
Direct material
cost
6,000.00
. .د إ
6,300.00
. .د إ
6,600.00
. .د إ
9,000.00
. .د إ
9,900.00
. .د إ
12,000.00
. .د إ
Fixed OH Budget
Jan Feb Mar Apr May Jun
Production units
2,000.00
. .د إ
2,100.00
. .د إ
2,200.00
. .د إ
3,000.00
. .د إ
3,300.00
. .د إ
4,000.00
. .د إ
Fixed cost per
unit 5.00 . .د إ 5.00 . .د إ 5.00 . .د إ 5.00 . .د إ 5.00 . .د إ 5.00 . .د إ
Fixed cost
10,000.00
. .د إ
10,500.00
. .د إ
11,000.00
. .د إ
15,000.00
. .د إ
16,500.00
. .د إ
20,000.00
. .د إ
Sales Budget
Jan Feb Mar Apr May Jun
Sales Units
2,000.00
. .د إ
2,100.00
. .د إ
2,200.00
. .د إ
3,000.00
. .د إ
3,300.00
. .د إ
4,000.00
. .د إ
Selling Price 18.60 . .د إ 18.60 . .د إ 18.60 . .د إ 18.60 . .د إ 18.60 . .د إ 18.60 . .د إ
Sales
37,200.00
. .د إ
39,060.00
. .د إ
40,920.00
. .د إ
55,800.00
. .د إ
61,380.00
. .د إ
74,400.00
. .د إ
Production Budget
Jan Feb Mar Apr May Jun
Sales Units
2,000.00 2,100.00 2,200.00 3,000.00 3,300.00 4,000.00

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. .د إ . .د إ . .د إ . .د إ . .د إ . .د إ
Less: opening
stock
-
. .د إ
-
. .د إ
-
. .د إ
-
. .د إ
-
. .د إ
-
. .د إ
Add: Closing
stock
-
. .د إ
-
. .د إ
-
. .د إ
-
. .د إ
-
. .د إ
-
. .د إ
Production
units
2,000.00
. .د إ
2,100.00
. .د إ
2,200.00
. .د إ
3,000.00
. .د إ
3,300.00
. .د إ
4,000.00
. .د إ
Production
cost 15.50 . .د إ 15.50 . .د إ 15.50 . .د إ 15.50 . .د إ 15.50 . .د إ 15.50 . .د إ
Production
cost
31,000.00
. .د إ
32,550.00
. .د إ
34,100.00
. .د إ
46,500.00
. .د إ
51,150.00
. .د إ
62,000.00
. .د إ
Direct Labour Budget
Jan Feb Mar Apr May Jun
Production
units
2,000.00
. .د إ
2,100.00
. .د إ
2,200.00
. .د إ
3,000.00
. .د إ
3,300.00
. .د إ
4,000.00
. .د إ
Labour hour
per unit 1.00 . .د إ 1.00 . .د إ 1.00 . .د إ 1.00 . .د إ 1.00 . .د إ 1.00 . .د إ
Labour cost 5.00 . .د إ 5.00 . .د إ 5.00 . .د إ 5.00 . .د إ 5.00 . .د إ 5.00 . .د إ
Direct labour
cost
10,000.00
. .د إ
10,500.00
. .د إ
11,000.00
. .د إ
15,000.00
. .د إ
16,500.00
. .د إ
20,000.00
. .د إ
Varibale OH Budget
Jan Feb Mar Apr May Jun
Production
units
2,000.00
. .د إ
2,100.00
. .د إ
2,200.00
. .د إ
3,000.00
. .د إ
3,300.00
. .د إ
4,000.00
. .د إ
Variable cost
per unit 2.50 . .د إ 2.50 . .د إ 2.50 . .د إ 2.50 . .د إ 2.50 . .د إ 2.50 . .د إ
Variable cost
5,000.00
. .د إ
5,250.00
. .د إ
5,500.00
. .د إ
7,500.00
. .د إ
8,250.00
. .د إ
10,000.00
. .د إ