Management Accounting Report: Business Plan of Minute Maid Fresh Fruit

This report provides a comprehensive management accounting analysis of Minute Maid Fresh Fruit, a business venture focused on providing healthy fruit juices. It includes an introduction outlining the business concept, product descriptions detailing various juice and smoothie offerings, and an analysis of major competitors like Tropical Smoothies and Banana Beaters. The report delves into market research, targeting health-conscious consumers in Leicester, and outlines revenue and cost assumptions, including break-even sales projections. It also examines the supply chain process, credit facilities, and cash flow assumptions. Furthermore, it presents financial assumptions, a summary of projected revenues, and a detailed break-even analysis to assess the financial viability of the business. Appendices include calculations, a unit cost statement, and budget forecasts.

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student
Name of the University
Authors Note
Course ID

1MANAGEMENT ACCOUNTING
Table of Contents
Introduction:...............................................................................................................................3
Product Description:...................................................................................................................3
Major Competitors:....................................................................................................................4
The Market Research:................................................................................................................5
Target Market:............................................................................................................................6
Revenue and Cost Assumptions:................................................................................................6
Demand and Supply of Products:...............................................................................................7
Supply chain Process:................................................................................................................8
Credit facilities and Cash Flow Assumption:.............................................................................9
Financial Assumptions:............................................................................................................10
Summary:.................................................................................................................................10
Breakeven Analysis:.................................................................................................................10
Conclusion:..............................................................................................................................11
Reference List:.........................................................................................................................12
Calculations Appendix:............................................................................................................14
Unit Cost Statement:................................................................................................................14
Break-even in Units:................................................................................................................15
Break even in Pound:...............................................................................................................16
Operational Budget:.................................................................................................................18
Production Budget:...................................................................................................................19
Cash Flow Budget:...................................................................................................................20

2MANAGEMENT ACCOUNTING
Introduction:
Minute Maid Fresh Fruit will be considered as the visualization of young
entrepreneur. The business will be making contribution in the society by assisting the youth
to enhance their health with the help of healthier launches. The business will be making use
of the fruits produced locally by the graduates and would import the fresh grown fruits to
make a constructive use of the business process. Offering smooth juice to the customers will
help Minute Maid Fresh Fruit to gaining a fair amount of share in the Leicester market. The
business would be utilizing the fresh fruit in manufacturing juice and would be increasing its
operations by distributing its products in the local stores.
Product Description:
The products of Minute Maid Fresh Fruit will be made from the local fruits which
will not be containing any preservatives or artificial additives. The product will be free from
sugar content as the fruits would be having natural sugar (Abrams 2017). Fruits that are
available during the specific season would be collected and would be processed in fresh
fruits.
The major products of Minute Maid Fresh Fruit would include
 Fruit and vegetable juices;
 Fresh Fruit Smoothies;
 Organic orange juices
 Fruit and vegetable shakes.

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Figure 1: Figure reflecting fruit and fruit juices
(Source: As Created by Author)
Apart from the production of fruit juice there are other products that will be
manufactured will be having the content of sugars;
a. Squeezed Grapefruit
b. Banana Shake
c. Golden Apple Juice
d. Gold Pineapple
The company will be categorizing the products under the heads of Relax Fit for its young
customers that prefer working out. Simultaneously the other category of fruit drinks will
include the Sporty Fit which will be dedicated towards the sports team and clubs that
participates in sports. This will enable the business to attract customers from every quarter.
Major Competitors:
Tropical Smoothies and Banana Beaters are some of the major competitor that operate
in the Leicester market of East Midlands of England (Scholes 2015). Market research have
provided that both the competitors have better reputation of providing quality products. Both

