Dysonica Plc: Cost Analysis, Reduction Strategies, and Budgeting 2023

This report assesses Dysonica Plc's cost management strategies, providing an in-depth analysis of various costing methods including variable, fixed, marginal, activity-based, and absorption costing. It recommends cost reduction policies, such as adopting activity-based costing and marginal costing, to improve efficiency and profitability. The report also develops a 12-month budget forecast up to April 30, 2023, and examines the company's financial presentation based on these forecasts. The analysis covers key areas like cost identification, expense reduction, and financial performance evaluation, offering insights into how Dysonica Plc can optimize its financial operations. Desklib provides access to similar solved assignments and resources for students.

FINANCE

Table of Contents
INTRODUCTION.......................................................................................................................3
TASK 1.....................................................................................................................................3
Establish the purpose of cost.............................................................................................................3
TASK 2.....................................................................................................................................7
Render the recommendations towards the business for the cost reduction policies and strategies...7
TASK 3.....................................................................................................................................8
Develop a 12-month budget/forecast the business activities up to 30th April 2023............................8
TASK 4...................................................................................................................................11
With the help of figures and facts in the budgets and forecast, examine and analyse the
presentation of Dysonica Plc............................................................................................................11
CONCLUSION.........................................................................................................................12
REFERENCES..........................................................................................................................13

INTRODUCTION
The report prepared as under explains the quantity of amount, managed and arranged by the
business enterprises for the purpose to fulfil the demands and expectations of the firm in long
run. It can also be explained as the funds which are being utilised by the companies or businesses
for running a business in competitive environment. These funds would include the credit funds
and capital funds which are being invested in a industry. The enterprise further would be utilising
these funds in acquiring the assets, purchasing of raw materials and producing a good and other
operational function considering activities. When the business would be starting its firm after
that the capital being introduced is not enough for meeting and reaching each and every desire
related to business (Aldridge and Avellaneda, 2021). Hence, in relation to fulfil such needs,
business companies would be looking after so many mechanisms for generating revenues and
profits. The evaluation of possibilities and financial requirements and possibilities could be cross
checked on a daily basis such that the good financial management plan could be created,
developed and prepared for smoother functioning of a business. This report takes in account case
study based on Dysonica Plc. It consists of four operational activities where the first task would
be considering the expense related areas. And segments of a firm and in what ways it would be
differentiating among them. The second task would be highlighting the recommendations for the
management which would help the managers in reducing the expenses and cost as well. The third
task consists the projection and estimation of cash flow of Dysonica Plc till April 30, 2023. And
the last task states in what ways accomplishment and achievements can be examined of an
organisation and in what ways a specific industry is being observed to perform. This judgement
would be taking place in relation with forecasted values in the cash flow of Dysonica Plc.
TASK 1
Establish the purpose of cost.
Cost can be explained as a term which is helpful in supplying and manufacturing of
commodities and services. In production cycle, cost can explain as a very essential element at
every level from acquisition of raw materials to finished products of a company. Generally the
cost is stated as a amount of fund which is helpful in covering expenses related towards
production being carried out. There are various sort of costs which would be affecting the

business but usually two type of expenses which make complexity in production of goods can be
explained as fixed and variable cost.
Variable cost: It can be explained as a cost which refers to expense which is directly dependent
on organisation production and sale related activities and which would be measuring the cost per
unit which is sold on additional basis. If the production and supply of commodities in a company
decreases or increases then the variable cost is also observed to rise or decline respectively which
denotes that they both seem to be parallel with each other. Variable cost can be explained
Semi variable cost: The expenses which is being paid at regular time intervals is based on yearly,
quarterly or monthly for examining the needs of the business. It generally includes both the costs
fixed and variable. Semi variable costs are depreciation of fixed asset, staffing and facility rent.
Fixed cost: Fixed expense is a cost which is always similar even when there is any fluctuation in
production and selling of goods and services. It is an independent cost that quantity won’t affect
from any of the decrease or increase in the cost of product or services. It would be including the
rent payment, insurance, salary payments and bill payments (Bals, 2019).
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
The expense which would manufacture the same good or commodity on a continuous
basis over a larger volume can be explained as unit cost. The cost which is being referred to
single unit of manufacturing good or product. It is also known as cost of products being sold and

