Accounting for Business Individual Report Component 2 Assignment Sample

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Introduction - Accounting for Business Individual Report Component 2 Assignment Sample

Accounting refers to the process of recording, classifying, analysing, and interpreting financial transactions of a business entity. This report includes the utilization of various accounting techniques on which decisions for operating a takeaway shop near Canon’s Park are based. It covers the breakeven point, income and expenditure budget, and targeted profits. This report also consists of the business case depicting assumptions associated with running the venture. This detailed explanation serves as valuable assignment help for students looking to understand practical business accounting applications effectively.

Estimated cost:

The potential cost for establishing a take away shop is as below:

Main Body

The Accounting for Business Individual Report Component 2 Assignment Sample delves into applying fundamental and advanced accounting techniques to operate a takeaway shop near Canon’s Park effectively. This section covers essential financial analyses such as breakeven point determination, contribution margin calculations, and marginal costing statements. The report further elaborates on budgeting practices, including income and expenditure forecasting, to project profitability and financial stability for the business. Additionally, it considers the use of pricing strategies like cost-plus and penetration pricing to maintain competitive advantage and ensure target profits. The business case introduces key assumptions and market insights, incorporating competitive analysis and financial feasibility to justify the venture’s growth potential. This comprehensive main body serves as a critical guide for students seeking assignment help, offering a practical example of how accounting principles are utilized in real business scenarios to support decision-making and operational success.

Target profit

The targeted profit for the take away shop will be 10% above the cost of production. The cost plus pricing method will be used that helps in earning an effective profit by charging 10% higher prices from the cost of production. This method has been selected to maintain the profitability of the business entity and simplifying the pricing mechanism for the business entity.

Contribution analysis

The contribution analysis indicates the profitability of each product produce and supports in understanding various internal and external factors that are impacting the firm’s overall income (Dyson and Franklin, 2017). The contribution analysis for setting up the selling price of per coffee is as follows:

Variable cost per unit= 34000/ 7000 = 5

Contribution margin per unit= (Revenue- variable cost)

=100000 - 34000

= 64000 / 7000

= 10

Selling price of coffee= variable cost per unit+ contribution margin per unit

= 10+5 = 15

The selling price of per cup of coffee will be 15 pound which will help in covering all the cost while managing profitability.

Analysis

The Breakeven analysis indicates the total units that firm need to sell for attaining the stage of no profit and no loss. This analysis has been undertaken as to identifying minimum sales and revenue which firm should earn to cover all its cost and expenses (McLaney and Atrill, 2018). The margin of safety indicates the difference in the breakeven point and the amount of expected profit. The Breakeven analysis and the margin of safety of the take away shop are as follows:

From the above table, it has identified that that firm need to sell minimum of 2600 coffee for attaining the stage of breakeven point. Further, a total of 3550 coffee needs to be sold out that will help in attaining the desired profit for the business entity. It is identified that total a margin of 61% is available that indicate firm’s ability in managing sales volatility.

Marginal costing

This is the cost accounting technique that emphasises over variable cost for producing one additional unit (Hayes, 2019). This statement supports in identifying the contribution margin and assists in taking effective decision regarding the product, profit and the price. The marginal costing statement for the take away shop is as follows:

From the above table it has identified that firm‘s sales is increasing over month and the company is earning an effective amount of profit for maintaining stability in the industry.

Income and expenditure Budget preparation

The income and expenditure statement indicate the postnatal cost and the income for cover all the cost over the period of time (Moisello and Mella, 2020). This statement helps in identifying the total profit that could be earned by the company and assists in identifying the growth prospect of the business entity. The below table indicate the expected amount of profit that would be earn through the take away shop.

From the above analysis, it has depicted that the expected profit of the shop is predicted to increase over time that indicate high viability of the organization. It has also been identified that profit percentage is increasing over month that firm’s ability in covering the cost and earning a significant amount of profit.

Business case

The proposed business is related to the establishment of “Flavourful fusion” which is the take away shop that is going to establish in the Canon’s park of UK. This Business is aiming at providing healthier and sustainable food that individual could enjoy by taking it to their home or other places.

Scope:

The take away business has high growth opportunity as it is identified that 25% of total population prefers take away food twice a week (Demand for take away business in UK, 2023). The take away market is contributing over 31.5 million pound in country; s GDP and its estimated to grow with 6.5% CGPR in upcoming time.

SMART goals:

Following are various objectives that firm need to attain in the upcoming three month:

• To increases the profit by 4% at the end of July month.
• To enhance website visibility by 2% at the end of June.
• To sale more than 10000 product in the third month.

Marketing mix:

Following is the marketing mix of the Flavourful fusion for attracting large number of customer:

Competitive analysis

The below table indicate the competitive analysis for effectively understanding the competitor’s position within the industry:

Porter five force analysis

It has identified that there is more than 46000 take away shops in UK that results in increasing the bargaining power of the buyers (Competitors analysing of take away business in UK, 2024). Further, there is large number of supplier providing raw material that reduces bargaining power of the suppliers. Due to requirement of high cost there is low threat of new entry in the industry.

Accounting for Business Individual Report Component 2 Assignment Sample

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Financial feasibility

From the analysis of the income statement and the marginal costing it has identified that firm is able to enhance its sales and profitability over a period of time. Further, firm will able to manage its cost over time and effectively manage inventories that result in increasing profitability and indicate high stability within industry. While deciding on the cost , it has believed that due to inflation there will be increase in cost over month . Further, the sales amount has been increasing as it has identified that there is continuous growth of the industry that results in increasing demand and enhancing overall sales.

Conclusion

By summing up the report, it has identified that there is high growth opportunity for the take away business in UK. It has estimated that firm should charge 15 pound for its product and sell at least 2600 product for covering all the cost. It has identified those organizations profits are increasing that indicate high growth opportunity for firm. Additionally, firm is using penetration pricing and promotion technique for attracting customer which aids in enhancing overall profits of the business entity.

References

Books and Journals

• Dyson, R. & Franklin, E. (2017) Accounting For non-Accounting Students, 9th ed., Harlow: Pearson
• Hayes, A.S., 2019. Bitcoin price and its marginal cost of production: support for a fundamental value. Applied economics letters, 26(7), pp.554-560.
• McLaney, E. and Atrill, P. (2018) Accounting and Finance: An Introduction, 9th ed., Harlow: Financial Times Press.
• Moisello, A.M. and Mella, P., 2020. Matching revenues and costs: The counter-intuitive rationality of direct costing. International Journal of Business and Management, 15(1), pp.202-222.
• Mott, G. (2012) Accounting for non-accountants; a manual for managers and students. 8th ed., Kogan Page

Online

• Demand for take away business in UK. 2023. Online. Available through: < https://cpdonline.co.uk/business-guides/setting-up-a-takeaway-business/#:~:text=The%20takeaway%20industry%20is%20at,more%20than%205%20million%20people. >
• Competitors analysing of take away business in UK.2024. Online. Available through: < https://goodfoodstudio.co.uk/restaurant-competitor-analysis>