National School of Business Management ABF205SL Management Accounting

ABF205SL - Management Accounting

Assessment - Report

“The Budgeting Process of JF & I Packaging (Pvt) Ltd"

By

Student Name NSBM Index Number Plymouth Index Number

H.A.DilkushiImashaAthukorala 10020864 10637861

W.D.S.Chamantha 10020709 10637907

T.Y.A.Jayawickrama 10020646 10639290

R.P.J.Kavidya 10020884 10639230

An Independent Coursework Report

Submitted to the Plymouth University -UK

in partial fulfillment of the requirements for the module of

ABF205SL - Management Accounting

2018

BSc (Hons.) Accounting & Finance

Plymouth University

United Kingdom

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National School of Business Management ABF205SL Management Accounting

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National School of Business Management ABF205SL Management Accounting

Declaration

I declare that all materials included in this report is the end result of our own work and that due
acknowledgement have been given in the bibliography and references to all sources be they
printed, electronic or personal.

Certification

This is to certify that the research report presented by H.A.

DilkushiImashaAthukorala,W.D.S.Chamantha, T.Y.A.Jayawickrama and R.P.J.Kavidya on topic

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National School of Business Management ABF205SL Management Accounting

(add the topic as given in the cover sheet) can be accepted in partial fulfillment of the
requirements of the Module ABF205SL Management Accounting.

15-11-2018

Date

Acknowledgement

On the instant of completion and submission of the report, we would like to convay our sincere
gratitude to Ms. MaithriVidanakariyaKaranage for providing us the Management Accounting
module in a motivating and a useful manner.

Our deepest thanks for Mr. UpulhemanthaThotamunige, the printing manager of J F and I
Packaging (PVT) LTD. Mr. W.D.L. Dushmantha and Mr. Gamini Samarasinghe for their
support, guidance, and valuable time spent for us throughout the project.

Also, my special thanks go to my fellow members for the active participation, and hard work.

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Abstract

A budget is a plan for the future. A budget could be defined as a qualified plan of action relating
to a given period of time. The budgeting process of J F and I Packaging (PVT) LTD depends on
their productions and flow of operations.

Budgeting process can be divided into few stages such as,

 Communicating details of budget policy and guidelines to those [elope responsible for
preparing the budget.
 Determine the factor that restricts output (usually sales).
 Preparation of the sales budget.
 Initial preparation of budgets.
 Negotiation of budgets with higher management.
 Co-ordination and review of budgets.
 Final acceptance of budgets.
 Ongoing review of the budget.

The task in this coursework is to develop budgets for a certain time period of a manufacturing
company after considering actual budgeting practices, resource constrains, market demand, and
other concerns. So the whole work represents the budgeting process of a selected company.

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J F and Packaging (PVT) LTD is one of the largest companies in package printing. They print
the covers and logos of many leading products in Sri Lanka. It has a wide range of products as
such Pears, Sunlight, Maliban, DSI and so on. There are main types of budgets that they prepare.
Such as, sales budget, production budget, material usage budget, material purchase budget, labor
budget, overhead budget and cash budget.

Table of Contents
Declaration.................................................................................................................................................. iii
Acknowledgement ...................................................................................................................................... iv
Abstract........................................................................................................................................................ v
1. Introduction ............................................................................................................................................. 6
1.1. Introduction to the Coursework ......................................................................................................... 6
1.3. Introduction to the Budgeting Process of JF & I Packaging (Pvt) Ltd ........................................... 8
2. Developing Budgets ................................................................................................................................. 9
3. Findings.................................................................................................................................................. 16
4. Suggestions............................................................................................................................................. 17
5. Conclusion ............................................................................................................................................. 18
6.References ............................................................................................................................................... 19
7. Appendix ................................................................................................................................................ 20

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1. Introduction

1.1. Introduction to the Coursework

Coursework is a work execution of the learning guides. It fields effectively as it requires the
hypothetical information for all intents and purposes. As indicated by that task, some different
sorts of destinations can be recognized acknowledge followings.

 To recognize the diverse sorts of spending plans (deal, creation, buys, material, stock,
money, ace spending plans and so forth.) and distinguish the distinctive kinds of planning
work on utilizing M.S Excel spread sheet for the chosen organization.
 To give and refresh the completely about the getting ready spending plans of the planning
procedure.
 To increment information and accepting an open door to perceive what are the worries of
the getting ready spending plans.
 To recognize the varieties between the anticipated figures and genuine figures of the
planning procedure.