the process which would cost is referred as accounting which produces and manufactures same
or identical unit of outcomes. Difference among process cost and unit are as under:
Marginal costing: It can be defined as a costing which makes better use of techniques in respect
of marginal cost where the variable cost is charged towards the cost of units and fixed expenses
of a stated time period is wholly written down in context of contribution price. It is a cost which
would indicate a greater number of expenses caught up in manufacturing additional units of
output or thing. The feature of marginal costing would include distribution among both fixed and
variable cost, observing the rates, evaluation of material and rating the profitability cycle. It
would also be helpful to examine the behaviour of cost which would affect the company’s
earning capacity of profitability (Chen, Liu and Li, 2019).
Marginal Cost = Change in cost / Change in Quantity
The rate of fluctuation in variable expenses effect the unit of cost. Fixed cost of the company
remains same in a sufficient level of production.
Example:
Assume that ABC is a corporation that makes a fan. For its manufacturing facilities, the
following information is provided.
Month 1 Units Produced = 10,000 Month 2 Units Produced = 15,000 Variable Costs in
Month 1= $ 50,000 Variable Costs in Month 2 = $ 80,000
Change in cost/change in quantity Equals Marginal Cost
(80,000 – 50,000)/ (15,000 – 10,000) = Marginal Cost
Therefore, the result of marginal cost per unit is $ 6 (30,000/5,000).
Activity based costing: It is a cost or expense which is useful in examining the cost of
production. It is breakdown overhead cost between manufacturing based on techniques and
methods. The procedure of activity-based costing is being followed by focusing on lessening or
minimizing the value of overhead expense. The necessity of such costing is as under:
It is helpful in analysing the cost related practices which would show the cost practice way with
respect to positioning of a company.
The ABC industry examine the route of distribution Is being used by the vendors for selling the
product or service such as wholesaler, retailer, social networking site and even door to door
services.

The price scale of goods is also essential part of activity-based costing which would directly be
affecting the revenue of company. Price of good are fixed after examination of marketplace and
the value of same competitors company goods. If the price of goods is more than minimum
expense then it may lead to problem of loss so the minimum pricing would prove to be useful for
maintaining the postilion in market (Costello, 2019).
Absorption costing: It can be explained as a cost which cover the method of costing which
examine and make proper accounting of manufacturing related cost. Usually this element is used
by the businesses for absorbing the expense related to goods. In simple language the cost is also
denoted as full costing. There are four sort of absorption costing factors such as direct labour,
direct material, fixed manufacturing overhead and variable production overhead. It is the expense
which consider direct or indirect expense. The main aspects of direct cost is the number of labour
and material which are helpful in manufacturing of goods. Whereas in case of indirect cost of
production. It would be including security charges, insurance and factory rent as well.
Computation of absorption costing:
Absorption costing formula = (Direct labour cost + Direct material cost + Variable
manufacturing overhead cost + Fixed manufacturing overhead) / No. of units produced
The absorption costing is usually computed in the field of manufacturing industries helping the
firm in computation of cost of goods such that the business would be able to analyse the better
cost computed for the amount as well as it would also help in having better control over the price
of products.
For example:
Assuming that the ABC company is a manufacturer of fans. The following data is being provided
for manufacturing of one phase. The revenues will be computed with the help of absorption
costing method.
The number of units produced equals 10,000. 9,000 units sold over the time = $ 50 unit price
Direct Labour = $ 5 Direct Material = $ 20
$ 5 in other variable costs
Overheads Fixed = $ 5
$ 30,000 in fixed costs

TASK 2
Render the recommendations towards the business for the cost reduction policies and strategies.
There are several methods which a business can adopt for reducing or cutting down its cost
and achieveing its desired or set objectives in methods which would reflect on the bottom line in
an efficient and effective manner.
On the basis of the outcomes which has been considered after implementation of the above tools
and techniques the conclusion which has been made is that they must incorporate Activity based
costing method as their tool to compute the cost (Dorfleitner and Braun, 2019). The main reason
after selection of such methodologies is that it is considered expense of each department of the
business separation and allocating the cost on the basis of drivers which has been computed. The
ABC costing would be helpful in enabling the cost in each of their business process and which
can be checked easily as which department is helpful for them in relation with cost allocation and
those departments which have been incurring more cost would be ensuring that their price shall
be managed and maintained under an acceptable bound. The main benefit of ABC costing is such
thst it facilitates grouping of cost according to the job work rather than allocating the same on the
department which are being operational. It is helpful in reducing the expense related to final
product as a whole which would be helpful in business enterprise for deciding the selling prices
of the goods and services to an acceptable level such that it won’t be creating burden on the
customers as well. Therefore, on the basis of above carried out discussion it is being
recommended to Dysonica Plc to adopt activity-based costing technique in their businesses so
that they are able to cut down cost of product in accordance.
Cost reduction strategy can be explained as a method which any company could adopt for
cutting down its expenses for bringing an increment in their bottom line. These methods are
observed to be different as they would be relying on the similar sort of goods and services which
is a company would be offering to its linked audience. The reason behind use of such strategies
and policies’ is to lower the expense which are being associated with every product without
bringing the transformation in its quality. From the above computations in accordance with the
cost Dysonica Plc must be choosing such strategies for lowering its expenses. The suggestions
given for Dysonica PLc takes in account the adoption of marginal costing as such cost of making
is the result with the variation in total production cost which arrives from manufacturing of one
extra unit (Gallagher, 2018). This will aid in cutting down expenses which are not important and

