MFRD 2 - 14 Dec 2009

a

GROUP NUMBER 01

NAME OF All STUDENTS

1, Pham Hai Linh (I3D – 3357)2, Nguyen Thi Minh Chau (I4D - 4229)3, Do Duc Hoa (I4C - 3346)4, Nguyen Dat Khue (I4C - 4074)5, Bui Son Bach (I4C)

REGISTRATION NOUNIT TITLE Unit 2: Managing Financial Resources and Decisions

ASSIGNMENT TITLE Group Assignment

ASSIGNMENT NO 2 of 3

NAME OF ASSESSOR HAFITAH MANSOR

SUBMISSION DEADLINE 14th December 2009

We, group 01 hereby confirm that this assignment is my own work and not copied or plagiarized from any source. I have referenced the sources from which information is obtained by me for this assignment.

________________________________ ______________________ Signature of all members Date

-----------------------------------------------------------------------------------------------------------

FOR OFFICIAL USE

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NATIONAL ECONOMICS UNIVERSITYBTEC HND IN BUSINESS

Assignment Cover Sheet

ASSIGNMENT GRADE

Unit Outcomes

OutcomeEvidence for the criteria

FeedbackAssessor’s

decisionInternal

Verification

Analyse the

implications of

finance as resource within a business

Describe the information

needs of different

decision makers

c

Make financial decisions based on

the financial

information

(3)

Analyse budgets and

make appropriate decisions

a

Calculate unit costs and make

pricing decisions using

relevant information

b

Analyse and

evaluate the

financial performanc

e of the business

(4)

Explain the purpose of the main financial

statements

a

Describe the differences

between the formats of financial

statements for different type of

businesses

b

2

OutcomeEvidence for the criteria

FeedbackAssessor’s

decisionInternal

Verification

Merit grades awarded M1 M2 M3

Distinction grades awarded D1 D2 D3

COMMON SKILLS & COMPETENCIES ASSESSED (indicated by X)

1. Managing own roles & responsibilities X 12. Use information sources

2. Manage own time in achieving objectives X 13. Deal with a combination of routine & non-routine tasks

3. Undertakes personal and career development 14. Identify & solve routine & non-routine problems X4. Transfer skills gained to new/changing situations & contexts

B. WORKING WITH & RELATING TO OTHERS E. APPLYING NUMERACY

5. Treat others beliefs and opinions with respect 15. Applying numerical skills and techniques X6. Relate & interact effectively with individuals & groups X

7. Work effectively as a team member X F. APPLYING TECHNOLOGY

C. COMMUNICATING 16. Use a range of technological equipment and systems

8. Receive and respond to a variety of information X G. APPLYING DESIGN AND CREATIVITY

9. Present information in a variety of visual forms 17. Applying a range of skills and techniques to develop a variety of ideas in the creation of new / modified products, services or situations

X10. Communicate in writing X

11. Participate in oral & no-verbal communication X 18. Use a range of thought processes X

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Task 1

Identify different decision makers in the company and describe the

information needs of the different decision makers

In the future, we will develop to a big company with 5 positions which are

considered as 5 decision maker. They are CEO, production manager,

marketing manager, finance manager and the human resources manager.

CEO

A CEO or chief executive officer is one of the highest-ranking administrators in

charge of total management. The CEO’s responsibilities are almost everything

because they have the highest rank in the company and often make final

decision as well. There are three main duties of the CEO which require three

kinds of information in order to help the CEO give decision to run company

fluently. The first duty of the CEO is setting strategy and vision. The company can

only run well when its have clear vision and clever strategy. In the position of the

highest rank in company, CEO will need information about the markets which the

company will enter. The more understanding the company is, the better

advantages it will have again other competitors. The next information is about the

company’s competitors and what are their product lines. It is not enough for the

company to only understand the market. The company has to study evidently

about their competitors in order to know their advantages and disadvantages so

they will have the best strategy again their rival. The final and most important

information is to analyze and to know what the difference between their company

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and the other is. At the end of the day, the CEO will decide, set budgets, form

partnerships and hire a team to steer the company accordingly. The second duty

of the CEO is creating the best working environmental in order to attract and

retain the employees. If the CEO wants to do that, the information needed here is

the expecting of the staffs and their reaction when they work in better

environment. The final duty is allocating capital. Capital is the basic requirement

to run the company so it is important for the CEO to allocate the capital

effectively. The information they need to do that is the information about the

project which CEO will allocate capital, will the project support company’s

strategy or not. At the end of the day, it is CEO decision that determines the

company’s financial fate.

