Project Report: Accounting and Finance for Shampoo Production

This project report provides a comprehensive financial analysis of a proposed shampoo production business. It begins with an introduction to the business concept, focusing on the production of organic shampoo to address hair fall and damage issues. The report details the production process, including required ingredients, labor costs, and machinery investments. It then presents a marginal cost statement, calculating sales revenue, variable costs, and contribution margin, which indicates a gross profit margin of 50%. The report further includes a forecasting financial statement with a cash budget that shows a net cash flow of $16,700 in the first month, and $35,400 at the end of the year, indicating a strong financial position and liquidity. The statement of financial position assesses the assets, liabilities, and equity of the business, concluding with a net profit of $14,400, emphasizing the business's potential for profitability and offering substantial returns to stakeholders. The report highlights the financial viability of the business, emphasizing its ability to generate profits and manage financial risks.

Running Head: Accounting and Finance
1
Project Report: Accounting and Finance

Accounting and Finance
2
Contents
Introduction.......................................................................................................................3
Production and sales.........................................................................................................3
Marginal cost statement:...................................................................................................3
Forecasting financial statement........................................................................................4
Conclusion........................................................................................................................5
References.........................................................................................................................6

Accounting and Finance
3
Introduction:
It has been considered that producing and delivering the hair products in the current
market would be a better idea to make investment. As currently people are struggling a lot
with the hair fall issues and the hair damages. We have researched and developed an organic
shampoo which will not only help the people to reduce the hair fall but as well it will make
the hair silky and smooth. The main characteristic of this shampoo is that it could be used by
any customer with any hair type. As the shampoo is natural so no side effects would be there
on the hairs of the user.
The characteristic could be the main USP of the business. It would help the business
to grow smoothly and the customers would also be attracted towards the business. The
promotion must be done in such a way that a single shampoo could be used by each member
of the family. The packaging of the shampoo would also be in such a way that it could be
used even by the children (above 8 years) easily.
Production and sales:
If we talk about the financial part of this business than the main products which is
required for the production of the shampoo are few chemicals, fruits and bottle for packaging.
The total labour amount to produce a bottle of shampoo would be $ 0.8. The research also
explains that Property, plant and machinery worth $ 70,000 would be required to produce the
bottles. The total capacity of the machinery is 2500-3000 bottles.
The Hair product is Shampoo
Ingrediences
Chemicals 0.5
Fruits 0.2
Bottle 0.1
Labour
Direct labour 0.8
The evaluation on market has explained that the demand of the product would be
higher in the market and thus the business could work on its highest production capacity to
manage the performance of the business (Gapenski, 2008). the total sales of the business is
30,000 units and the sales per unit of the shampoo bottle would be $ 3.2.

Accounting and Finance
4
Cost
Useful
life Depreciation
PPE 50000 25 Y 2000
Machinery 20000 5 Y 4000
Volume of
production 2500 30000
Month Year
Marginal cost statement:
The marginal cost statement of the business explains that the sales price per bottle of
the shampoo would be $ 3.2 and the yearly sales of the business would be $ 96,000. If we talk
about the variable cost of the business than the total cost of the business would be $ 24000 for
direct material and $ 24000 for the direct labour. The marginal cost statement explains that
the contribution of the business would be $ 1.6 which explains that the gross profit margin of
the business would be 50%. It would offer great return to the company (Kaplan and Atkinson,
2015).
Further, it has been found that the fixed cost of the business would be $ 33,600 which
includes all the office expenses and factory expenses of the business. The overall calculations
explains that the total net profit of the business would be 15% of total sales.
Marginal Costing Statement
Per bottle Per year
Sales $ 3.20 $ 96,000
Less: Variable
cost
Direct Material $ 0.80 $ 24,000
Direct labour $ 0.80 $ 24,000
Contribution $ 1.60 $ 48,000
Less: Fixed cost $ 33,600
Profit $ 14,400
(Gapenski, 2008)
Marginal Costing Statement