1.2. Introduction to JF and I Packaging (Pvt) Ltd

JF and I Packaging (Pvt) Ltd established in 1987. The organization started as a privately-owned
company built up by Mr. Joseph De Fonseka with the underlying point of making occupations
for the occupants of the territory in a residential area close Kandy. For multi-year, they are one
of Sri Lanka's head bundling organizations, with a work power of 110 individuals utilizing
forefront innovation and a stringent adherence to the most elevated global measures of
accreditation. These are the characterizing factors that gave us the edge. The mind-boggling
TEAM of Qualified, Skilled, abroad prepared and Motivated staff, outfitted and working with a
ultra-present day cutting edge Factory. This organization guaranteed to keep running concurring
the gauges and documentation of ISO9001:2008, ISO 22000:2005 and HACCP confirmation.

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JF Packaging (Pvt) Ltd, with the most recent innovation has been an earth well-disposed
Organization additionally dedicated to ensure the nature and the earth with the end goal to secure
the

JF Packaging (Pvt) Ltd,with the latest technology has been an environmentally friendly
Organization also committed to protect the nature and the environment in order to protect the
planet earth for the future generations. JF Packaging (Pvt) Ltdhave a diverse product range as
following;

 Printing consultants
 Publishing services
 Printing services
 Rotary printing
 Flatbed printing: letterpress and offset-photolithography
 Screen printing
 Transfer and carbon printing
 Printing specialties
 Printing services, specific surfaces
 Packaging contractors
 Reconditioning contractors
 Industrial design consultants
o Color consultants
o Sign design consultants
o Packaging design consultants
o Packaging label design consultants

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1.3. Introduction to the Budgeting Process of JF & I Packaging (Pvt) Ltd

JF & I Packaging (Pvt) Ltd budgeting process mainly basis in cost unit. Company take
information from marketing division, printing division and accounting division to make their
budgets. They make their budgets monthly. They mainly preparesales budget, production budget,
material usage budget, material purchase budget, labor budget, overhead budget and cash
budgets. The budgets are prepared to the financial year of 1st April – 31st March.

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2. Developing Budgets

2.1. Sales Budget

2.1 Figure – Sales Budget
According to the company policies, sales unit price increases by 10% more than last year’s
budget.
That is an actual figure. Budgeted sales price is assumed based on company selling price.

2.2. Production Budget

2.2 Figure – Production Budget
According to the company policy, ¼ of the following months sales units are prepared this month.
¼ of the sales units equal to the last months closing stock which is this month’s opening stock.

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2.3. Direct Material usage Budget

2.3 Figure – Direct Material Usage Budget

One paper board can produce 10 units. That is an actual figure given by the company. Then we
assume 0.1 paper board can produce 1 unit.1kg of ink requires print 10000 units. That is actual
figure given by the company. So, we assume 0.1g of ink can print 1 unit.Actual figure is 20litres
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chemical required to print 500,000 units. Then we assume 0.04ml required to produce 1 unit.15m
paper roll can produce 100 units. That is actual figuregiven by the company. Then we assume,
0.15cm can produce 1 unit.1kg of varnish want to print 10000 units. That is an actual figure
given by the company. Then we can assume 0.1g of varnish want to print 1 unit.

2.4. Direct Material Purchases Budget

2.4 Figure – Direct Material Purchase Budget

Rs. 27,700 can bring 1000 paper boards. That actual figure given by company. We can assume
Rs 27.70 can bring 1 paper board. Rs. 150,000 can bring 100kg of ink. Company gave actual
figure. So, we assume Rs 1.50 can bring 1 g of ink. Company gave actual figure Rs. 25,000 want
to bring 10kg of chemicals. Rs 2.50 can bring 1g of chemical. That we assume. Rs 190,000 can
bring 100kg of varnish. That genuine figure given by organization. Along these lines, Rs 1.90
can bring 1g of varnish. That we can expect. Organization gave genuine figure. Rs 17,130 need

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to bring 1000m of paper roll. At that point we can expect, Rs 17.13 need to bring 1m of paper
roll.