Production manager

A production manager is involved with the planning, coordination and control of

industrial processes. A production manager ensures that goods and services are

produced efficiently; that they are of the right quality, quantity, and cost; and that

they are produced on time, to the satisfaction of the customer, at the right price.

The scope of the job depends on the nature of the production system: jobbing

production, mass production, process production, or batch production. The

information a production manager need to know is about the production process,

the production schedule to ensure that the company can produce the product on

time. He also needs information about the material resources, the cost and the

quality of the products whether they satisfy customers’ needs or not.

Furthermore, the production manager will need information about health and

safety guidelines to ensure the quality of the product, he also needs information

about the subordinates’ skill to provide training class if necessary to help the

employees have their best performance and improve the quality of the products.

Marketing manager

Marketing manager is the one who determine the demand for products and

services offered by a firm and its competitors and identify potential customers.

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Develop pricing strategies with the goal of maximizing the firm's profits or share

of the market while ensuring the firm's customers are satisfied. Oversee product

development or monitor trends that indicate the need for new products and

services. The useful information which helps he to do that is the information

about the customers’ needs and wants. Understand exactly the requirement of

the customers is one of the best advantages of the company to earn long-term

profit. He also has to know the information of the product, the information of the

competitors and the information about the distributing channel so that he can

have the right strategy to help the company compete effectively again the other

rivals. If the company has its right strategy, they can develop gradually and have

revenue in order to exist in the market.

Financial manager

Financial manager is the responsible for providing financial advice and support to

clients and colleagues to enable them to make sound business decisions.

Financial considerations are the basic requirement of all major business

decisions. Definite budgetary planning is necessary for future planning, both

short and long term, and company needs to know the financial implications of

any decision before proceeding. In order to make financial decision, the financial

manager has to know information about the source of finance which company

can use in the future. He will also has to update the information about the

company’s financial in order to manage the budget, monitor cash flow and predict

future trend. The information about the factors which influencing company’s

performance is also affects the manager’s decision.

Human resources manager

The human resources manager is in charge of recruiting all the staffs in the

company. His job is managing and overseeing the personnel department within a

company, organization or agency. This includes posting advertisements or

approving advertisements for new employees, screening resumes and

applications, setting interview appointments and being involved in the hiring

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process. The information which a human resources manager needs to know is all

the information about their staffs. Having a definite understanding about the

staffs, about their skills, their weakness and other information is the basic

requirement of the human resources manager. The manager also has to know

the information about safety, insurance and the government law about working

condition to make sure their company will not have any trouble with that problem

in the future. The human resources manager has to update the information about

the performance of the staffs, the staffs expecting in order to have immediate

change to improve the company’s performance.

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Task 2

Assuming your company has decided on either manufactoring or trading

company, choose your company product and calculate the unit cost and

make the relevant pricing decisions using relevant information.

Description of our product

In average, a person spends more than 120000 hours of his/her life to sleep,

which means 8 hours/day for 50 years of living. We can easily recognize the

important of sleep to our life. No matter if you sleep for too long or too little time,

it will affect your performance for the next day. Any time a person mention about

sleeping, you can immediately think of a bed with many pillow and blanket.

Understand that behaviour, our company decided to choose pillow as our

product.

In present, global market has been available with many type of pillow, from neck

pillow to lumbar pillow; each one has their own characteristic. Some provide a

deep area for the head to rest, some are designed to support for the lower back

when you’re sitting. However, our company chose to produce the original pillow,

as known as the neck pillow. It’s the most common type of pillow in the world.

Our company commit to provide not only a comfortable pillow for customer’s

sleep but also a nice pillow with beautiful decoration:

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Basically, our product is made from draper and cotton. In our opinion, cotton is

the most comfortable, because it offers the advantage of softness and ability to

conform to shapes designed by our designer. More than that, the draper that

cover cotton will be decorated with many types of flowers or cute animal, or it

even can be designed by the customers.