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Tropical Smoothies and Banana Beaters is located in the East Midlands of England busy
market. Both the company are characterised as the purchase and go form of outlets.
Minute Maid Fresh Fruit faces direct competition in the market from the local
producers that compete to offer customer with pulpy drinks (Rubin 2016). The business faces
major competition from Tropical Smoothies since it is located close to Minute Maid Fresh
Fruit location. The direct competition can be viewed relatively medium as there are no other
fruit juice producers that offer customers with fresh fruit juice and no content of sugar.
The other competitor Banana Beaters is known for their traditional juices with
Tropical Smoothies operating in the market for several years and no real sign of growing its
business soon. Fortunately, other fruit juice manufacturer located in the far East Midlands
faces financial shortages and this may assist the proposed business in stimulating demand for
fresh fruit juices.
The Market Research:
The market research suggest that the industry of fruit juice has experienced rise in
2016 and recorded a growth of 7% in the off-trade values sales with 6% rise in off-trade
sales. The expansion of fruit juice industry is primarily because of the rise in premium trend
especially packed bottle of pulpy fruit and vegetable juice, sugar content preservative drinks
and carbonated content juice (Cassidy 2016). New market entrant of carbonated fruit juice
brands without the preservatives are some of the popular launches and drinks having Asian
speciality are on declining trend.
The per unit price of reconstituted fruit juice bottles costs around £4.50 per litre while
the price per unit of peel fresh nectars brands of fruit juice costs around £4.30 per litre.
Presumably recent market trends suggest a demand for health drinks with majority of the
consumers have expressed their preference of sharing goodness with their family. Over their

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forecasted time period the consumers would look for wide range of healthy fruit drinks that
are free from sugar and preservatives.
Target Market:
With more than 1.5 million population of Leicester the target market for Minute Maid
Fresh Fruit is visibly large. Nevertheless, the business will be targeting customers from all
age group but a special focus will be placed on younger and health conscious customers. The
target market will mainly comprise of creating an appeal for its products among the youth
generations that are engaged in sports and value their health (Morecroft 2015). The target
market opportunity is based on prioritizing and personalizing the packaging for achieving the
objective of better standard of living.
Revenue and Cost Assumptions:
The breakeven of the sales was computed at £1,00,591 over the one year forecasted
period. Because of the margin of contribution ratio, the prices of the products are determined
based on the bulk purchasing of the products. The projected quantity to be sold is determined
based on the market survey of how often the consumers purchase the juice item. The market
survey reveals that 10% of the customers purchase an additional item with their smoothies
(Wheelen et al. 2017). The sales computation is based on the assumption that 11 % of the
sales are generated from the purchase of fruit and vegetable juices from the first year were as
14 % of the sales revenue are generated from the super food drinks in the initial year of
operation.
Moreover, the strategy employed is low cost option that is envisioned to diversify the
company overall revenues and simultaneously offering customers with the necessary
nutrients (Slack 2015). The average cost per batch is anticipated to be around £94.50. As a
result of this, the contribution margin stands 78.5%. This strategy is regarded as one of the

6MANAGEMENT ACCOUNTING
incredibly easy method of implementing and boosting sales. The revenue and cost strategy
would help in strengthening the financial stability of the firm.
To increase the seasonal sales, the proposed business needs products that can be sold
throughout the year particularly during the winter months. The fruit and vegetables shakes
can be considered as the ideal solution that is budget friendly and it is favourite among the
French culture. This strategy would help in diversifying the revenue of product offerings and
offers greater diversification in financial security (Kotler 2015). A commercial graded
machinery is capable producing 70 bottles in one batch and would cost merely around
£94.75. All the information relating to expenditure was obtained from the online stores and
each bottle of juice would cost around £1.25 to manufacture with pre-tax profit £2.30. This
strategy can be extremely considered to be low cost but would help in bolstering the sales and
revenue for the firm.
Demand and Supply of Products:
The macro-economic factors that dictate the supply or price and the consumer demand
for the packaged juices play an important role in the organic market. Though the UK
supermarket chains have reported a rise of 22% the supplies in general are unable to keep
pace with the demand. Even though the individual juices on certain occasions have gone past
the demand however a surplus in supply is generally short lived (Keller and Kotler 2016).
Unlike the conventional juices the organic fruit juice market in UK have reported a strong
growth, underpinned by insufficient supply. Most of the juice type is witnessing a shortage in
certified production. This has resulted the new entrants to make a solid investment
opportunity.
The freshly squeezed varieties of orange, grapefruit, lemonade and orange in the UK
regions have grown strongly and more specifically the market is demanding more fresh

