Manage Budgets and Financial Plans - Activity 2

Calculation of number of units needed to achieve the target profit at current variable cost

Formula = (Fixed cost + Target profit)/ Contribution per unit

  • Current selling price = $500 per unit
  • Variable cost per unit = $250 per unit

Contribution per unit = Selling price per unit – Variable cost per unit

= $500-$250

= $250

  • Fixed cost = $1,280,000
  • Target profit = $1,000,000

Number of units required = ($1280000+1000000)/$250

= 9120 units

Calculation of variable cost per unit that need to achieve the target profit with current manufacturing capacity

Current selling units = (Fixed cost + target profit)/ (Selling price-VC cost per unit)

8000 units = ($1280000+1000000)/ ($500-VC cost per unit)

$500-VC per unit = $2280000/8000 units

$500-VC per unit = $285

VC per unit = $500-$285

= $215

Recommendation: On the basis of analysis it has been found that Big Red Bicycles need to focus on moving to the Indian Plant in order to increase its capacity to 10000 units. This recommendation is based on the fact that the company needs minimum of 9120 units to achieve the target profit and as per the given scenario company has the option to move to the Indian Plant that has capacity of 10000 units. Here the analytical process used is the CVP analysis as it helps to analyse the units required to produce to achieve the target profit.

Manage Budgets and Financial Plans - Activity 3

It is required to keep GST records for 5 years

Particulars

July

August

September

Total

CASH RECEIPTS

GST collected (payable)

       

Cash Sales

$20,000.00

$10,000.00

$10,000.00

$40,000.00

Cash revenue (Beside sales)

$0.00

$0.00

$0.00

$0.00

Cash receipts through sale of assets

$0.00

$0.00

$0.00

$0.00

Cash receipts Account receivables

$180,000.00

$230,000.00

$150,000.00

$560,000.00

Total receipts including GST

$200,000.00

$240,000.00

$160,000.00

$600,000.00

GST payable on cash receipts

$18,181.82

$21,818.18

$14,545.45

$54,545.45

($200000*10/110)

($240000*10/110)

$160000*10/110)

CASH PAYMENTS 

       

GST Paid (Refundable)

       

Cash purchases of stock

$0.00

$0.00

$0.00

$0.00

Cash expenses

$4,300.00

$5,200.00

$5,250.00

$14,750.00

Cash paid for account payable

       

Purchase of stock

$25,000.00

$30,000.00

$25,000.00

$80,000.00

Purchase of asset

$4,300.00

$5,200.00

$5,250.00

$14,750.00

Total payments including GST

$33,600.00

$40,400.00

$35,500.00

$109,500.00

GST Refundable

$3,054.55

$3,672.73

$3,227.27

$9,954.55

 

 ($33600*10/110)

($40400*10/110)

($35500*10/110)

 

NET GST Payable/ Liabilities

$15,127.27

$18,145.45

$11,318.18

$44,590.91

Manage Budgets and Financial Plans - Activity 5

Activities

Monitoring

Accountabilities

Timelines

Project Development

Continual review of project needs and requirements

Project leader will define the plan and purpose of the project

22 days

Setting up organisation in relocated area

Assessing the requirements for relocation of business

Developing different departments and team leaders of the relocated business

30 days

Creating relocation plan

Detailing the requirements of each stage of relocation plan

Defining different stages of the relocation plan

20 days

Nominating in-house relocation coordinator

Reviewing performance of the project leader and team members in a continual manner

Project leader need to continual review the performance of business manager and team members

5 days

Developing a budget

Reviewing the potential expenses and income of the new project

The finance department is responsible for developing and implementation of the budget

20 days

Defining relocation requirements

Assessing size, location and availability of factors of production at relocated area

Project leaders required to conduct a preliminary feasibility analysis for evaluation success of business at relocated area

25 days

Approval by management

Reviewing the support from top management

Higher management will continual review the progress of the relocated business

1 day

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Accounting and Finance Assignment Help

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