Your assignment requires you to provide a formal business report max 2,000 words, to your Bank Manager regarding the launch of a new business manufacturing a product (I will provide a list you can choose from). The word count excludes your appendices. You must include within the appendices the supporting business documentation requested below
In the written report:
Introduce your business and your idea to the bank manager and ensure you state how much you intend to borrow and how you intend to make repayments.
Marks 5%
State your chosen business and what product you intend to sell based on the ingredients supplied . State the cost price to produce it and its intended selling price. (max 250 words), Marks 5%
Explain in your own words the cost structure of your product (using the actual calculations to support your answer) and also provide an explanation regarding which method of pricing you used to arrive at the target selling price and the underlying assumptions to support your figures for break even point. Further to this you must explain your figures in your operational and cash budget. (max 750 words).
(NOTE: as part of this section, you will need to decide which of the costs given are fixed and which are variable)
Marks 20%
Provide a suitable summary of the business report by analysing (commenting on) the figures from your calculations and business documentation (appendices). Ensure you discuss the implications of your credit terms on the cash budget, the advantages and disadvantages of producing operational budgets and the profit results and whether the product is worthwhile producing based on the figures. (max 350 words).
Marks 15%
Finally, what are the implications of producing management accounts in such detail (purpose and use of the management accounting information)
Marks 10%
Marks will be awarded for innovation, originality of approach, report format & structure, relevant references and general presentation Marks 5%
Section B Appendices to the Business Report:
Produce a ‘per unit cost statement’ showing the main costs groups involved and the target selling price.
Marks 5%
Calculate a breakeven point (show the workings here).
Marks 5%
Prepare a One (1) Year Operational Budget (per month) based on your cost structure and production/sales pattern. Marks 15%
Prepare a One (1) Year Cash Budget (per month) using the operational budget and credit terms to assist you. Ensure you use the credit terms provided in section D.
Marks 10%
Prepare a One (1) Year Budgeted Income Statement (totals only) using marginal costing principles (ignore taxation and interest costs)
Marks 5%
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