Accounting and Finance
5
Per
bot
tle Jan Feb
Ma
r
Ap
r
Ma
y Jun Jul
Au
g Sep Oct
No
v
De
c
Per
yea
r
Sales
$
3.2
0
$
8,0
00
$
8,0
00
$
8,0
00
$
8,0
00
$
8,0
00
$
8,0
00
$
8,0
00
$
8,0
00
$
8,0
00
$
8,0
00
$
8,0
00
$
8,0
00
$
96,
00
0
Less:
Variable
cost
Direc
t
Mate
rial
$
0.8
0
$
2,0
00
$
2,0
00
$
2,0
00
$
2,0
00
$
2,0
00
$
2,0
00
$
2,0
00
$
2,0
00
$
2,0
00
$
2,0
00
$
2,0
00
$
2,0
00
$
24,
00
0
Direc
t
labou
r
$
0.8
0
$
2,0
00
$
2,0
00
$
2,0
00
$
2,0
00
$
2,0
00
$
2,0
00
$
2,0
00
$
2,0
00
$
2,0
00
$
2,0
00
$
2,0
00
$
2,0
00
$
24,
00
0
Contr
ibutio
n
$
1.6
0
$
4,0
00
$
4,0
00
$
4,0
00
$
4,0
00
$
4,0
00
$
4,0
00
$
4,0
00
$
4,0
00
$
4,0
00
$
4,0
00
$
4,0
00
$
4,0
00
$
48,
00
0
Less: Fixed
cost
$
2,8
00
$
2,8
00
$
2,8
00
$
2,8
00
$
2,8
00
$
2,8
00
$
2,8
00
$
2,8
00
$
2,8
00
$
2,8
00
$
2,8
00
$
2,8
00
$
33,
60
0
Profit
$
1,2
00
$
1,2
00
$
1,2
00
$
1,2
00
$
1,2
00
$
1,2
00
$
1,2
00
$
1,2
00
$
1,2
00
$
1,2
00
$
1,2
00
$
1,2
00
$
14,
40
0
The marginal statement brief that the business would offer great return to you. If you
will invest the amount in this business than it is for sure that you would earn $ 14,400 per
year. Along with the time, the demand of the products would also be improved and thus the
net profit of the business would also be higher (Higgins, 2012).
Fixed cost
Depreciation $ 6,000
Utilities $ 8,000
Marketing $ 8,000
Accountant fees $ 5,000
Others $ 6,600

Accounting and Finance
6
Total $ 33,600
If we talk about the cash flows, total income and expenses of the business and the
financial performance of the business than the overall performance of this business is quite
attractive and offers huge return to the related parties.
Forecasting financial statement:
The final financial statement of the business explains that the total cash inflow and
outflow of the business at initial month would be $ 93,000 and $ 76300. It explains that the
net receipts of the business would be $ 16700 in the first month. And at the end of the year,
the net cash flow of the business would be $ 35,400. It explains about a great increment in the
cash and liquid position of the business. The overall cash statement and the evaluation on the
business explains that the business would never have to face liquid risk and the overall
position of the business would be great (Lord, 2007).
The overall cash flow statement position of the business explains that the cash
position of the business would be better in the market and along with the higher cash inflows,
the liquidity level of the business would be improved and it would help the business to
maintain the overall position in the market.
It has also been measured that if the risk level related to the liquid position of the
business would be lower than it would be calculated against the total net working capital of
the business to measure the overall investment level and liquidity position of the business and
market performance of the business.
Cash
Bugdet
Jan Feb
Ma
r Apr
Ma
y Jun Jul Aug Sep Oct Nov Dec
Cash
receipts
Capital
introduc
ed
$
85,0
00
Sales
$
8,00
0
$
8,00
0
$
8,0
00
$
8,00
0
$
8,00
0
$
8,00
0
$
8,00
0
$
8,00
0
$
8,00
0
$
8,00
0
$
8,00
0
$
8,00
0
Total $ $ $ $ $ $ $ $ $ $ $ $

Accounting and Finance
7
receipts
93,0
00
8,00
0
8,0
00
8,00
0
8,00
0
8,00
0
8,00
0
8,00
0
8,00
0
8,00
0
8,00
0
8,00
0
Cash
paymen
t
Propert
y
$
50,0
00
Machin
e
$
20,0
00
Purchas
es
$
2,00
0
$
2,00
0
$
2,0
00
$
2,00
0
$
2,00
0
$
2,00
0
$
2,00
0
$
2,00
0
$
2,00
0
$
2,00
0
$
2,00
0
$
2,00
0
Wages
$
2,00
0
$
2,00
0
$
2,0
00
$
2,00
0
$
2,00
0
$
2,00
0
$
2,00
0
$
2,00
0
$
2,00
0
$
2,00
0
$
2,00
0
$
2,00
0
Utilities
$
667
$
667
$
667
$
667
$
667
$
667
$
667
$
667
$
667
$
667
$
667
$
667
Marketi
ng
$
667
$
667
$
667
$
667
$
667
$
667
$
667
$
667
$
667
$
667
$
667
$
667
Accoun
tant fees
$
417
$
417
$
417
$
417
$
417
$
417
$
417
$
417
$
417
$
417
$
417
$
417
Others
$
550
$
550
$
550
$
550
$
550
$
550
$
550
$
550
$
550
$
550
$
550
$
550
Total
paymen
t
$
76,3
00
$
6,30
0
$
6,3
00
$
6,30
0
$
6,30
0
$
6,30
0
$
6,30
0
$
6,30
0
$
6,30
0
$
6,30
0
$
6,30
0
$
6,30
0
Net
receipts
/
paymen
t
$
16,7
00
$
1,70
0
$
1,7
00
$
1,70
0
$
1,70
0
$
1,70
0
$
1,70
0
$
1,70
0
$
1,70
0
$
1,70
0
$
1,70
0
$
1,70
0
Openin
g
balance
$
-
$
16,7
00
$
18,
400
$
20,1
00
$
21,8
00
$
23,5
00
$
25,2
00
$
26,9
00
$
28,6
00
$
30,3
00
$
32,0
00
$
33,7
00
Closing
balance
$
16,7
00
$
18,4
00
$
20,
100
$
21,8
00
$
23,5
00
$
25,2
00
$
26,9
00
$
28,6
00
$
30,3
00
$
32,0
00
$
33,7
00
$
35,4
00
The statement of financial performance and the statement of financial position of the
business explain that the financial position of the business is quite strong. Company wouldn’t
have any liabilities as the entire business would be maintained through the available capital of
the business. The total assets of the business are $ 99,400. Further, it has been found that the

