North South University

Department of Accounting & Finance

ACT 202 Project

Introduction to Managerial Accounting

Act202

Sec:05

Submitted to:

Bushra Ferdous Khan (BFK)

Submitted By

Name ID

M.N. Zaman Shafin 2232299630

Fardin Rahat 2231936630

Ayesha Fahmida 2221898630

Samanta Islam Neha 2223041630

Fahim Shahriar Siam 2013730630

 TABLE OF CONTENTS
 LETTER OF ACKNOWLEDGEMENT

 EXECUTIVE SUMMARY

 INTRODUCTION

 THE SALES BUDGET

 EXPECTED CASH BUDGET

 PRODUCTION BUDGET

 DIRECT MATERIAL BUDGET

 THE DIRECT LABOR BUDGET

 MANUFACTURING OVERHEAD BUDGET

 SELLING AND ADMINISTRATIVE BUDGET

 PRIME COST AND CONVERSION COST

 CASH BUDGET

 CONCLUSION
 LETTER OF ACKNOWLEDGEMENT
November 5th ,2023

Bushra Ferdous Khan

Honorable Faculty

Department of Accounting & Finance

Department: School of Business & Economics

North South University

Bashundhara Residential Area, Dhaka, Bangladesh.

Subject: Submission of group report on Master budget on a processed orange juice company.

Ma’am,

Here is the group report on the topic “Master Budget” which was assigned to us. We tried to

prepare the report with a lot of effort and tried to find the most authentic and relevant information

to make the report informative. This was a whole new experience for us which has helped us enrich

our accounting and business skills. Thank you for giving us the amazing opportunity.

Sincerely,

1. Fahim shahriar Siam

Id:2013730630

2. Ayesha Fahmida
Id:2221898630

3.Samanta islam neha

Id: 2223041630

4.Fardin Rahat
Id: 2231936630

5.M.N. Zaman Shafin

ID: 2232299630
 EXECUTIVE SUMMARY

This executive summary provides an overview of the strategic initiatives and notable accomplishments of
our stationary company. Our company's mission is to satisfy customers with superior stationary products
while maintaining moral and responsible business conduct. Our strategy involves using our strengths in
production efficiency, product innovation, and brand recognition to capture a significant portion of the
stationary market.

Key Strategies:

1. Product Innovation: We will continuously invest in R&D to create new stationery products in order to
differentiate our offerings. This means using modern technology and experimenting with different raw
materials.

2. Supply Chain Optimization: To ensure a consistent supply of premium raw materials, we will form
strategic partnerships with reliable paper suppliers and rely on state-of-the-art production methods.

We can optimize our supply chain to reduce costs without sacrificing product quality.

3. Marketing and branding: We'll develop a thorough advertising plan to raise brand awareness and
showcase the craftsmanship and quality of our stationery products. This means utilizing bloggers,
utilizing social media platforms, and implementing customized advertising tactics.

Conclusion: In conclusion, our stationery company is well-positioned to meet the growing demand for
high-quality stationery products. By placing an emphasis on product innovation, supply chain
optimization, marketing and branding, and sustainability, we hope to dominate the global stationery
market. We are confident in our ability to generate long-term success and profit by providing customers
with high-quality, useful goods.

INTRODUCTION
Budgeting is an essential function of any business, necessary for both financial planning and growth. A
master budget gathers a company’s lower-level budgets and incorporates them into one central
document for ease of reference. Please keep reading for a closer look at what’s included in a master
budget, as well as how to use it. The term “master budget” refers to a comprehensive document that
consists of a variety of different smaller budgets. It brings these individual budget templates together
into one master template. A master budget will show the company’s income-generating actions via the
operating budget, with an overview of revenue and expenses. It will also show cash inflows and outflows
from the cash flow statement and estimations of what will appear on the balance sheet at the end of the
accounting period.
 THE SALES BUDGET

CONDITIONS:

 Selling Price goes up by 15%

 Monthly sales (Physical Units) growth will be 12%

Budget sales unit (Month-01): 3000 Note books + 12% (Monthly sales growth)

= 3360 notebooks

Selling Price per unit: (Taka 65 + 15% (Selling Price goes up))

= TAKA 75

Budget sales unit (Month-02): 3360 Note books + 12% (Monthly sales growth)

= 3763 notebooks

Selling Price per unit: (Taka 75 + 15% (Selling Price goes up))

= TAKA 86

DETAILS Month-01 Month-02

BUDGET SALES 3360 3763

SELLING PRICE PER UNIT (TK) TK. 75 TK. 86

TOTAL BUDGETED SALES TK. 252000 TK. 323618

EXPECTED CASH BUDGET

Cash Collection is done as follows:

(All the given data are based on assumption)

a. Cash is required for every transaction.

b. All cash collection is done within the year

c. 2% cash is uncollectable

d. Opening balance for year 2023(assumed) 50000 tk.

 DETAILS Month-01 Month-02

OPENING BALANCE Tk.50000 TK.296960

CASH RECEIVED (2% cash is Tk. 246960 TK.317145

uncollectable)
TOTAL CASH COLLECTION TK.296960 TK.614105

PRODUCTION BUDGET

All the data are based on assumptions:

 The management wants ending inventory to be equal to 10% to budgeted sales in units.
 In the Month-0(assumed) inventory on hand 300 note books
 In the Month-01 inventory on hand 3360*10% equal to 336 notebooks
 In the Month-02 inventory on hand 3763* 10% equal to 376 notebooks

DETAILS Month-01 Month-02

BUDGETED SALES (UNITS) 3360 3763
ADD: PLANNED ENDING 336 376
INVENTORY
TOTAL PRODUCTION 3696 4139
LESS: BEGINNING INVENTORY 300 336
TOTAL UNITS TO BE PRODUCED 3396 3803

DIRECT MATERIAL BUDGET

Raw Material needed for the production of notebooks:

 Wood Pulp: If virgin paper is being produced, wood pulp is prepared from various tree
species, such as softwood (pine, spruce, fir) or hardwood. Pulp may be produced by
mechanical or chemical pulping processes.