Costs incur in our business

Normally, to make a pillow need three main ingredients, draper, cotton and

thread. The two ingredients that are the main cost are draper and cotton. In the

market, price for draper and cotton (purchase with large amount) is about

4000VND/m2 and 60000/kg. With that price, each product will cost 20000VND of

draper and 18000VND of cotton. To reduce the cost in produce pillow, in order to

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take the advantage of price for our product, we decide to make contract with

some sewing company; with the cost for one product is 10000. Besides these

direct costs, producing pillow also cost the package for delivery. And the indirect

cost which is a small amount in the cost for one product is thread, package with

the cost of 116VND each.

Not only the manufacture contains cost, but also the shop. It is the cost that

suffers for sale pillows. We decided to hire two people as the sellers. Each of

them will be paid 1300000VND/month. The company made the decision to rent a

shop in Pham Ngoc Thach Street, with the rental price is 8million VND/month.

Having a shop which means it will cost the extra fee for electricity, water, security

and the fee for parking place. The total cost that we estimated for that is

1600000/month.

Last but not least is the salary for the one who keeping the business floating.

That’s salary for CEO, CPO, CFO, CMO, HR manager and the designer for the

product. All the cost will be illustrate in this sheet:

CostDraper 20,000VND/unitCotton 18,000VND/unitThread, package, decoration 10,116VND/unitLabour 10,000VND/unitRental 8,000,000VND/monthElectricity, water, security, parking 1,600,000VND/monthSeller 1,300,000VND/sellerTotal salary 18,800,000VNDMarketing cost 2,000,000VNDDepreciation for infrastructure 350,000VND/monthTotal variable cost: 58,116Total fixed cost: 33,350,000

Profit margin for the product

The profit margin shows the relationship between profit and sales of a company.

It measures the amount of money in the sales that a company retains in earning.

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Increase in sales do not guarantee for the increase in profit. Follow this profit

margin; we can know the profitability of each company in the same industry. The

higher profit margin is, the more profitability they are. Our company calculate the

profit margin base on all of the cost above and assume the sale for the first

month at 719 units with the selling price in the market is 104,500VND. For that,

our profit margin for the first month is 0.

Profit margin for 6 months

January February March April May June0,0% 10,5% 12,1% 14,1% 17,1% 20,4%

Task 3

As requested by your uncle, prepare a six (6) month relevant budget and

make appropriate decisions. Comments on the decisions that you need to

make in order to make the business afloat.

Budget

A budget is a useful tool for planning and controlling the finance of the company.

The budget consists of the forecast of the revenues and expenditures. Based on

that, the managers can set out a suitable plan; apply the strategy to control the

finance effectively. In addition, the actual performance of the company can be

compared. It provides the opportunity to review the performance and make

improvement. In any kind of business, budgeting is essential, especially for the

start-up business. A practical budget can help develop the business.

When start up the business, based on the capital that we have, we prepare the

budgets for the first six months of running business (the first half of 2010).

First of all, we prepare the sales budget which is the forecast of sales quantity for

each month and the first half of 2009. We assume that sales in January will be

break even. Quantity for sales increases 2%, 4%, 5%, 8%, and 10% respectively

in each month from February to June. From July, the quantity still remains 10%

increasing in sales:

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Chart1. The forecast of sales for six month.

SALES BUDGET

January February March April May June1st half of

2010

Units 719 733 763 801 865 951 4,832

Price (VND)

104,500 104,500 104,500 104,500 104,500 104,500 627,000

Revenue (VND)

75,135,500 76,638,210 79,703,738 83,688,925 90,384,039 99,422,443 504,972,856

(To know how to calculate, see Appendix 3.1)

Secondly, the production budget is created in order to estimate the quantity

needed for production meeting the sales forecast. It also consists of the opening

inventory and the closing inventory. Assuming that the opening inventory of

January is zero and the desired ending inventory equals to 10% of the following

month’s sales.

PRODUCTION BUDGET


2010Quantity needed

for sales719 733 763 801 865 951 4,832

Opening stock 0 73 76 80 86 95 411

Closing stock 73 76 80 86 95 105 516

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The forecast of sales for six months

0100200300400500600700800900

1.000

Janu

ary

Febru

ary

Mar

chApr

ilM

ayJu

ne

Month

Qu

anti

ty n

eed

ed f

or

sale

s (u

nit

)

Quantity needed forsales

Production units

792 736 767 807 874 961 4,937


Hereafter are the budgets for direct material needed for production. In order to

produce one unit of pillow, 1metre draper and 300gram soft cotton are needed.