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juices. The market has number of large hospitality industries along with educated health
conscious customers that shop for wellbeing (Armstrong et al. 2015). Manufacturing
companies in the UK have the demand for fruit juices and concentrates with guaranteed
product quality.
Supply chain Process:
The procedure of supply chain management is the significant process in running the
key operations for all business. The business will be following the five step supply chain
procedure for running its key operations.
Step 1: Planning: The supply chain managers will be identifying the list of vital components
such as location of plant, size and warehousing and IT solutions selection (Chernev 2018).
The business will be planning the matrices such as transportation cost modelling and
warehousing efficiency.
Step 2: Source: At this stage of supply chain management the emphasis would be placed on
ascertaining the reliable source of suppliers for raw materials so that procedure is not
jeopardised.
Step 3: Execution: At this stage the company will be designing and implementing the
perceivable shape to the plans for manufacturing the products that are ready for testing,
packaging and delivery (Weinstein and Pohlman 2015). At this stage the results will be
quantified and maximum potential efficiency will be attained.
Step 4: Delivery: The supply chain at this stage will be reaching the delivering the products
and service at the right quantity at the right market place. The company will be equipped with
modern tools to keep track on the inventory and warehousing along with invoice and
payments received.

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Step 5: Return: Return will form the final step in the process of supply chain. It would not
only consist of reviewing and returning the products because of quality but would also
manage the inventory.
Figure 2: Figure representing Supply Chain Procedure
(Source: As Created by Author)
Credit facilities and Cash Flow Assumption:
Concerning the credit facilities, the business will take the credit facilities of paying its
suppliers of raw materials for a period of two months. The main purpose of obtaining the pre
shipment facilities is to provide the exporter with the facilities of procuring raw materials
carrying out the manufacturing procedure and to offer a secure warehouse for goods and raw
materials (Rothaermel 2015).
The cash flow assumption is based on the budgeted amount of inflow and outflow of
cash. The cash flow will be containing the business associated expenditure that owners will
be incurring each year (Hill, Jones and Schilling 2014). The cash flow for the first year is
Planning
Sourcing
Execution
Delivery
Return

9MANAGEMENT ACCOUNTING
related low as the owners will be looking forward to expand the business. The cash flow is
potentially aimed at producing the personal income of 150% greater than the presently listed
expenditure however the surplus amount of cash flow will be used in expanding the need of
bank loan. The cash flow will be reviewing the net inflow and outflow of cash for the first
year.
Financial Assumptions:
Summary:
The one year projected revenues stands approximately £100,591. The breakdown for
units sold for each of the product categories are provided and justify the sharp increase in the
units sold over the period of 12 months. The cost of goods sold maintains the persistent
relation with the sales. The expenses though for the first year is high but these expenses are
offset in profits because of the overall larger amount of goods sold (Barney 2014). The
income tax expenditure stands £3223 with net income before tax standing £12,891. The EBIT
are anticipated to increase from year to year. The appendix offers the detailed yearly
summary of the financial measures.
Breakeven Analysis:
Minute Maid Fresh Fruit will remain open for 12 months during period of first year of
operations with total amount of fixed cost standing £42,700. The average contribution margin
is assumed to be around 78% of sales and 4,543 units must be sold each year to attain
breakeven. This is equivalent to 378 units to be sold each month. As evident from the current
information the breakeven point will be easily attainable (Wheelen et al. 2017). The numbers
obtained from the calculations explain the huge potential of profitability for the proposed
business.

