Acconting Graded Unit 1

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Lidia Kujawska
HND Accounting
Year 2

Graded Unit 2
Development Stage

Moorland Brewery plans to expand its production to new lager called Puma. They found buyer for it and right now they need to develop stage of producing new beer. The first calculation must start from cost statement for the new product.

Primarily there is need to find out how much ingredients brewery will need to produce 2 litre of lager, this amount give company a clue how much they will pay for one mashing of beer.

Direct Material ( 2 litre bottle )| | | £|
| | | | | | |
Malted Barley ( £600/1000000g x140 g)| | | 0.084|
Yeast (£400/1000000*10 g)| | | | | 0.004|
Hops (£2/1000g *2 g)| | | | | 0.004|
| | | | | | 0.092|

Next steps need to concentrate of calculation per mashing.
Costs per one mashing of lager| | | |
| | | | | | |
Direct materials ( 4500hrs/ 2ltr)| | | £|
| | | | | | |
Malted Barley (0.084 x 2,250 )| | | | 189|
Yeast ( 0.004 x 2,250 hrs )| | | | 9|
Hops ( 0.004 x 2,250 hrs )| | | | 9|
TOTAL | | | | | | 207|
| | | | | | |
| | | | | | |
Direct Labour| | | | | |
| | | | | | |
Mashing ( 84 hrs x £8 per hour )| | | 672|
Bottling/labelling/packaging ( 6hrs x £8 per hour)| | 48| TOTAL| | | | | | 720|
| | | | | | |
| | | | | | | | | | |
| | | | | | | | | £| |
| | Cost of producing lager per one mashing| |
| | | | | | | | |
| | | | | | | | £|
TOTAL PRODUCTION COSTS ( 39,000/ 88 mashing )| | | 443| TOTAL FIXED ADMINISTRATION /SELLING &DISTRIBUTION | ( 86,500/88 mashing )| 983| MAINTAINANCE COSTS OF NEW PLANT 2%| ( 8,803/44 mashing) | 200| DEPREPRATION OF NEW PLANT ( 20 years - 5% )| ( 22,007/44 mashing )| 500| | | | | | | | | |

| | | | | | | | |
DIRECT MATERIALS | | | | ( £207 per mashing x 88 )| 18216| DIRECT LABOUR| | | | ( £720 per mashing x 88 )| 63360|

| | Total cost of producing lager for one mashing| £|
| | | | | | | | |
Direct materials| | | | | | | 207|
Direct labour| | | | | | | 720|
Fixed production costs| | | | | | 443|
Fixed administration, selling and distribution costs| | | | 983| Maintenance costs| | | | | | | 200|
Depreciation of new plant| | | | | | 500|
Total| | | | | | | | 3053|

The total costs need to be divided by number of bottles produce in one mashing, after that cost of duty and bottle need to be added.

3,053/13,000 bottles per mashing = | £0.24| |
| | | | | |
Cost of producing one bottle of lager ( 33cl )| |
| | | | | £|
Cost of producing one bottle| | | 0.24|
Cost of duty| | | | 0.36|
Cost of bottle| | | | 0.05|
Total| | | | | 0.65|

The proprietor of chain Indian restaurants will pay £1 per bottle of Puma lager and can guarantee to keep the sales for the first year at the level of 450,000 33cl bottles. All that means that the Sales Budget for the first 6 months will look like this:

Sales Budget for the first 6 months based on 33cl bottles sale| | | | | | |
| | | | | |
| | Units| Selling Price| Value (£)|
January| | 37,500| £1| | £37,500|
February| | 37,500| £1| | £37,500|
March| | 37,500| £1| | £37,500|
April | | 37,500| £1| | £37,500|
May | | 37,500| £1| | £37,500|
June| | 37,500| £1| | £37,500|
| | 225,000| | | £225,000|

The calculation of units based on 450,000 divided by 12 months of selling period.
There is need to make an assumption of closing stock of production budget, it could be 10% of following month units.

Production Budget for 6 months based on bottles| | | |
| | | | | | | |
| | January | February| March| April| May| June|
Sales (units)| 37,500| 37,500|...
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