PROJECT REPORT ON

MANAGERIAL ACCOUNTING- NOTEBOOK

Budgeted Cost Sheet for Five Years

Submitted By:

Bibek Shrestha

Denim Jung Shah

Rahul Giri

Sandipa Silwal

Susaita Sharma

Sushmita Singh

Submitted To:

Mr. Prajwol Sayami

Managerial Accounting

April, 2019
1.0 Description of Product

A notebook is a book or binder of paper pages, often ruled, used for purposes such as recording
notes or memoranda, writing, drawing or scrapbooking. A notebook that is used in schools to
copy down schoolwork and notes. The notebook format is different for some subjects: for the
majority of subjects, the exercise book will contain lined paper with a margin, but for other
subjects such as mathematics, the exercise book will contain squared paper to aid in the drawing
of graphs, tables or other diagrams.

1.1 History

During the fourteenth and fifteenth centuries notebooks were often made by hand at home by

folding pieces of paper in half into gatherings that were then bound at a later date. The pages

were blank and every note keeper had to make ruled lines across the paper. Making and keeping

notebooks was such an important information management technique that children learned how

to do it in school.

1.2 Place of Origin

In the beginning the term notebook comes from the name of an Italian religious scholar named
Ambrogio Calepino (1435-1511). He published a Latin dictionary in 1502, and over the years he
completed it with other languages (Hebrew, Italian etc). This work knew an astounding success
in Europe during this decade and made this Latin dictionary the reference books.

Being taken during trip or travel, it was regularly annotated either personal reflection or enriches
notes over meetings. Its format has adapted in collecting small book for notes for more
convenience, and then like a personal notebook. The notebook that we know today hasn’t started
with the small size. These are the men and women who shaped it with their uses over time.
1.3 Usefulness

Notebooks have been used extensively in schools and in offices across the world. Artists often
use large notebooks, which include wide spaces of blank paper appropriate for drawing. Lawyers
use rather large notebooks known as legal pads that contain lined paper (often yellow) and are
appropriate for use on tables and desks. In contrast, journalists prefer small, hand-held notebooks
for portability (reporters' notebooks), and sometimes use shorthand when taking notes. Scientists
and other researchers use lab notebooks to document their experiments. The pages in lab
notebooks are sometimes graph paper to plot data. Police officers are required to write notes on
what they observe, using a police notebook. Land surveyors commonly record field notes in
durable, hard-bound notebooks called "field books."

2.0 Marketing Plan

 Product features: 120 pages per note book, Ozone-treated Elemental Chlorine Free
Paper, theme of the cover is customizable, high quality smooth paper which includes
yearly calendar, fun facts, riddles etc.
 The main target customers are students, lawyers, journalist, corporate house, financial
institutions, NGO/INGOs, private companies, research firms etc.
 Promotions: word of mouth, send sample copies discount in bulk order.
 Distribution: wholesaler, direct contact with business house and institutions.

Notebook are easy to carry and very much useful for taking notes. As Notebook use
premium quality paper and are very light weight in nature; it's very easy to carry and use in
various occasions.

3.0 Details of Material

Direct material includes all the raw materials used to make finished goods. The raw materials

required to produce copies include:

S.No Direct Materials Units Quantity Rate (in Amount (in Rs.)
. Rs.)
1. Cardboard paper (A4 Ream 1,500(sets) 380/- 5,70,000/-
size)

2. Staples Units 20(box) 925/- 18500/-

3. White sheets (A4 size) Sheets 10,000 (sets) 7.5/- 75,000/-

4.0 Details of Labor

Labor is categorized into direct labor and indirect labor. Direct and indirect labor in producing

copies includes:

Direct Labor

S.No Position Type No. of Job Duties Salary/Wag

. employee e
Monthly Yearly
1. Graphic Skilled 1  Develop new design Rs. 20000/- Rs.
Designer concepts, graphics, 240000/-
and layouts and
produce artwork for
copy
2. Worker 1 Semi- 1  Feed raw materials Rs. 10000/- Rs.
skilled into production 120000/-
machinery
 Manage stock of
raw materials
3. Worker 2 Semi- 1  Monitor the Rs. 10000/- Rs.
skilled production process 120000/-
 Binding