even linked with the production of other additional unit and would be useful in giving guidance
to the management for separating the cost and organizing its processes in a efficient and effective
way.
Another advice to Dysonica PLc is to opt the activity-based costing method as it is a very precise
approach towards projecting a cost of commodity or service which would be helpful in taking the
decision which are more accurate and reliable. Dysonica must use this method as this would help
the business firm in allocation of cost according to various activities which are being performed
in the manufacturing process. Dysonica PLc can get a better understanding of the expenses as it
would be giving a clear insight of those actions which are not able to add any value and even
involving more and more expenses.
Other methods which Dysonica PLc must go for is development of better payment
terminologies with the vendor such that they would be able to negotiate for the costing of raw
materials. But making sure that it won’t be affecting the quality rendered by raw materials. If this
cost is being reduced then it would prove to be very useful for the organisation to buy goods in
bulk without giving it a second thought. Dominos Plc shall be investing in the technology-based
solution it might also be an additional cost for the company and might incur higher expenses in
the beginning. But adoption of new technique advancement would be helpful for the business
enterprises to minimize or lower its operational cost for long term and the output would also rise.
Dysonica Plc Ltd must keep a track of expenses which are incurred in the performance of day to
day business actions and activities. It must be keeping a close eye on the cost related to utility,
storage, other cost and property as well. It must. Be making budgets according to the guidance
given to company for allocation of expenses which are according to the activities carried out in
various departments. Through such overheads cost can be minimized (Harvey, Liu and Saretto,
2020).
TASK 3
Develop a 12-month budget/forecast the business activities up to 30th April 2023.
An income articulation can be explained as a budget summary which shows the wellspring
of income for a enterprise. An income articulation is able to portray a company’s whole
monetary based status. Businesses are able to utilise the assertion for deciding how much cash a

firm is able to generate every year and whether it would prove to be sufficient for subsiding
futuristic tasks.
Non cash exercises such as deterioration and receivables not yet gathered are eliminated from the
income proclamation, not similar to the monetary based records or paying explanation.
Following is the cash flow forecast for the business of Dysonica upto 30th April 2023
Cash flow Statement
Particular MAY JUNE JULY AUG
A. Cash flow from operating activities:-
Sales/Revenue £ 25,000.00 £ 35,000.00 £ 49,000.00 £
Payment of salary - £ 26,500.00 - £ 26,500.00 - £ 26,500.00 - £
Raw materials - £ 15,000.00 - £ 21,000.00 - £ 29,400.00 - £
Rent Paid - £ 18,000.00 - £ 18,000.00 - £ 18,000.00 - £
Accountant's fee - £ 1,500.00
Payment of Utilities - £ 2,500.00
Telephones -£ 1,000.00
Vehicles - £ 20,000.00 - £ 200.00 - £ 200.00 - £
marketing costs - £ 1,250.00 - £ 1,750.00 - £ 2,450.00 - £
water - £ 100.00
logistics - £ 3,000.00 - £ 3,000.00 - £ 3,000.00 - £
Machinery - £ 1,500.00 - £ 1,500.00 - £ 1,500.00 - £
Insurance - £ 500.00 - £ 500.00 - £ 500.00 - £
Mixc Expense - £ 50.00 - £ 50.00 - £ 50.00 - £
Net cash flow from operating activites:- - £ 62,300.00 - £ 37,500.00 - £ 36,200.00 - £
B. Cash flow from financaing 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 £ - £ - £
Tatal cash inflwo/outflows(A+B+C) - £ 42,300.00 - £ 37,500.00 - £ 36,200.00 - £
Cash flow Statement
Particular NOVEMBER DECEMBER JANUARY FEBU
A. Cash flow from operating activities:-
Sales/Revenue £1,88,238.40 £2,63,533.76 £3,68,947.26 £5,
Payment of salary - £ 31,800.00 - £ 31,800.00 - £ 31,800.00 - £