2.5. Direct Manufacturing Labor Budget

2.5 Figure – Direct Manufacturing Labour Budget

80000 units can be produced within 2.5 hours by 10 persons, according to the company policies.
We assumed that 80000 units can be produced by 9000 seconds, 10 persons at labour 80000
units can be produced within 90000 seconds by 1 labor so for one unit 1.125 seconds will be
needed according to our assumptions. Due to the company policies they use both skilled and
unskilled labour. Skilled rate is Rs.972 per hour. We assumed that for one minute the rate is
16.20 and for one second the rate is 0.27. Unskilled rate is Rs.612 per hour Then 1 min. we
assumed that the rate for one minute is Rs.10.20 and 1 second rate is Rs.0.17. according to the
company policies the total labour cost is the total of both the skilled and unskilled labour costs.

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2.6. Manufacturing Overhead Budget

2.6 Figure –Manufacturing Overhead Budget

Supervisor salary is Rs. 60,000 per month and 6 supervisors in production branch. It isGiven by
the company. Printing manager salary is Rs. 70,000 per month and 2 printing managers in
production branch. It is Given by the company. Electricity calculate by 3% of the total month
sales. It is the company policy. Fuel calculate by 2% of the total month sale. It is the company
policy.

Description April May June July August September October November December January February March Total
Credit sales-CART Pears Baby FLORAL BS 100G BIG BAR 988,020.00 406,186.00 5,839,298.00 2,465,060.00 4,992,470.00 1,903,986.00 4,793,180.00 2,785,972.00 4,907,644.00 3,337,852.00 3,525,900.00 3,041,472.00 38,987,040.00
Credit sales-CART Pears Baby PURE & GENTLE BS 100G BIG BAR 3,383,900.00 3,471,832.00 4,048,824.00 5,487,352.00 3,955,140.00 3,693,508.00 6,415,094.00 3,325,588.00 4,658,276.00 4,122,748.00 4,690,980.00 4,376,204.00 51,629,446.00
Credit sales-WRP Sun light yelow LBAR 120G LSR CDE RW ACMA741 (METERS) 7,617,600.00 5,455,600.00 6,776,720.00 5,301,040.00 8,807,859.20 10,078,377.60 8,353,776.00 9,045,816.00 10,486,776.00 10,297,176.00 7,648,464.00 5,490,816.00 95,360,020.80

Total receipts 11,989,520.00 9,333,618.00 16,664,842.00 13,253,452.00 17,755,469.20 15,675,871.60 19,562,050.00 15,157,376.00 20,052,696.00 17,757,776.00 15,865,344.00 12,908,492.00 185,976,506.80
Credit purchase-Paper board 3,007,112.00 5,245,133.50 4,546,539.50 4,396,267.00 3,794,623.00 5,385,018.50 3,781,050.00 4,900,130.00 4,146,690.00 4,345,853.00 3,831,879.50 2,988,691.50 50,368,987.50
Credit purchase-Ink 351,510.00 492,982.50 447,650.70 533,208.60 510,777.00 561,442.50 502,410.00 595,710.00 529,455.00 460,305.00 403,687.50 402,937.50 5,792,076.30
Credit purchase-Chemical 234,340.00 328,655.00 298,433.80 355,472.40 340,518.00 374,295.00 334,940.00 397,140.00 352,970.00 306,870.00 269,125.00 268,625.00 3,861,384.20
Credit purchase-Paper roal 3,231,917.10 3,579,313.50 3,450,807.67 5,055,809.87 5,229,651.96 4,622,273.55 5,098,915.80 5,659,066.80 5,223,022.65 3,853,736.10 3,360,649.05 4,129,957.35 52,495,121.39
Credit purchase-Varnish 238,982.00 264,670.00 255,167.72 373,848.56 386,703.20 341,791.00 377,036.00 418,456.00 386,213.00 284,962.00 248,501.00 305,387.00 3,881,717.48
Electricity (Rs.) 359,685.60 280,008.54 499,945.26 397,603.56 532,664.08 470,276.15 586,861.50 454,721.28 601,580.88 532,733.28 475,960.32 387,254.76 5,579,295.20
Fuel (Rs.) 239,790.40 186,672.36 333,296.84 265,069.04 355,109.38 313,517.43 391,241.00 303,147.52 401,053.92 355,155.52 317,306.88 258,169.84 3,719,530.14
Labour cost-CART Pears Baby FLORAL BS 100G BIG BAR 83,580.75 175,032.00 495,569.25 304,301.25 408,820.50 254,405.25 415,701.00 321,255.00 437,382.00 327,888.00 329,818.50 282,224.25 3,835,977.75
Labour cost-CART Pears Baby PURE & GENTLE BS 100G BIG BAR 341,277.75 362,340.00 441,738.00 508,167.00 376,794.00 423,695.25 546,603.75 354,420.00 438,273.00 413,127.00 446,787.00 402,534.00 5,055,756.75
Labour cost-WRP Sun light yelow LBAR 120G LSR CDE RW ACMA741 (METERS) 761,557.50 622,611.00 689,535.00 664,779.06 973,973.88 1,007,463.60 890,455.50 982,278.00 1,090,188.00 1,006,186.50 742,401.00 647,410.50 10,078,839.54
Printing manager salary (Rs.) 140,000.00 140,000.00 140,000.00 140,000.00 140,000.00 140,000.00 140,000.00 140,000.00 140,000.00 140,000.00 140,000.00 140,000.00 1,680,000.00
supervisor salary (Rs.) 360,000.00 360,000.00 360,000.00 360,000.00 360,000.00 360,000.00 360,000.00 360,000.00 360,000.00 360,000.00 360,000.00 360,000.00 4,320,000.00