4. Worker 3 Semi- 1  Pack goods to be Rs. 10000/- Rs.

skilled shipped 120000/-
 Cleans work areas
and lubricates
equipment
 Indirect Labor and Office staff

S.No Position Type No. of Job Duties Salary

. employee
Monthly Yearly
1. Manager Skilled 1  Maintain staff by Rs. Rs.
recruiting, 25000/- 300,000/
selecting, orienting, -
and training
employees
 Prepare financial
statement
 Make production
and marketing
related decisions
2. Supervisor Skilled 1 Give instructions to and Rs. Rs.
oversee the work of 32000/- 384000/-
workers
3. Driver Skilled 1 Load, unload, prepare, Rs. Rs.
inspect and operate the 10000/- 120000/-
delivery vehicle
4. Office Unskilled 1 Office cleaning plus Rs. Rs.
Assistant other day to day work 8000/- 96000/-
as told by office
administration.
5. Receptionist Semi- 1 Receive calls and Rs. Rs.
skilled orders 10000/- 120000/-

5.0 Details of Overhead

All other costs of manufacturing copies are classified as manufacturing overhead. This includes:

S.No. Overhead Amount

1. Indirect Labor Rs. 3,84,000/-
 Supervisor Rs. 3,84,000/-

2. Indirect Material Rs.,1,23,500/-

 Printing Ink (25* Rs.4,500/-)
 Carton box (20* Rs.300/-)
 Tape and glue (Rs.5,000/-)
3. Factory Rent (Rs.60,000/-*12 months) Rs. 720,000/-
4. Electricity (1000 units* Rs. 13/-* 12 months) Rs. 1,56,000/-
5. Depreciation Rs.65000 /-
 Electric binding machine Rs.15000 /-
 Printer Rs.18000 /-
 Paper cutter Rs.4500 /-
 Factory Furniture Rs.15000 /-
 Computer Rs.12500 /-

6.0 Details of Selling and Administrative Expenses

S.No. Selling and Administration Expenses Amount

1. Telephone Bills Rs. 5,000/-
2. Electricity (250 units*Rs. 13/- *12 months) Rs. 39,000/-
3. Office Rent (16000*12months) Rs. 192,000/-
4. Advertisement Rs. 50,000/-
6. Depreciation Rs.210,000/-
 Office Furniture Rs. 10,000/-
 Vehicle Rs. 2,00,000/-
7. Salaries of staff Rs. 6,36,000/-
 Manager Rs. 300,000/-
 Receptionist Rs. 120,000/-
 Driver Rs. 120,000/-
 Office Assistant Rs. 96,000/-
Total Selling and Administration Expenses Rs. 11,32,500

7.0 Details of Fixed Assets

S.No. Fixed Assets Quantity Amount

1. Furniture Rs.1,50,000/-
 Office Rs.50,000/-
 Factory Rs.1,00,000/-

2. Printer 1 Rs. 120,000/-

3. Computer 1 Rs. 50,000/-
4. Vehicle 1 Rs.10,00,000/-
5. Paper Cutting Machine 1 Rs.30,000/-
6. Telephone 1 Rs.3,000/-
7. Electric binding machine 1 Rs. 100,000/-
Total Fixed assets Rs.14,53,000/-
8.0 Schedule of Cost of Goods Manufactured

Assumptions:

 Projected sales = 24000 units

 Production = 32000 units

 Closing WIP for year 1 = 10% of total manufacturing cost

 Sales is increased by 15% every year

 Cost of materials is expected to grow at 10% annually

 Only the cost of labor used in manufacturing is increased by 15% annually

 Finished goods inventory is assumed to be 25% of production

 Initial selling price Rs.150 per unit.

For 1st Year, Let X be the production (assuming sales to be 24000)

Opening+ Production- Closing= Sales

or, 0+X-0.25X=24000

or, 0.75X=24,000

or, X=24000/ 0.75

Therefore, X= 32,000/-

8.1 Cost Sheet for Year 1

Schedule of Cost of Goods Manufactured 1st Year

   
Raw Materials  
   
Opening Raw Materials -  
  add: Purchase of Raw Material   663,500.00    
Raw material available 663,500.00  
  less: Closing Raw Material 165,875.00  
Raw Material Used       497,625.00  
   
