Accounting Project Report: Investment Analysis and Budgeting

This project report analyzes an investment opportunity for two marketing students, Mark and Paul, who plan to open a restaurant. The report details the nature and scope of investment, presenting financial data for a restaurant business, including machinery, furniture, and operational expenses. It provides sales, labor, and cash budgets, projecting revenues and costs over several months. The analysis includes detailed calculations of sales based on meal and drink prices, labor costs, and cash flow projections. The report highlights the practical issues associated with the investment, suggesting the need for operational adjustments. The financial analysis offers a clear view of the investment's potential profitability and operational challenges, providing a comprehensive overview of the financial aspects of starting and running the restaurant.

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Project Report: Accounting for business

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Executive summary
A report briefs the user about various aspects related to a topic. In this report, two
marketing students named by Mark and Paul have decided to open their own venture. This
report depict that the user is required to make various steps according to various techniques
and tools to manage the performance and profitability condition of both the projects. Further,
this report also depict that a person must always investigate the projects to make a better
decision. In this report paper, introduction has been given for the investments briefly than
both the investment has been examined and a comparison study has been given and lastly, the
conclusion has been expressed.

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Contents
Introduction.......................................................................................................................4
Nature and scope of investment........................................................................................4
First Investment opportunity.............................................................................................4
Sales budget..................................................................................................................6
Labor budget.................................................................................................................7
Cash budget..................................................................................................................7
Overview and analysis of budgets................................................................................9
Practical issues of investment.......................................................................................9
Second Investment opportunity........................................................................................9
Comparison.....................................................................................................................10
Conclusion:.....................................................................................................................10
References.......................................................................................................................11
Appendix.........................................................................................................................12

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Introduction:
Mark and Paul have decided to start their own venture or invest the amount into the
market so that they could start earning the revenue. Mark and Paul have presented two
investment opportunities to manage the performance and profitability of both the projects.
Mark and Paul have decided to open their own venture. This report depict that the user is
required to make various steps according to various techniques and tools to manage the
performance and profitability condition of both the projects (Garrison et al, 2010). Further,
this report also depict that a person must always investigate the projects to make a better
decision. A proposal of start the restaurant is beneficial for the Mark and Paul as it would
offer them a business to run and it would be something like a part time job for them at the
same time, the other opportunity where they could be capitalist and invest their amount to
manage the performance of their saving amount.
Nature and scope of investment:
Investment is a technical term which is used in the market for those individuals, firms
or the organization that has used their saving amount into buying new securities from the
market or spending that amount to buy some financial securities or the products which would
offer them high return in the future. Investment are of various types such as investing into the
government bonds, investment into the capital market, into a new business etc. the nature of
investment is complex as only few people like financial analyst could understand the changes
into the performance of an investment (Nobes and Parker, 2013). But at the same time, an
investment offers various opportunities and the profitability position to an investor who has
invested the amount in that. This report depict that the scope of the investments are wide in
nature.
First Investment opportunity:
According to the given case study, two marketing students which are Mark and Paul
have decided to invest their savings into some business so that they could start earning some
amount. And two proposals of investment have been identified by them. Through this report,
it has been found that the Mark and Paul would be required high amount to invest in this
proposal as restaurant business is quite expensive. With this, it has also been found that the
various machineries, vehicles, utensils etc would be required for the restaurant business.

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Following are few details which have been given related to the total revenue and total
expenses of the company:
Restaurant Purchase and Expenses
Machinery $ 1,10,000
Furniture $ 30,000
Vehicle for Deliveries $ 43,000
Utensils (cups and plates) $ 18,000
Products $ 10,000
Drinks (For 1 month) $ 20,000
Jun-01 Bank balance $ 80,000
Purchase $10000 for a week of meals
Purchase of $ 20,000 for a month of drinks
Am
ount
would be
paid
according
to the
following
derails:
10% in current month
45% in second month
45% in third month
Labour
Number of casual labour 3
Working in a day (hours) 6 hours
In a week (days) 6 days
Rate
$ 23 per
hour
Drawings
$ 10000 each per
month