The cost of material is listed as the table below. We also assume that the

opening stock of January is zero and the closing stock equals to 10% of the

following month’s quantity material needed for production.

DIRECT MATERIAL BUDGET FOR DRAPER (m)


2009Quantity needed for production

792 736 767 807 874 961 4,937

Opening stock 0 73 77 81 87 96 414

Closing stock 73 77 81 87 96 106 520

Purchase quantity

866 740 771 814 882 971 5,043

Cost/m (VND) 20,000 20,000 20,000 20,000 20,000 20,000 120,000

Purchase (VND) 17,313,520 14,792,568 15,412,034 16,277,776 17,646,078 19,410,686 100,852,662


DIRECT MATERIAL BUDGET FOR COTTON (kg)



238 221 230 242 262 288 1,481

Opening stock 0 22 23 24 26 29 124

Closing stock 22 23 24 26 29 32 156

Purchase quantity

260 222 231 244 265 291 1,513

Cost per/kg(VND)

60,000 60,000 60,000 60,000 60,000 60,000 360,000

Purchase (VND) 15,587,448 13,308,031 13,870,830 14,649,999 15,881,470 17,469,617 90,767,396


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The wages for direct labor is under the direct labor budget. The budget is

expressed in term of rate per unit. A labor will receive the wage based on the

finished products. When the labor produces one unit of pillow, they will get the

wage of 10,000 VND.

DIRECT LABOUR BUDGET



792 736 767 807 874 961 4,937

Rate/unit (VND) 10,000 10,000 10,000 10,000 10,000 10,000 60,000

Total (VND) 7,923,380 7,363,135 7,665,288 8,072,578 8,735,682 9,609,250 49,369,313


Variable overhead budget covers the variable overhead cost. In our business,

they are needle, thread and package used to make the finished pillow.

VARIABLE OVERHEAD BUDGET

January February March April May June1st half of 2010

Needle, thread and package cost per unit

116 116 116 116 116 116 696

Total units 792 736 767 807 874 961 4.937

TOTAL VARIABLE OVERHEAD COSTS

91.911 85.412 88.917 93.642 101.334 111.467 572.684


Fixed overhead budget covers the production overhead, administration overhead

and selling overhead costs. They are the fixed cost that our company has to pay

every month.

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FIXED OVERHEAD BUDGET

1st 2nd 3rd 4th 5th 6th1st half of

2010Production overheads

Indirect wages

Store staff 2.600.000 2.600.000 2.600.000 2.600.000 2.600.000 2.600.000 15.600.000

Security and parking 600.000 600.000 600.000 600.000 600.000 600.000 3.600.000

Total indirect wages

3.200.000 3.200.000 3.200.000 3.200.000 3.200.000 3.200.000 19.200.000

Indirect expenses

Renting a store 8.000.000 8.000.000 8.000.000 8.000.000 8.000.000 8.000.000 48.000.000

Utility 1.000.000 1.000.000 1.000.000 1.000.000 1.000.000 1.000.000 6.000.000

Total indirect expenses

9.000.000 9.000.000 9.000.000 9.000.000 9.000.000 9.000.000 54.000.000

Total production overheads

12.200.000 12.200.000 12.200.000 12.200.000 12.200.000 12.200.000 73.200.000

Administration overheads

Office salary 18.800.000 18.800.000 18.800.000 18.800.000 18.800.000 18.800.000 112.800.000

Depreciation for infrastructure

350.000 350.000 350.000 350.000 350.000 350.000 2.100.000

Total adminstration

overhead19.150.000 19.150.000 19.150.000 19.150.000 19.150.000 19.150.000 114.900.000

SELLING

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OVERHEADSMKT and

Advertising2.000.000 2.000.000 2.000.000 2.000.000 2.000.000 2.000.000 12.000.000

Total selling overheads

2.000.000 2.000.000 2.000.000 2.000.000 2.000.000 2.000.000 12.000.000

TOTAL FIXED OVERHEAD

COSTS

33.350.000 33.350.000 33.350.000 33.350.000 33.350.000 33.350.000 200.100.000


Finally, we prepare the income statement budget which is the summary of the

revenues, expenses of the company each month, and how much net profit we

get. In detail, we assume that sales for January will be breakeven, then the net

profit equals to zero.