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Conclusion:
On a conclusive note, given the Minute Maid Fresh Fruit is a small start-up business it
is difficult to perform analysis against the large fruit juice companies. The profit line appears
to be in accordance with industry average. The company projected profit margin in first year
of operation is 10% which is in line with the industry average. The business strategies have
maintained a minimum borrowed money to afford the company to generate sufficient amount
of sales to breakeven. The business is profitable on small scale and all sales projections were
based on breakeven point and units.

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Reference List:
Abrams, R.M., 2017. Entrepreneurship: A Real-World Approach. Planning Shop.
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction.
Pearson Education.
Barney, J.B., 2014. Gaining and sustaining competitive advantage. Pearson higher ed.
Cassidy, A., 2016. A practical guide to information systems strategic planning. CRC press.
Chernev, A., 2018. Strategic marketing management. Cerebellum Press.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an
integrated approach. Cengage Learning.
Keller, K.L. and Kotler, P., 2016. Marketing management. Pearson.
Kotler, P., 2015. Framework for marketing management. Pearson Education India.
Morecroft, J.D., 2015. Strategic modelling and business dynamics: a feedback systems
approach. John Wiley & Sons.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Rubin, G.D., 2016. An organizational perspective and a team approach: keys to successful
business planning. Journal of the American College of Radiology, 13(2), pp.228-229.
Scholes, M.S., 2015. Taxes and business strategy. Prentice Hall.
Slack, N., 2015. Operations strategy. John Wiley & Sons, Ltd.
Weinstein, A. and Pohlman, R.A., 2015. Customer value: a new paradigm for marketing
management. In Proceedings of the 1997 Academy of Marketing Science (AMS) Annual
Conference (pp. 132-133). Springer, Cham.

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Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic
management and business policy. pearson.
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic
management and business policy. pearson.

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Calculations Appendix:
Unit Cost Statement:
PRODUCT REVENUE
PRODUCT
NAME
COST
PER
ITEM
MARK
UP
PERCE
NTAG
E
TO
TA
L
Sal
es
TOTAL
REVEN
UE
SHIPPI
NG
CHAR
GE
PER
ITEM
SHIPPI
NG
COST
PER
ITEM
PROFI
T PER
ITEM
RET
URN
S
TOTAL
INCOM
E
Fruit and
Vegetable
Juices
£
4.50
83.00
%
140
0
£
11,529.0
0
£
5.00
£
2.50
£
6.24 0 £
8,729.00
Fresh Fruit
Smoothies
£
5.75
87.00
%
135
0
£
14,515.8
8
£
5.00
£
2.50
£
7.50 0
£
10,128.3
8
Organic
Orange Juices
£
5.50
75.00
%
150
0
£
14,437.5
0
£
5.00
£
2.50
£
6.63 0 £
9,937.50
Fruit and
Vegetable
Shakes
£
4.25
90.00
%
150
0
£
12,112.5
0
£
5.00
£
2.50
£
6.33 0 £
9,487.50
Squeezed
Grapefruit
£
5.25
95.00
%
130
0
£
13,308.7
5
£
5.00
£
2.50
£
7.49 0 £
9,733.75
Banana
Shake
£
3.50
100.0
0%
130
0
£
9,100.00
£
5.00
£
2.50
£
6.00 0 £
7,800.00
Golden
Apple Juice
£
5.75
65.00
%
125
0
£
11,859.3
8
£
5.00
£
2.50
£
6.24 0 £
7,796.88
Gold
Pineapple
£
5.50
92.00
%
130
0
£
13,728.0
0
£
5.00
£
2.50
£
7.56 0 £
9,828.00

14MANAGEMENT ACCOUNTING
11%
14%
14%
12%
13%
9%
12%
14%
Fruit and Vegetable
Juices
Fresh Fruit Smoothies
Organic Orange Juices
Fruit and Vegetable
Shakes
Squeezed Grapefruit
Banana Shake
Golden Apple Juice
Gold Pineapple
Figure 3: Figure representing Revenue Breakdown
(Source: As Created by Author)
Break-even in Units:
Break-Even Analysis
For the Period: Jan 1, 2018 - Dec 30, 2018
Selling Price (P): £ 12.00
Break-Even Units (X): 4,543 units
Break-Even Sales (S): £ 54,510.64
[42]
Fixed Costs
Accounting and Legal £ 1,250.00
Advertising £ 1,500.00
Depreciation £ 4,500.00
Dues and Subscriptions £ 1,500.00
Insurance £ 2,000.00
Interest Expense £ 1,500.00
Maintenance and Repairs £ 1,250.00
Office Supplies £ 1,000.00
Payroll Expenses £ 1,750.00

