Dysonica Plc: Financial Analysis, Budgeting, and Cost Reduction

This report provides a comprehensive analysis of business finance principles applied to Dysonica, focusing on cost classification, reduction strategies, and financial forecasting. It examines fixed, variable, and semi-variable costs, advocating for activity-based costing or marginal costing to enhance cost control. A 12-month cash flow forecast is presented, highlighting potential cash inflows and outflows, with recommendations for managing currency exchange risks and improving overall financial health. The report concludes that effective financial management is crucial for Dysonica's competitiveness, emphasizing the importance of cost reduction and accurate budgeting for sustained success in the global market. Desklib offers this solved assignment and many other resources for students.

Business Finance

Contents
INTRODUCTION...........................................................................................................................................3
TASK 1..........................................................................................................................................................3
Classify cost according to behaviour........................................................................................................3
TASK 2..........................................................................................................................................................5
Discuss the judgments and conclusions based on cost reduction strategy.............................................5
TASK 3..........................................................................................................................................................5
Preparation a 12 - month forecast/budget for the business up to 30 April 2023....................................5
TASK 4........................................................................................................................................................11
Clear justifications are needed to support the conclusions and recommendations made in your
evaluation..............................................................................................................................................11
CONCLUSION.............................................................................................................................................11
REFERENCES..............................................................................................................................................13

INTRODUCTION
Finance is the backbone of any firm. It is nearly hard to prosper lacking solid financial
backing. Business finance refers to the finances and credit used in a business. Financial is the
underpinning of any firm. Finance is required to acquire property, products, natural resources,
and other enabling business (Beladi, Deng, and Hu, 2021). Financial management can give the tools
needed to devise solutions to address the deficit. Dysonica is a large multinational inventive firm
that was founded in the United Kingdom but now works globally. Its items are accessible on the
main street and also internet. Competitive pressure has resulted in several price initiatives,
including the relocation of production from the United Kingdom.
TASK 1
Classify cost according to behaviour
Fixed cost:
Factory and storage rent: 18000 per month = 18000*12 = 216000
Insurance: 500 per month = 500*12 = 6000
Machinery: 1500 per month = 1500*12 = 18000
Utilities: 500 per month = 500*12 = 6000
Variable Cost:
Direct labour: 17500 per month
Raw material: 15000
Semi variable cost:
Office and sales staff: 9000 per month = 9000*12 = 18000
Logistics cost: 3000 per month
Fixed Costs £ Variable Costs £ Semi-variable
Costs
£

Machinery 1500 Raw materials 15000 Office and
sales staff
9000
Factory and
storage rent
18000 Direct labour 17500 Logistics 3000
Utilities 500
Insurance 500
Total: 20500 32500 12000
Absorption costing: Absorption costing is a costing method that takes into account all
manufacturing expenditures. Organization employs this approach to absorb the cost of the
products. The expenses provide both directly and indirectly charges. Direct expenditures include
factors of production required for manufacturing. Variable expenses include manufacturing
rental, administrative fees, licensing, and security.
Marginal costing: It is a technique of assigning changeable manufacturing costs to goods. It is
the proportion of the increase in expense to the increase in output. A product has two types of
costs: fixed costs and variable costs. Fixed expenditures stay unchanged irrespective of industrial
production. Variable costs, but at the other extreme, alter as a result of variations in global
production.
Activity based costing: It is a more exact method of determining a company's or service's price,
culminating in more appropriate price selections. It raises management' knowledge of overhead
expenses and variable cost by revealing inefficient and non-value-added procedures that may be
decreased or removed. ABC enables a more thorough assessment of operational expenditures in
order to develop effective techniques for allocating and eliminating overheads. It also enables for
more precise product and customer revenue assessment. It promotes its use of tools and
protocols, including as balanced scorecard, as well as continual development (Sarkar, and et.al.,
2019).

TASK 2
Discuss the judgments and conclusions based on cost reduction strategy
From the several costing strategies listed previously, it is advised that Dysonica Plc utilise
activity-based spending or marginal costing to enables the firm control expenses that may come
from various operations. This enables the firm to separate expenses based on its procedures and
determine which one is spending the majority of the costs, guiding administration to decrease
costs and optimize its strategies accordingly. Activity-based costing is a one-stop solution for
businesses to control their expenses. It allows businesses to specify expenses as they occur rather
than combining them with some other expenditure. In this manner, the actual price source is
recognised, and organisations may concentrate on properly controlling that respective cost
heading rather than concentrating on other inflexible drivers. The distribution of overhead costs
is more objective and accurate since overhead expenditures are divided and structured into
categories depending on the number of operations. To make things easier, ABC classifies
expenses by function instead of putting all costs together again to estimate the firm's indirectly
expenses (Rashid, and Hersi, 2021).
Traditionally unidentifiable expenditures, such as depreciation, are now identifiable to individual
tasks through the use of activity-based accounting. The ABC approach can effect the unit price
of low-volume commodities by shifting administrative expenditures from elevated goods to
reduced goods.
TASK 3
Preparation a 12 - month forecast/budget for the business up to 30 April 2023
Predicting prospective income and expenditure is part of cash flow forecasting. A cash
flow prediction is an important tool for their organization since it tells them if they will have
sufficient income to operate or develop their firm. This will reveal when more money is leaving
the company than coming in. A cash flow projection is a technique used by financial and
administration experts to anticipate impending cash needs across their organisation. The primary
goal of financial planning is to help with cash management; the greater the organisation, the
more complicated and difficult cash flow statement gets.
Following is the cash flow forecast for the business of Dysonica' up to 30th April 2023