INCOME STATEMENT BUDGET

1st 2nd 3rd 4th 5th 6th 1st half of 2010

Sales 75.135.500 76.638.210 79.703.738 83.688.925 90.384.039 99.422.443 504.972.856

Less cost of sales

Direct material 27.322.000 20.534.640 21.356.026 22.423.827 24.217.733 26.639.506 142.493.732

Direct labour 7.190.000 7.333.800 7.627.152 8.008.510 8.649.190 9.514.109 48.322.761

Variable overhead cost

7.273.500 7.407.138 7.703.424 8.088.595 8.735.682 9.609.250 48.817.589

Contribution margin

33.350.000 41.362.632 43.017.137 45.167.994 48.781.434 53.659.577 265.338.774

Less Fixed overhead cost

Production overheads

12.200.000 12.200.000 12.200.000 12.200.000 12.200.000 12.200.000 73.200.000

Administration overheafds

19.150.000 19.150.000 19.150.000 19.150.000 19.150.000 19.150.000 114.900.000

Selling overhead

2.000.000 2.000.000 2.000.000 2.000.000 2.000.000 2.000.000 12.000.000

Net profit 0 8.012.632 9.667.137 11.817.994 15.431.434 20.309.577 65.238.774


The six budgets above are created based on the company’s capacity and the

real situation. They are “the important source of information” that we can use to

make appropriate decisions about financing and measure the achievement of the

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company’s objectives. (Managing Financial Resources and Decisions course

book, p171)

Comment

In order to make the business afloat, we should take into account about

budgeting because it is the useful way for planning and controlling. Planning

helps create objectives and decide what to do in advance. Based on what was

planned, controlling evaluates the current situation and the actual performance

against the plan. It helps make suitable decisions about implementing plans more

effectively.

More detail, for planning, first of all, we know that how many hand-made pillows

we want to sell in order to break even in the first month. Moreover, we can set up

appropriate strategies for next months in order to make profit which increase

month by month. For example, quantity needed for sales in the second month

needs to increase 2% compare to the first month and so on. Then, we can start

making profit from the second month. Secondly, we can absolutely evaluate the

performance by comparing the actual sale to master budget. Then, the CFO can

manage cash flow effectively and makes decision whether needs to seek other

source of finance or not. Another advantage of budget is that it concerns about

the cost. In other words, we can manage the cost if it is too high. For example,

we try to find another material to substitute draper and soft cotton if the price of

material increases too much, or we can consider about other cheaper options

rather than investing in new items. In addition, we’re able to make a long term

plan for handmade pillow production in 3-5 years, and expand the business. For

example, releases more kind of pillow and potential to export to other countries in

the Southeast Asia. Last but not least, we can do better and better by using

suitable marketing policy. Keep in mind that marketing not only increase quantity

for sale at the moment but also give a chance for company continues developing

in future.

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In conclusion, budgeting is important to do business. It is the tool to plan and

control the performance of the company. If the company can follow the plan, and

control the performance to achieve plan, we can assure that the business will

afloat. However, preparing budgets must be based on the reality. Plan must be

practical and suitable with the capacity of the company.

Task 4

Explain the purpose of the main financial statements and describe the

differences between the formats of financial statements for different types

of businesses.

There are three main financial statements which are commonly called these

“accounts”: a balance sheet, a profit and loss account, and a cash flow

statement. These statements are built for different purposes based on various

types of businesses.

Balance sheet

A balance sheet is a statement which shows out the assets , liabilities, capital or

shareholders’ equity of a business at a specific moment in time.

Balance sheet generally gives informations about the finance structure of a

company. One of the main aims of its description is consistency between one

accounting period and the next. Moreover, it helps the company to predict the

funds which would be used in the future. It could also reflect the capacity of the

company to raise more capital.

Balance sheets are nearly always presented in the format shown below, however

because of various types of business there can be some differences in

presentation of each balance sheet. The top half of balance sheet which

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represents the net assets of the company will be alike for all the types of

business. However, the bottom half which represents the owner(s) stake in the

business is different based on which kind of business belongs to.