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Overhead $ 5,000
Sales
20000 meals in first month
18000 meals in second month
18000 meals in third month
22000 in forth month
Average selling price $ 45
Drink sales would be triples the amount of
meals per month.
Drink Price $ 6
Mark and Paul has depicted into their case that the above non tangible assets would be
required for the business. The above depicted revenues would be got through the business by
them. Above mentioned expenses are lined with this investment opportunity. Budgeting
techniques have been taken into the context to make it bit simple.
Sales budget:
The calculations of sales budget of this investment opportunity of the business depict
that the sales would be start from the August to the further month. Through the details it has
been found that the 20000 meals in first month, 18000 meals in second month, 18000 meals
in third month, 22000 in forth month. The selling price per unit of the company is $ 45 of the
meals and $ 6 for the drinks of the company, the total units of drinks are thrice to the total
units of the products (Lafond and Roychowdhury, 2008).
Sales budget
For the year 2017
June July August September
Sales of meals 18000 22000
Sales per unit $ 45 $ 45
Sales price $ 8,10,000 $ 9,90,000

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Sales of drink 54000 66000
Sales per unit $ 6 $ 6
Sales price $ 3,24,000 $ 3,96,000
Total Sales $ 11,34,000 $ 13,86,000
According to the calculations, it has been found that the total sales of products of the
company would be $ 8,10,000 in august and $ 9,90,000 in Sept whereas the total sales of
drinks of the company would be $ 3,24,000 in august and $ 3,96,000 in Sept. This depict that
the total sales of the company would be $ 11,34,000 in august and $ 13,86,000 in Sept.
Labor budget:
The calculations of labour budget of this investment opportunity of the business
depict that the labour work would be start from the June to the further month. Through the
details it has been found that the 3 skilled labours are there who is performing their duties 6
days in a month. The labour cost per hour of the company is $ 23, the total labour hour of the
company is 432 hours in a month.
Restaurant Purchase and Expenses
Labour budget
For the year 2017
June July August September
Number of labour 3 3 3 3
Working in a day (hours) 6 6 6 6
In a week (days) 6 6 6 6
Total weeks 4 4 4 4
Total Working hours 432 432 432 432
Rate 23 23 23 23
Total Labour rate 9936 9936 9936 9936

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According to the calculations, it has been found that the total labour hour of the
company would be 432 hours in every month and thus the total labour cost of the company is
$9,936 in every month (Van der Stede, 2001).
Cash budget:
The calculations of cash budget of this investment opportunity of the business depict
that the cash outflow would be start from the June to the further month. Through the details it
has been found that the cash outflow would be start from the August to the further month.
The balance of the business is $ 80,000 at the starting phase.
Restaurant Purchase and Expenses
Cash budget
For the year 2017
June July August September
Beginning cash balance
$
80,000 -155936 -192872 855192
Add: budgeted cash receipts for meal and
drinks
$
-
$
-
$
11,34,000
$
13,86,000
Total cash available for use
$
80,000
$ -
1,55,936
$
9,41,128
$
22,41,192
Less: cash disbursements
Direct Material of meals and drinks
$
2,000
$
51,000
$
60,000
direct Labour
$
9,936
$
9,936
$
9,936
$
9,936
Overhead
$
5,000
$
5,000
$
5,000
$
5,000
Withdrawals
$
20,000
$
20,000
$
20,000
$
20,000
Machinery
$
1,10,000
Furniture
$
30,000
Vehicle
$
43,000
Utensils
$
18,000
Total disbursements
$
2,35,936
$
36,936
$
85,936
$
94,936
Cash surplus
$ -
1,55,936
$ -
1,92,872
$
8,55,192
$
21,46,256
budgeted ending cash balance $ - $ - $ $