 Recycled Paper: If the paper company is using recycled paper as a raw material, the
collected paper is sorted, cleaned, and de-inked.

 Bleach: In cases where bright, white paper is required, the pulp is often subjected to a
bleaching process. This process removes color and brightens the pulp.
 NAME BDT

Wood Pulp 5.77/=

Recycled Paper 4.5/=

Bleach 3.9/=

TOTAL MATERIAL COST (PER 14.17/=

UNIT)

FOR MONTH-01
Materials needed per Note book: BDT14.17

Total Materials Cost= TOTAL UNITS TO BE PRODUCED* Cost Per notebook

=3396*BDT14.17= BDT 48121.32

FOR MONTH-02
Materials needed per Note book: BDT14.17

Total Materials Cost= TOTAL UNITS TO BE PRODUCED* Cost Per notebook

=3803*BDT14.17= BDT 53888.5

THE DIRECT LABOR BUDGET

● Each unit of product requires 0.05 of direct labor hour.

● The company has no layoff policy. According to the policy, company will pay all the employees for 40

hours of work each week

● In exchange for the no layoff policy, the workers agreed to a wage rate of 60tk per hour regardless of

the hour worked (no overtime payment)

● The labor workforce will be paid for a minimum of 250 hours

DETAILS Month-01 Month-02

UNITS TO BE PRODUCED 3396 3803
DL PER UNIT 0.05 0.05
AMOUNT OF TIME REQUIRED 250 250
DL HOURS PAID FOR 250 250
DL PER HOUR PAYMENT TK.60 TK.60
TOTAL DL COST TK. 15000 TK. 15000

MANUFACTURING OVERHEAD BUDGET

Details Month-01 Month-02
Production Unit 3396 3803
Variable (PER UNIT) Total Total
manufacturing (Month-01) (Month-02)
overhead cost
Packaging BDT 1.50 (per unit) BDT 5094 BDT 5704
Indirect Labor BDT 2.00 (Per Hour) BDT 6792 BDT 7606
Cost
Total Variable BDT 11886 BDT 13310
Manufacturing
Overhead Cost
Fixed
Manufacturing
Overhead cost
Utility Cost BDT 3000 BDT 3000
Factory BDT 7000 BDT 7000
Management
Team Salary
Security Guard BDT 1500 BDT 1500
Depreciation BDT 1750 BDT 1750
Rent BDT 5000 BDT 5000
Total Fixed BDT 18250 BDT 18250
Manufacturing
Overhead Cost
Total Estimated BDT 30136 BDT 31560
Manufacturing
Overhead Cost

POHR (Month 1) = Estimated Total Manufacturing Overhead Costs / Total Direct Labor Costs

= BDT 30136/ BDT. 15000

 =2.00 (approx.)

POHR (Month 2) = Estimated Total Manufacturing Overhead Costs / Total Direct Labor Costs

= BDT 31560/ BDT. 15000

=2.104(approx.)

MOH Applied (MONTH-01) = POHR * Actual DL Hours

= BDT 2.00* BDT15000

=BDT 30000

MOH Applied (MONTH-02) = POHR * Actual DL Hours

=2.104*15000

=BDT 31560

SELLING AND ADMINISTRATIVE BUDGET

DETAILS MONTH -01 MONTH-02
BUDGETED SALES UNIT 3396 3803
VARIABLE SELLING AND ADMIN BDT 1.02 BDT 1.02
RATE
VARIABLE EXPENSE SELLING AND BDT 3464 BDT 3879
ADMIN
RENT BDT 50000 BDT 50000
SALARIES BDT100000 BDT100000
UTILITY BDT 10000 BDT 10000
TOTAL CASH DISBURSEMENT BDT 163464 BDT 163879
FOR
SELLING AND ADMIN

PRIME COST AND CONVERSION COST

FOR MONTH-01:
PRIME COST: DM+DL = BDT (48121.32 + 15000)

= BDT 63121.32

CONVERSION COST: DL+ MOH = BDT (15000 + 30000)

 = BDT 45000

FOR MONTH-02:

PRIME COST: DM+DL = BDT (53888.5+ 15000)

= BDT 68888.5

CONVERSION COST: DL+ MOH = BDT (15000 + 31560)

= BDT 46560

CASH BUDGET
DETAILS MONTH -01 MONTH -02

BEGINNING BALANCE Tk.50000 TK.90239

ADD: CASH COLLECTION TK.296960 TK.614105

TOTAL CASH TK.346,960 TK.704479.68

LESS: DM (TK.48121.32) (TK. 53888.5)

LESS: DL (TK.15000) (TK.15000)

LESS: MOH (TK.30136) (TK.31560)

LESS: SELLING AND (TK.163464) (TK.163879)

ADMIN

Total cash balance TK.90239 TK. 440016

 CONCLUSION
The master budget is a comprehensive financial planning document. It usually includes all of the

lower-level budgets within the operating budget and the financial budget. As the paper product
producing company is a manufacturing company, master budget is essential for us in

planning and also as a strategic tool because depending on the company’s long-term decisions are

taken. From this research we have gained enough practical knowledge by dealing with the

company’s assumed figures. Master budgets provide an outlook of the performance of different

departments within the company and can help pinpoint areas for improvement.