Total expenses 9,349,753.10 12,037,418.40 11,958,683.74 13,354,526.34 13,409,635.00 14,254,178.23 13,425,214.55 14,886,324.60 14,106,828.45 12,386,816.40 10,926,115.75 10,573,191.70 150,668,686.25
Net cash change 2,639,766.90 (2,703,800.40) 4,706,158.26 (101,074.34) 4,345,834.20 1,421,693.37 6,136,835.45 271,051.40 5,945,867.55 5,370,959.60 4,939,228.25 2,335,300.30 35,307,820.55
Opening cash balance 3,540,650.00 6,180,416.90 3,476,616.50 8,182,774.76 8,081,700.43 12,427,534.63 13,849,228.00 19,986,063.45 20,257,114.85 26,202,982.40 31,573,942.00 36,513,170.25 38,848,470.55
Clossing cash balance 6,180,416.90 3,476,616.50 8,182,774.76 8,081,700.43 12,427,534.63 13,849,228.00 19,986,063.45 20,257,114.85 26,202,982.40 31,573,942.00 36,513,170.25 38,848,470.55 74,156,291.09

2.7. Cash Budget

2.7 Figure – Cash Budget

All the sales are credit. Credit period is 1 month. It is company policy. All the purchases are
credit. Credit period is 1 months. It is the company policy. All the expenses will pay following
months. It is company policy.The opening balance of 3,540,650.00 is taken from the company
reports.

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3. Findings

 JF & I Packaging organization update their everyday exchanges utilizing the different
kind of bookkeeping programming from their everyday activities referring. They have
recorded all the monetary and nonfinancial data utilizing their everyday exchange source
reports.
 Under that the budgetary data, they are recorded in the money book, diaries, records,
insignificant money book, complete salary articulation, monetary record, income
explanation, proclamation of hold profit, articulation of changes in value capital. The
company uses two one color machines and fours six color machines for their productions.
They create the budget from the cost units, for the preparation of budgets they get the
help of their marketing unit, production unit, accounting branch and so on. They use both
skilled and unskilled, labors.
 They produce 3 products. The total of the sale is 188,580,543.00
 The total of production is 38,613,842.00
 1818375-unit paper board, 3861384g ink, 1544553ml chemical, 3064513m paper roll,
2043009g varnish those materials use for the preparing that three products during the
budget time period.
 For the all the three products, total paper board material uses 49,522,475.50. For the all
the three products, total ink material uses 5,731,566.30. Total chemical material uses
3,850,044.20. Total paper roll use 52,243,824.29. Total varnish material uses
3,863,135.48
 Those 3 products for want skilled and unskilled labor. So total skilled labour amount is
11,728,954.51. Total skilled labour amount is 7,384,897.28
 In the 2018/2019 budget time period total overhead cost is 9,429,043.24
 Total closing cash balance is 86,156,291.09

