ASSIGNMENT QUESTION
It is the end of the financial year and you are required to produce a management accountant’s report to be given to the company’s Chief Financial Officer (CFO). The table below shows the budgeted and actual sales for the year:
Oct-
19
Nov-
19
Dec-
19
Jan-
20
Feb-
20
Mar-
20
Apr-
20
May-
20
Jun-
20
Jul-
20
Aug-
20
Sep-
20
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Budgeted
Sales 354 390 429 472 519 571 628 690 759 835 919 1,011
Actual
Sales 375 421 497 562 712 150 180 242 523 715 894 1,256
Based on the budget/actual figures, create a set of costs for the company and create a
Statement of Profit/Loss (P/L). The line items to include are:
• Sales
• Direct Materials
• Direct Labour
• Variable Overheads
• Fixed Overheads
• Gross Profit
• Administration Costs
• Distribution Costs
• Selling Costs
• Operating Profit
• Finance Costs
• Profit Before Tax (PBT)
• Tax (10% of PBT)
• Profit After Tax
You are also required to produce a budget and actual Statement of Financial Position (SOFP).
You are to create these values, but ensure you include the following line items:
• Land & Buildings, Plant & Machinery, Cash, Receivables, Inventory, Prepayments,
Accrued Income, Share Capital, Retained Earnings, Long-term Bank Loan,
Payables, Accruals
• The following headings must be used:
• NON-CURRENT ASSETS, CURRENT ASSETS, TOTAL ASSETS, EQUITY, NON-
CURRENT LIABILITIES, CURRENT LIABILITIES, TOTAL EQUITY AND LIABILITIES
• Ensure that your SOFP balances (i.e. total assets = total equity and liabilities)
Write a report using Microsoft Word showing both the original budgeted results and the actual results for the financial year. Insert graphs (from Excel) and tables where appropriate.
Include the following:
• Contents Page
• Report Summary: summarise main findings in report including how company has
performed over the year and how the company has performed relative to the budget.
One paragraph, approximately 150 words.
• A budgeted Statement of Profit & Loss, shown monthly for a period of 12 months for the
financial year, including a 13th column showing the total for the year.
• An actual Statement of Profit & Loss, shown monthly for a period of 12 months, including
a 13th column showing the total for the year.
• A budgeted Statement of Financial Position for the financial year.
• An actual Statement of Financial Position for the financial year.
• A pie chart showing the relative size of each of the budgeted costs for the year. Provide a
brief comment on interpreting what the data from the graph means.
• A pie chart showing the relative size of each of the actual costs for the year. Provide a
brief comment on interpreting what the data from the graph means. Compare the 2 pie
charts.
• The following graphs comparing the budgeted against the actual performance. Provide a
brief comment on interpreting what the data from the graphs means and what the
implication is for the business:
• A line graph comparing 12 months of budgeted against actual sales
• A line graph comparing 12 months of budgeted against actual gross profit
• A line graph comparing 12 months of budgeted against actual operating profit
• The following performance ratio calculations:
• 2 profitability ratio calculations for both budgeted and actual years
• 2 liquidity ratio calculations for both budgeted and actual years