Raw materials - £ 1,12,943.04 - £ 1,58,120.26 - £ 2,21,368.36 - £ 3
Rent Paid - £ 25,000.00 - £ 25,000.00 - £ 25,000.00 - £
Accountant's fee
Payment of Utilities - £ 2,500.00
Telephones - £ 1,000.00
Vehicles - £ 200.00 - £ 200.00 - £ 200.00 - £
marketing costs - £ 18,823.84 - £ 26,353.38 - £ 36,894.73 - £
water - £ 100.00
logistics - £ 3,000.00 - £ 3,000.00 - £ 3,000.00 - £
Machinery - £ 1,500.00 - £ 1,500.00 - £ 1,500.00 - £
Insurance - £ 500.00 - £ 500.00 - £ 500.00 - £
Mixc Expense - £ 50.00 - £ 50.00 - £ 50.00 - £
Net cash flow from operating activites:- - £ 5,578.48 £ 17,010.13 £ 45,034.18 £
B. Cash flow from financaing activities:- £ - £ - £ - £
Net Cash flow from financing activities:- £ - £ - £ - £
C. Cash flow from Investing activities:-
Initial investment made £ - £ - £ - £
Net cash flow from investing activities:- £ - £ - £ - £
Tatal cash inflwo/outflows(A+B+C) -£ 5,578.48 £ 17,010.13 £ 45,034.18 £

TASK 4
With the help of figures and facts in the budgets and forecast, examine and analyse the
presentation of Dysonica Plc.
From the above prepared cash flow oit can be interpreted that the business has good
accomplishment and achievements. Dysonica’s company appears to be performing pretty well as
observed by the cash flow forecasting plan as above. Companies can generate significant profit
and income throughout various time intervals, which would result in a large influx of resources.
In a season such as this, the group would be dealing in developing quickly, implying that the
group is having enough for offering to keep up with itself in a significant commercial hub. The
whole infusion of £2,465,187 into the business in the primary year is a good opportunity for
companies because they can be activated in several conditions for the company and could help
Dysonica expand. The corporation must cut down cost, especially which are related to currency
exchange rates among countries such as China and United Kingdom. Currency subsidiaries can
be utilised by firms to analyse the trade at predetermined exchange rates which would allow
them to have better control over the cost which are linked with such elements in a business.
Unfavourable inflow are common which indicates that the business has revenue in its first six to
eight years of operation, implying what the company wants for expanding trading or cutting
down usage. The company’s funding position is observed to be affected by the cyclical rise in
investment, which is a mandatory prerequisite for any company to win in deep marketplaces and
around the world as well. Costs can be cut by usage of alternative supply connection and
determining which drives shall be blamed and which would cost the organisation’s money. It is
necessary for them to generate operational functions over a constant basis such that their
operational cash flow would be remaining positive over a longer period of time.
The very first element of cash flow from operating activities for an accounting periof reflects
sale which start from the month of May and end in April and an rise can also be observed in the
twelve months. The forecasted cash flow statement would reflect that the business is able to
maintain its financial position good and sound. The Dysonica Plc can cover its short-term
liabilities without facing any issues and it has enough of current asset for dealing with the current
liabilities. Also, the sales projections can also be observed, which would represent that the
business is able to play to the point and carry out selling of products and services and even
generate good quantity of profit. The total cash inflow for the first year is being assessed at £

2,465,187 which states the best thing and also give an origin and scope towards the Dysonica Plc
for making new investment-based opportunities. Investment in new asset will actually serve as
an helping hand to Dysonica Plc for growing its business and attracting larger number of
stakeholders group. It is also being observed from the projected cash flow statements that the
Dysonica Plc is involved in the foreign exchange rates with the territories such as United
Kingdom and China. Some the cost which is incurred is the exchange which result in high level
amount which must be controlled and monitored by the businesses by using the techniques as it
would assist in the estimation of trade at the pre decided rates. All this would be useful for the
business in that very field for monitoring the direct expenses. For another six months a negative
inflow in cash is being examined which means that the business must focus or concentrate on
increasing its sales and cut down costs.
CONCLUSION
So, from the above asserted report it can be concluded that funds are necessary for
maintaining the stand in market for long run. Every business must be opting for finance from
various sources. In relation to compete with rivalries it must be handling operational activities in
a precise and efficient manner. Such companies must be using various tools and techniques for
reducing the cost and adopting number of mechanisms which would increase the profit scale and
revenue from sale operations. This report also gives a clear presentation on how you could
predict future financial potential and the capability of a business concern for meeting its
upcoming needs and requirements.

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