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4. Suggestions

 Start out by foretelling a lot of what proportion what quantity cash that returning in each
month and the way much think that be disbursal. The additional realistic regarding every
of those numbers, the additional probably be to stay to your budget.
 Particularly if money’s tight, differentiating between “needs” and “wants” will facilitate
keep at intervals budget. wants come back initial, and if there’s cash left over, it will be
able to pay on needs.
 Be conservative, and guess low for financial gain. If financial gain exceeds the number
factored into budget, all the better, however don’t need to be caught short as a result of
excessively optimistic.
 In addition to shot low for financial gain, guess high for expenses. This, too, can provide
with some flexibility once one thing surprising crops up or prices rise.
 Firstly, ought to be approved all the budgets from the highest management/ through the
budgeted committee of the firm.
 It hasn’t a typical manner to organize budgets however you must continue one manner to
organize that budgets that are accepted thereby the budgeted committee.
 All the resources ought to be allotted during a additional helpful and completely different
manner.it suggests that reducing the inputs and will be supposed to boost our output level
of the connected merchandise.
 Budgeting system ought to be straightforward and might manage simply. Then it as a
result of all the managers are often management that system associated with the budgeted
method and also the most vital one is all the persons, once World Health Organization
have an interest parties regarding the firm’s operation ought to be ready to clearly
perceive regarding the budgeting method.

Before creating budgets ought to be ready to determine what are the constraints we've got to
face. truly it'll be a benefited one if once World Health Organization will determine that whereas
budgets are being ready. If there's a limiting factor/factors first of all you must determine and at
that time the identification, it ought to take into associate degree account.

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5. Conclusion

Consequently, the planning technique the yearly monetary benefit, costs and benefits are
anticipated. In this way, the planned information you'll get as of late refreshed information
concerning the corporate financial position and fiscal practices. It because of that archives
(spending plans) refresh frequently and its incorporated with a spread of monetary reports.

Planned information are as of now requires choices concerning the uncertain future potential
issues and its exceptionally required to the benefit making openings. In the event that it's
characterized the costs into overhead and generation classes. without a doubt, it'll encourage to
ask the decision concerning the esteem decrease of the get together technique and associated
item.

They prepare their sales budget by taking 10% from previous year sales, for the production
budget they take ¼ from each month’s sales as their starting inventory and closing inventory. In
material budget they produce 10 units from 1 paper board, from 1kg ink they produce 10000
units, from 20leters they produce 500000 units. In material purchase budget they make their
assumption through company policy. All the other budget was prepared by the assumptions we
made from the cost structure received from the company.

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6.References

 Jfpackaging.lk. (2018). JF Packaging | About Us. [online] Available at:

http://jfpackaging.lk/AboutUs.html [Accessed 15 Nov. 2018].
 Ltd (2018). Jf& I Packaging (pvt) Ltd - Talangama null, 321,kaduwela Road Koswatt.... [online]
Lk.kompass.com. Available at: https://lk.kompass.com/c/jf-i-packaging-pvt-ltd/lk011918/
[Accessed 15 Nov. 2018].

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7. Appendix

2.1 Figure – Sales Budget

2.2 Figure – Production Budget
2.3 Figure – Direct Material Usage Budget
2.4 Figure – Direct Material Purchase Budget
2.5 Figure –Direct Manufacturing Labour Cost Budget
2.6 Figure –Manufacturing Overhead Cost Budget
2.7 Figure –Cash Budget
Information were taken by the interview done with Mr. W.D.L. Dushmantha, Mr. Garmini
Samarasinghe (Chartered accountants), Mr. UpulHemanthaThotamunuge(Printing manager).

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Group Report Marks Comments

awarded

The introduction to coursework

is good and you have taken a
good background for your
1 Introduction to the coursework. 10% 6 study.

Analysis of the budgeting process of You have done a good

the organization and identifying analysis for the budgeting
main budgets to develop process. Resource constrains
considering their resource are identified to initiate the
2 constraints and other aspects. 30% 23 budgeting process.

Developing a budget to the selected Budgets are developed

organization properly. Have done a good
3 40% 28 job.

Identifying issues of the budgeting You have identified issues

process and your suggestions for its properly and have come up
4 development 10% with suggestions.

8
5 Adherence to provided guidelines 5% 4 Have followed guidelines.

Clear presentation of budget is

Overall structure and the there. Highly appreciate your
6 presentation 5% 4 hard work and keep it up!!!
of the report including
spreadsheets

Total Marks = 75%

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