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Postage £ 250.00
Rent £ 1,500.00
Research and Development £ 3,250.00
Salaries and Wages £ 15,000.00
Telephone £ 2,250.00
Travel £ 1,250.00
Utilities £ 1,750.00
Web Hosting and Domains £ 1,200.00
Total Fixed Costs (TFC) £ 42,700.00
Variable Costs
Variables Costs based on Dollar Amount per Unit
Cost of Goods Sold £ 0.75 per unit
Direct Labor £ 0.75 per unit
Overhead £ 0.50 per unit
Sum: £ 2.00
Variables Costs based on Percentage
Commissions 5.00% per unit
Other (specify) per unit
Sum: 5.00%
Total Variable Cost per Unit (V) £ 2.60
Contribution Margin per unit (CM) = P - V £ 9.40
Contribution Margin Ratio (CMR) = 1 - V / P = CM / P 78.3%
Break-Even Point
Break-Even Units (X) X = TFC / (P - V) 4,543 units
Break-Even Sales (S) S = X * P = TFC / CMR £ 54,510.64
Targeted Net Income
Targeted Net Income Before Taxes (NIBT) -₹
Units required to reach targeted NIBT, X = (TFC + NIBT) / (P-V) 4,543 units
Sales required to reach targeted NIBT, S = (TFC + NIBT) / CMR £ 54,510.64
Rate of return on sales before taxes = NIBT / S 0.0%
Tax Rate (T) 25%
Net Income After Taxes (NIAT) = (1-T)*NIBT -₹
Rate of return on sales after taxes = NIAT / S 0.0%
Break even in Pound:
Break-Even Price

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Number of Units (X): 10,900
Break-Even Price (P): £ 6.23 per unit
Break-Even Sales (S): £ 67,894.74
[42]
Fixed Costs
Accounting and Legal £ 1,250.00
Advertising £ 1,500.00
Depreciation £ 4,500.00
Dues and Subscriptions £ 1,500.00
Insurance £ 2,000.00
Interest Expense £ 1,500.00
Maintenance and Repairs £ 1,250.00
Office Supplies £ 1,000.00
Payroll Expenses £ 1,750.00
Postage £ 250.00
Rent £ 1,500.00
Research and Development £ 3,250.00
Salaries and Wages £ 15,000.00
Telephone £ 2,250.00
Travel £ 1,250.00
Utilities £ 1,750.00
Web Hosting and Domains £ 1,200.00
Total Fixed Costs (TFC) £ 42,700.00
Variable Costs
Variables Costs based on Dollar Amount per Unit
Cost of Goods Sold £ 0.75 per unit
Direct Labor £ 0.75 per unit
Overhead £ 0.50 per unit
Other (specify) per unit
Sum (Vd): £ 2.00
Variables Costs based on Percentage
Commissions 5.00% per unit
Other (specify) per unit
Sum (Vp): 5.00%
Total Variable Cost per Unit (V) V = Vd + (Vp*P) £ 2.31
Contribution Margin per unit (CM) = P - V £ 3.92
Contribution Margin Ratio (CMR) = 1 - V / P = CM / P 62.9%
Break-Even Point
Break-Even Price (P) P = (1/(1-Vp))*(Vd+(TFC/X)) £ 6.23
Break-Even Sales (S) S = X * P = TFC / CMR £ 67,894.74