For a sole trader, the profits (or losses) are often transferred to the capital which

belongs to only one person, so it is simply shown in balance sheet a line as

below:

Capital 30,000

For a partnership, stakes of each partners will be presented by capital accounts

based on their long-term investment or profit shares, salaries, interest on capital

accounts, etc. In case the company is a partnership, the capital might be

represented as follow:

Partnerships’ capital £Capital accounts - Fred

- Sue- Billy

2,0003,0004,000

Capital accounts- Fred- Sue- Billy

3,5001,850

650 15,000

(Source:Managing Financial Resources and Decisions Course book, pg. 100)

For a limited company, part of the net assets of the company is similar to the

two partnerships and sole traders. However, the capital in a limited company’s

balance sheet is quite different. The owners are also shareholders, whose initial

stake is shown as stockholders’ equity and profit earned shown as a balance on

the income statement, as the table below.

Example of balance sheet format

Example CompanyBalance Sheet

December 31, 2008

ASSETS LIABILITIESCurrent Assets Current Liabilities

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Cash $ 2,100 Notes Payable $ 5,000Petty Cash 100 Account Payable 35,900Temporary Investments 10,000 Wages Payable 8,500Accounts Receivable-net 40,500 Interest Payable 2,900Inventory 31,000 Taxes Payable 6,100Supplies 3,800 Warranty Liability 1,100Prepaid Insurance 1,500 Unearned Revenues 1,500Total Current Assets 89,000 Total Current Liabilities 61,000

Investments 36,000 Long-term LiabilitiesNotes Payable 20,000

Property, Plant & Equipment Bonds Payable 400,000Land 5,500 Total Long-term Liabilities 420,000Land Improvements 6,500Buildings 180,000Equipment 201,000 Total Liabilities 481,000Less: Accum Depreciation (56,000)Prop, Plant & Equip – net 337,000

Intangible Assets STOCKHOLDERS’ EQUITYGoodwill 105,000 Common Stock 110,000Trade Names 200,000 Retained Earnings 229,000Total Intangible Assets 305,000 Less: Treasury Stock (50,000)

Total Stockholders’ Equity 289,000Other Assets 3,000

Total Assets $770,000 Total Liabilities & Stockholders’ Equity $770,000(Source:http://www.accountingcoach.com/online-accounting-course/05Xpg04.html)

Profit and loss account ( or income statement)

A profit and loss account is a record of business’s revenues and expenses over a

given period of time, such as a year, quarter, month, etc.

A profit and loss account includes an estimate of the company’s sales, cost,

increase or loss in intangible value, taxes, outstanding shares, and how the

resulting net profit is divided up to shareholders. The main purpose of a profit and

loss account is to figure out management whether the company made or lost

money during the given period. Besides that, investors may base on these

statement to make decisions.

About differences between the format of income statement for various types of

businesses, it is said that the non-incorporated businesses (partnerships and

sole traders) can present the statement as they want while the limited

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companies have to use particular wordings and layouts according to their

activities. In a P&L of partnerships or sole traders will not appear corporation

tax and dividends. Partnerships and sole traders do not have to pay corporation

tax. They only have to pay their personal income tax on their share of the profits,

which is no need to be written on the business statements. They do not have to

pay dividends also because dividends are paid for shareholders, but there are no

shareholders in partnerships or sole traders. The table below is an example of

income statement:

Company AIncome statementJanuary 1, 20X6 to December 31, 20X6

IncomeGross Sales 346,400Less returns and allowances 1,000Net sales 345,400

Cost of GoodsMerchandise Inventory, January 1 160,000Purchases 90,000Freight Charges 2,000Total Merchandise Handled 252,000

Less Inventory, December 31 100,000Cost of Goods Sold 152,000Gross Profit 193,400Interest Income 500Total Income 193,900ExpensesSalaries 68,250Utilities 5,800Rent 23,000Office Supplies 2,250Insurance 3,900Advertising 8,650Telephone 2,700Travel and Entertainment 2,550Dues & Subsriptions 1,100Interest Paid 2,140Repairs & Maintenance 1,250Taxes & Licenses 11,700Total Expenses 133,290

Net income $60,110

(http://www.smallbusinessnotes.com/operating/finmgmt/financialstmts/

incomeexample.html)

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Cash flow statement

A cash flow statement provides information on the change in a business’s cash

activities such as its operating, investing and financing activities and tantamount

cash during the same period of time as income statement.