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1,55,936 1,92,872 8,55,192 21,46,256
According to the calculations, it has been found that the total cash inflow of the
company would be $ 80,000 in June, $ - 1,55,936 in July, $ 9,41,128 in August and $
22,41,192 in Sept whereas the total cash outflow of the company is $ 2,35,936in June, $
36,936 in July, $ 85,936 in August and $ 94,936 in Sept. Thus the total cash flow of the
company is enhancing in further years.
Overview and analysis of budgets:
All the above budget details of the company depict that the company is required to
make the changes into some operations of the company. Rest this opportunity would offer
huge amount in return to the Mark and Paul. Through budgeting techniques, a good future of
the restaurant has been predicted (Deegan, 2013).
Practical issues of investment:
Though this opportunity would be a better one but this opportunity is connected with
many issues such as collecting the license, various players are already their in the market,
economical condition of the company, geographical location of the business etc. through
these reports, it has been calculated that the risk is associated with this investment
opportunity.
Second Investment opportunity:
According to the given case study, two marketing students which are Mark and Paul
have decided to invest their savings into some business so that they could start earning some
amount. And two proposals of investment have been identified by them. Through this report,
it has been found that the Mark and Paul would be required high amount to invest in the new
business as a venture capitalist. With this, it has also been found that the various
opportunities could be got by the business. Following are few details of the investment which
has been given in the case study:
Initial Cost
$ -
3,90,000
Cash Inflows
June
$
1,00,000

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July
$
2,30,000
Aug
$
1,90,000
Sept
$
1,40,000
From the over given facts in the case study paper, it has been investigated that the
total NPV (net present value) of venture capitalist investment opportunity might be $
1,06,851.08 while the 3.77 years would be taken to get back the invested amount according to
the payback technique and the 27.40% is the average return of this business.
Comparison:
Risk and return are the important factor to analyze before comparing the two
projects. In these proposals, first project is offering high return and second offer is offering
less risk. Now it depends over the investor to analyze that which factor is most important and
he could make a decision accordingly.
Conclusion:
To conclude, risk and return are the important factor to analyze before comparing the
two projects. In these proposals, first project is offering high return and second offer is
offering less risk. Now it depends over the investor to analyze that which factor is most
important and he could make a decision accordingly.

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References:
Deegan, C., (2013). Financial accounting theory. McGraw-Hill Education Australia.
Garrison, R.H., Noreen, E.W., Brewer, P.C. and McGowan, A., (2010). Managerial
accounting. Issues in Accounting Education, (25(4), pp.79(2-793.
Lafond, R. and Roychowdhury, S., (2008). Managerial ownership and accounting
conservatism. Journal of accounting research, 46(1), pp.101-135.
Nobes, C. and Parker, R.H., (2008). Comparative international accounting. Pearson
Education.
Van der Stede, W.A., (2001). Measuring ‘tight budgetary control’. Management Accounting
Research, 1(2(1), pp.119-137.

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Appendix:
Restaurant Purchase and Expenses
Cash budget
For the year 2017
June July August September
Begining cash balance $
80,000
-155936 -192872 855192
Add: budgeted cash recepits for meal and
drinks
$
-
$
-
$
11,34,000
$
13,86,000
Total cash available for use $
80,000
$ -
1,55,936
$
9,41,128
$
22,41,192
Less: cash disbursements
Direct Material of meals ad drinks $
2,000
$
51,000
$
60,000
direct Labour $
9,936
$
9,936
$
9,936
$
9,936
Overhead $
5,000
$
5,000
$
5,000
$
5,000
Withdrawals $
20,000
$
20,000
$
20,000
$
20,000
Machinery $
1,10,000
Furniture $
30,000
Vehicle $
43,000
Utensils $
18,000
Total disbursements $
2,35,936
$
36,936
$
85,936
$
94,936
Cash surplus $ -
1,55,936
$ -
1,92,872
$
8,55,192
$
21,46,256
budgetd ending cash balance $ -
1,55,936
$ -
1,92,872
$
8,55,192
$
21,46,256
working Note:
cash Scedule
For the year 2017