Cash flow Statement
Particular MAY JUNE JULY
AUGU
ST
SEPT
EMBE
R OCTOBER
A. Cash flow from
operating
activities:-
Sales/Revenue
£
25,000.00
£
35,000.
00
£
49,000.00
£
68,600.
00
£
96,040.
00
£
1,34,456.00
Payment of salary
-£
26,500.00
-£
26,500.
00
-£
26,500.00
-£
26,500.
00
-£
26,500.
00
-£
26,500.00
Raw materials
-£
15,000.00
-£
21,000.
00
-£
29,400.00
-£
41,160.
00
-£
57,624.
00
-£
80,673.60
Rent Paid
-£
18,000.00
-£
18,000.
00
-£
18,000.00
-£
18,000.
00
-£
18,000.
00
-£
18,000.00
Accountant's fee
- £
1,50
0.00
Payment of Utilities
- £
2,50
0.00
- £
2,500
.00
Telephones -£
1,000.00
- £
1,000

.00
Vehicles
-£
20,000.00
-£
200.00
-£
200.00
-£
200.00
-£
200.00
-£
200.00
marketing costs
-£
1,250.00
-£
1,750.0
0
-£
2,450.00
-£
3,430.0
0
-£
4,802.0
0
-£
6,722.80
Water
- £
100.
00
- £
100.0
0
Logistics
-£
3,000.00
-£
3,000.0
0
-£
3,000.00
-£
4,500.0
0
-£
3,000.0
0
-£
3,000.00
Machinery
-£
1,500.00
-£
1,500.0
0
-£
1,500.00
-£
1,500.0
0
-£
1,500.0
0
-£
1,500.00
Insurance
-£
500.00
-£
500.00
-£
500.00
-£
500.00
-£
500.00
-£
500.00
Mixc Expense
-£
50.00
-£
50.00
-£
50.00
-£
50.00
-£
50.00
-£
50.00
Net cash flow from
operating activites:-
-£
62,300.00
-£
37,500.
00
-£
36,200.00
-£
27,240.
00
-£
16,136.
00
-£
6,290.40

B. Cash flow from
financaingactivities:
-
£
-
£
-
£
-
£
-
£
-
£
-
Net Cash flow from
financing
activities:-
£
-
£
-
£
-
£
-
£
-
£
-
C. Cash flow from
Investing activities:-
Initial investment
made
£
20,000.00
£
-
£
-
£
-
£
-
£
-
Net cash flow from
investing activities:-
£
20,000.00
£
-
£
-
£
-
£
-
£
-
Tatal cash
inflwo/outflows(A+
B+C)
-£
42,300.00
-£
37,500.
00
-£
36,200.00
-£
27,240.
00
-£
16,136.
00
-£
6,290.40
Cash flow Statement
Particular
NOVEMB
ER
DECE
MBE
R
JANUAR
Y
FEBU
RARY
MAR
CH APRIL
Total(
Year
1)
A. Cash flow from
operating
activities:-
Sales/Revenue £1,88,238. £2,63, £3,68,947. £5,16, £7,23, £10,12 £34,8

40 533.76 26 526.17 136.64 ,391.29 0,869.
52
Payment of salary
-£
31,800.00
-£
31,800
.00
-£
31,800.00
-£
31,800
.00
-£
31,800
.00
-£
31,800.
00
-£
3,49,8
00.00
Raw materials
-£
1,12,943.04
-£
1,58,1
20.26
-£
2,21,368.36
-£
3,09,9
15.70
-£
4,33,8
81.98
-£
6,07,43
4.78
Rent Paid
-£
25,000.00
-£
25,000
.00
-£
25,000.00
-£
25,000
.00
-£
25,000
.00
-£
25,000.
00
-£
2,58,0
00.00
Accountant's fee
-£
1,500.
00
Payment of Utilities
- £
2,50
0.00
-£
2,500.0
0
-£
10,000
.00
Telephones
- £
1,00
0.00
-£
1,000.0
0
-£
4,000.
00
Vehicles
-£
200.00
-£
200.00
-£
200.00
-£
200.00
-£
200.00
-£
200.00
-£
22,200
.00
marketing costs
-£
18,823.84
-£
26,353
.38
-£
36,894.73
-£
51,652
.62
-£
72,313
.66
-£
1,01,23
9.13
-£
3,27,6
82.15
Water
- £
100.
00
-£
100.00
-£
400.00
Logistics
-£
3,000.00
-£
3,000.
00
-£
3,000.00
-£
3,000.
00
-£
3,000.
00
-£
3,000.0
0
-£
37,500
.00
Machinery
-£
1,500.00
-£
1,500.
00
-£
1,500.00
-£
1,500.
00
-£
1,500.
00
-£
1,500.0
0
-£
18,000
.00
Insurance -£
500.00
-£
500.00
-£
500.00
-£
500.00
-£
500.00
-£
500.00
-£
6,000.