The purposes of cash flow statement include:

- to assess the company’s ability to generate positive cash flows in the future

- to assess its ability to meet its obligations to service loans, pay dividends etc

- to assess the reasons for differences between reported and related cash flows

- to assess the effect on its finances of major transactions in the year.

(http://www.fao.org)

With cash flow statement, there is not much differences in format between the

various types of company. For the partnerships or soletraders, some items such

as equity dividends paid or increase in stocks etc will not appear in cash flow

statement.

APPENDIXIn this section, we will make it clear about the calculation how we get those

results above. The calculation is the same for all 6 months so we only give

instruction for the first month of 2009.

3.1_SALE BUDGET

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Total revenue= Quantity for sale (unit) Price/unit (VND)

= 719 104,500 = 75,135,500

3.2_PRODUCTION BUDGET

Production unit= Quantity needed for sales+ closing stock – opening stock

Closing stock= 10% of quantity for sale in February and considered opening of

February

So production unit = 719+733 10% = 792 (units)

3.3_DIRECT MATERIAL BUDGET : DRAPER (m)

Purchase quantity = Quantity needed for production + closing stock – opening

stock

Assuming that closing stock is still 10% of quantity in February

So purchase quantity = 792+736 10%= 865 (m)

Purchase (VND) = Purchase quantity (m)* cost/m (VND)

= 865* 20,000 = 17,300,000 (VND)

3.4_DIRECT MATERIAL BUDGET: SOFT COTTON (kg)

Purchase quantity = Quantity needed for production +closing stock – opening

stock

= 238+ 221*10% = 260

Purchase (VND) = Purchase quantity (kg)* cost/kg (VND)

= 260*60,000 = 15,600,000 (VND)

3.5_DIRECT LABOUR BUDGET

Total = Quantity needed for production * Rate/unit (VND)

=792*10,000=7,920,000 (VND)

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3.6_VARIABLE OVERHEAD BUDGET

Total variable overhead cost= cost/unit* total unit =116*792=91,872 (VND)

3.7_FIX OVERHEAD BUDGET

Total fix overhead cost = Total production overhead + Total administration + Total

selling overhead

= 12,200,000+19,150,000+2,000,000

= 33,350,000 (VND)

3.8_INCOME STATEMENT BUDGET

Net profit = (Sale-cost of goods sold)-fixed overhead cost

= Contribution margin – fixed overhead cost

In January: Net profit = 33,350,000-33,350,000=0

Net profit in January = 0 because we assume that quantity for sale in Jan will be

break even.

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FOR OFFICIAL USE

Comments By Assessor

Common Skills Grade

A B C D E F G

Assignment

( ) Well-structuredReference is done properly / should be done (if any)

Overall, you’ve

Areas for improvement:

ASSESSOR SIGNATURE DATE / /

NAME:.........................................................................................

(Oral feedback was also provided)

STUDENT SIGNATURE DATE / /

NAME :........................................................................................

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FOR INTERNAL USE ONLY

VERIFIED YES NO

DATE : ..........................................................

VERIFIED BY : ..........................................................

NAME : ..........................................................

26

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Peer review form

UNIT: ………………………………………

Group number:

Please complete peer review form per groupMark each group members’ contribution and effort towards the group work out of

10 points

5 points = equal contribution0 – 4 points = less than equal contribution6 – 10 points = above equal contribution

Do not allocate marks for yourself

Group Members(List in alphabetical order) Points

Return completed forms to the teachers before the presentation time.

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MEETING MINUTES

PROJECTVersion #: 1.0 Issue Date: Error! Style not defined.

Minutes of Meeting

Customer:

Project:

Location: Date: Time:

Purpose:

Attendees:

CC:

Review of Previous Action Items (from second meeting onward)

Action Item(s) Who When

Discussion

Action Item(s) Who When

Next meetingThe next meeting will be (date) at (time) at (location), room (room number or “to

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be determined”).

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Documents

MFRD 2 - 14 Dec 2009