Accounting and Finance
8
total liabilities of the business are nil so the business don’t have to face any risk in terms of
credit and liquid level. All the funds could be generated from the equity only.
The overall financial position statement explains that the sales of the business would
be better in the market and along with the higher sales; the gross profit margin and net profit
margin of the business would also be improved. The financial performance of the business
additionally adds that the financial performance and position of the business would be quite
better and it would offer higher returns to the related parties of the business.
Statement of Financial Position
Assets
Non current Assets
PPE (property, plant and
equipment) $ 70,000
Less: Accumulated depreciation $ 6,000
Current assets
Cash $ 35,400
Total Assets $ 99,400
Liabilities
Equity
Capital introduced $ 85,000
Profit $ 14,400
Total liabilities and equity $ 99,400
Further, the statement of financial position has been measured and it has been found
that the net profit of the business would be $ 14,400. The gross profit % and the net profit %
of the business is 50% and 15% respectively. It has also been measured that the net
profitability performance of the business would be improved in near future (Lumby and
Jones, 2007). The overall financial position statement explains that the sales of the business
would be better in the market and along with the higher sales; the gross profit margin and net
profit margin of the business would also be improved.

Accounting and Finance
9
It has also been measured that if the return of the business would be higher than it
would be calculated against the total resources and the equity of the business to measure the
overall investment level of the business and market performance of the business.
Income Statement
Sales $ 96,000
Less: cost of goods sold $ 48,000
Gross profit $ 48,000
Expenses
Depreciation $ 6,000
Utilities $ 8,000
Marketing $ 8,000
Accountant fees $ 5,000
Others $ 6,600
Profit $ 14,400
It explains that if we talk in concern of the financial performance of the business than
the overall performance of the business is quite strong as well as the business would help the
investor’s amount to be double in no time. The overall financial position statement explains
that the resources of the business would be better in the market and along with the higher
resources, the overall performance of the business in terms of the various stakeholders would
be better.
It has also been measured that if the return of the business would be higher than it
would be calculated against the total resources and the equity of the business to measure the
overall investment level of the business and market performance of the business. The
business evaluation explains that the demand of the product would be higher in the market
and thus the investors could set new plants and machineries in next year to improve the sales
and the profits of the business.
Conclusion:
To conclude, the business of Hair shampoo is a better idea to invest the amount and
grab the market. Along with the shampoo, various other products such as conditioner, serum
etc could also be produced by the business and sold in the market. The characteristic could
be the main USP of the business. It would help the business to grow smoothly and the

Accounting and Finance
10
customers would also be attracted towards the business. The promotion must be done in such
a way that a single shampoo could be used by each member of the family. The packaging of
the shampoo would also be in such a way that it could be used even by the children (above 8
years) easily.
The business is viable and could be diversified by the owner of the business. The
financial, marketing, technological and research evaluation explains that the business would
offer huge return to the owners as well as other stakeholders of the business and thus you
should defiantly invest into the business.

Accounting and Finance
11
References:
Gapenski, L.C., 2008. Healthcare finance: an introduction to accounting and financial
management. Health Administration Press.
Higgins, R. C., 2012. Analysis for financial management. McGraw-Hill/Irwin.
Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.
Lord, B.R., 2007. Strategic management accounting. Issues in Management Accounting, 3.
Lumby,S and Jones,C,.2007. Corporate finance theory & practice, 7th edition, Thomson,
London.