00
Mix Expense
-£
50.00
-£
50.00
-£
50.00
-£
50.00
-£
50.00
-£
50.00
-£
600.00
Net cash flow from
operating
activities:-
- £
5,57
8.48
£
17,010
.13
£
45,034.18
£
92,907
.85
£
1,54,8
90.99
£
2,38,06
7.39
£
24,45,
187.37
B. Cash flow from
financing
activities:-
£
-
£
-
£
-
£
-
£
-
£
-
£
-
Net Cash flow
from financing
activities:-
£
-
£
-
£
-
£
-
£
-
£
-
£
-
C. Cash flow from
Investing
activities:-
Initial investment
made
£
-
£
-
£
-
£
-
£
-
£
-
£
20,000
.00
Net cash flow from
investing
activities:-
£
-
£
-
£
-
£
-
£
-
£
-
£
20,000
.00
Total cash
inflow/outflows(A+
B+C)
-£
5,578.48
£
17,010
.13
£
45,034.18
£
92,907
.85
£
1,54,8
90.99
£
2,38,06
7.39
£
24,65,
187.37

TASK 4
Clear justifications are needed to support the conclusions and recommendations made in your
evaluation
The cash flow budget given above demonstrates that Dysonica's company is performing
well. The company can get a considerable quantity of cash flow in various periods, resulting in
favourable liquid assets for the company. The company's sales are expanding at a rapid pace in
such seasons, as predicted, indicating that the company is able to sell enough items to maintain
itself in a competitive marketplace. The entire cash injection in the company in the first year was
£ 2,465,187, which is a wonderful chance for the company since they may engage in various
scenarios for the company and help Dysonica expand. The firm must minimise its costs,
particularly those spent as a result of the currency exchange rate between nations such as the
United Kingdom and China. The company might employ financial derivatives to evaluate the
transaction at a predefined rate that would assist the company control the costs associated with
this component of the operation. It can be noted that the firm has adverse cash inflows, which
implies that the company had a cash flow in the first six to eight years of operation, indicating
that the company either has to increase sales or cut expenditures (Utomo, and Pamungkas, 2018).
The cash outflow has an indirect impact on the firm's financial condition, which is a critical
condition for any company succeed in a highly market and worldwide. Costs could be reduced
by employing a different link of supplies and reviewing which initiatives are in control and
which are losing money in the control of the company.
CONCLUSION
According to the above-mentioned assessment, company finance and administration of these
money is a big and crucial aspect in the performance of the company. Businesses that operate on
a global scale, such as Dysonica, confront tough rivalry. To stay ahead of the competition in a
competitive field, they must lower the many costs that the firm faces. Cash flow projections are a
fantastic method of measuring the influx or cash outflows into or out of a firm at the conclusion
of a predefined timeframe, and the company may use it to establish its own budgeting. Marginal
and activity-based spending are two of the greatest costing techniques that a company may
adopt. Dysonica reduces the possibility of inaccuracy and counts each expense that must be

incurred. It also assists the firm in reducing expenses by utilising the total expenses and expense
head that are not contributing to the key earnings of the organisation.

REFERENCES
Books and Journal
Beladi, H., Deng, J. and Hu, M., 2021. Cash flow uncertainty, financial constraints and R&D
investment. International Review of Financial Analysis, 76, p.101785.
Karpac, D. and Sedlakova, I., 2021. The usage of economic profit and other forms of profit as a
part of prediction models to forecast the financial stability of business entities in the
context of globalization. In SHS Web of Conferences (Vol. 92). EDP Sciences.
Kouvelis, P., Wu, X. and Xiao, Y., 2019. Cash hedging in a supply chain. Management
Science, 65(8), pp.3928-3947.
Sarkar, B., and et.al., 2019. How does an industry manage the optimum cash flow within a smart
production system with the carbon footprint and carbon emission under logistics
framework? International Journal of Production Economics, 213, pp.243-257.
Persson, M. E. and Fafatas, S., 2018. Accounting measurements, profit, and loss: a science
fiction play in one act by Harold C. Edey. Accounting History Review, 28(1-2), pp.31-
60.
Prior, D., and et.al., 2019. Profit efficiency and earnings quality: Evidence from the Spanish
banking industry. Journal of Productivity Analysis, 51(2), pp.153-174.
Choi, W., 2021. The Meeting of Several Earnings and Cash Flow Measures of Firm
Performance. Available at SSRN 3931205.
Guenther, D. A., Njoroge, K. and Williams, B. M., 2020. Allocation of internal cash flow when
firms pay less tax. The Accounting Review, 95(5), pp.185-210.
Rashid, A. and Hersi, M. A., 2021. The firm growth-cash flow sensitivity: do financial
constraints matter? International Journal of Managerial Finance.