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Targeted Net Income
Targeted Net Income Before Taxes (NIBT) £ -
Sales Price (P) required to reach targeted NIBT £ 6.23
Sales required to reach targeted NIBT, S = X * P £ 67,894.74
Rate of return on sales before taxes = NIBT / S 0.0%
Tax Rate (T) 25%
Operational Budget:
Operational Budget
INCOME Budget
Operating Income
Fruit and Vegetable Juices £ 11,529
Fresh Fruit Smoothies £ 14,516
Organic Orange Juices £ 14,438
Fruit and Vegetable Shakes £ 12,113
Squeezed Grapefruit £ 13,309
Banana Shake £ 9,100
Golden Apple Juice £ 11,859
Gold Pineapple £ 13,728
Total Operating Income £ 1,00,591
Total INCOME £ 1,00,591
EXPENSES
Operating Expenses
Accounting and Legal £ 1,250
Advertising £ 1,500
Depreciation £ 4,500

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Dues and Subscriptions £ 1,500
Insurance £ 2,000
Interest Expense £ 1,500
Maintenance and Repairs £ 1,250
Office Supplies £ 1,000
Payroll Expenses £ 1,750
Postage £ 250
Rent £ 1,500
Research and Development £ 3,250
Salaries and Wages £ 15,000
Telephone £ 2,250
Travel £ 1,250
Utilities £ 1,750
Web Hosting and Domains £ 1,200
Total Operating Expenses £ 42,700
Non-Recurring Expenses
Furniture, Equipment and Software £ 12,000
Machinery £ 25,000
Equipment’s £ 8,000
Total Non-Recurring Expenses £ 45,000
Total EXPENSES £ 87,700
Net Income Before Taxes £ 12,891
Income Tax Expense £ 3,223
NET INCOME £ 9,668
Profit Margin 10%
Production Budget:
Production Budget
TOTAL "A" - DEVELOPMENT COSTS Amount
"B" - PRODUCTION COSTS ("Below-The-Line
Production")
Production Office - Labour 250
Technical Department -
Labour 350
Production Office Expenses 600
Transportation Expenses 350
Raw Stock and Transfer
Expenses 250

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TOTAL "B" - PRODUCTION COSTS 1,800
"C" - POST PRODUCTION COSTS
Post Production Labour 400
Finishing and Delivery
Expenses 375
TOTAL "C" - POST PRODUCTION COSTS 775
TOTAL "B" + "C" 2,575
"D" - OTHER COSTS
Unit Publicity 250
Digital Marketing Expenses 275
General and Indirect
Expenses 300
TOTAL "D" - OTHER COSTS 825
TOTAL "A" + "B" + "C"
+ "D" 3,400
CONTINGENCY
Contingency 550
CONTINGENCY
TOTAL PRODUCTION BUDGET 3,950
"E" - PROMOTION AND DISTRIBUTION COSTS
Promotion Costs 600
Distribution Costs 450
TOTAL "E" - PROMOTION AND DISTRIBUTION
COSTS 1,050
GRAND TOTAL 5,000
Cash Flow Budget:
Cash Flow Statement
For the Year Ending 31-12-2018
Cash at Beginning of Year £ 20,000
Operations
Cash receipts from
Customers £ 1,00,591
Other Operations
Cash paid for
Inventory purchases -£ 35,000
General operating and administrative -£ 42,700

20MANAGEMENT ACCOUNTING
expenses
Wage expenses -£ 15,000
Interest -£ 1,500
Income taxes -£ 3,223
Net Cash Flow from Operations £ 3,168
Investing Activities
Cash receipts from
Sale of property and equipment £ -
Collection of principal on loans
Sale of investment securities
Cash paid for
Purchase of property and equipment -£ 45,000
Making loans to other entities
Purchase of investment securities
Net Cash Flow from Investing Activities -£ 45,000
Financing Activities
Cash receipts from
Issuance of stock
Borrowing £ 50,000
Cash paid for
Repurchase of stock (treasury stock)
Repayment of loans £ -
Dividends £ -
Net Cash Flow from Financing Activities £ 50,000
Net Increase in Cash £ 8,168
Cash at End of Year £ 28,168

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