Direct Labor 600,000.00  
   
Manufacturing overhead          
Factory Rent 720,000.00  
Indirect labor 384,000.00  
Indirect Material 123,500.00  
Electricity 156,000.00  
Depreciation on furniture 15,000.00  
Depreciation on Machinery 37,500.00  
Depreciation of Computer     12,500.00  
Total Manufacturing Overhead     1,448,500.00  
Total Manufacturing cost 2,546,125.00  
  add: Opening Work in Process -  
  less: closing Work in Process     254,612.50  
Cost of Goods Manufactured 2,291,512.50  
               

Schedule of Cost of Goods Sold 1st Year  

   
Opening Stock of finished goods -  
  add: Cost of Goods Manufactured 2,291,512.50    
Cost of goods available for sale 2,291,512.50  
  less: closing stock of finished goods 572,878.12    
Cost of goods sold 1,718,634.38  
               

Income Statement 1st Year      

   
Sales revenue 3,600,000.00  
  less: cost of goods sold   1,718,634.38    
Gross Margin       1,881,365.62    
  depreciation of vehicle 210,000.00  
  electricity 39,000.00  
  telephone 5,000.00  
  office rent 192,000.00  
   salary 636,000.00  
  advertisement 50,000.00  
Selling & admin     1,132,500.00    
Profit before tax 748,865.62  
  Less: tax (25%)     187,216.40    
Profit after tax 561,649.21  
               

8.2 Cost Sheet for Year 2

Schedule of Cost of Goods Manufactured 2nd Year

   
Raw Materials  
   
Opening Raw Materials 165,875.00 -  
add: Purchase of Raw
  Material   729,850.00    
Raw material available 895,725.00  
  less: Closing Raw Material 223,931.25  
Raw Material Used       671,793.75  
   
Direct Labor 690,000.00  
   
Manufacturing overhead          
Factory Rent 720,000.00  
Indirect labor 384,000.00  
Indirect Material 123,500.00  
Electricity 156,000.00  
Depreciation on furniture 15,000.00  
Depreciation on Machinery 37,500.00  
Depreciation of Computer     12,500.00  
Total Manufacturing Overhead     1,448,500.00  
Total Manufacturing cost 2,810,293.75  
  add: Opening Work in Process 254,612.50  
  less: closing Work in Process     281029.37  
Cost of Goods Manufactured 2,783,876.88  
               

Schedule of Cost of Goods Sold 2nd Year  

   
 Opening Stock of finished goods 572,878.12  
  add: Cost of Goods Manufactured 2,783,876.88    
Cost of goods available for sale 3,356,755  
  less: closing stock of finished goods 625,711.87    
Cost of goods sold 2,731,043.13  
               

Income Statement 2nd Year      

   
Sales revenue 4,140,000.00  
  less: cost of goods sold   2,731,043.13    
Gross Margin       1,408,956.87    
  depreciation of vehicle 210,000.00  
  electricity 39,000.00  
  telephone 5,000.00  
  office rent 192,000.00  
  salary 636,000.00  
  advertisement 50,000.00  
Selling & admin     1,132,500.00    
Profit Before Tax 276,456.87  
  Less tax (25%)     69,114.21    
Profit After Tax 207,342.65  
               

8.3 Cost Sheet for Year 3

Schedule of Cost of Goods Manufactured 3rd Year

   
Raw Materials  
   
Opening Raw Materials 223,931.25  
  add: Purchase of Raw Material   802,835.00    
Raw material available 1,026,766.25  
  less: Closing Raw Material 256,691.56  
Raw Material Used       770,074.68  
   
Direct Labor 793,500.00  
   
Manufacturing overhead          
Factory Rent 720,000.00  
Indirect labor 384,000.00  
Indirect Material 123,500.00  
Electricity 156,000.00  
Depreciation on furniture 15,000.00  
Depreciation on Machinery 37,500.00  
Depreciation of Computer     12,500.00  
Total Manufacturing Overhead     1,448,500.00  
Total Manufacturing cost 3,012,074.68  
  add: Opening Work in Process 281029.37  
  less: closing Work in Process     301,207.46  
Cost of Goods Manufactured 2,991,896.59  
               

Schedule of Cost of Goods Sold 3rd Year  

   
Opening Stock of finished goods 625,711.87  
  add: Cost of Goods Manufactured 2,991,896.59    
Cost of goods available for sale 3,714,405.68  
  less: closing stock of finished goods 747,974.14    
Cost of goods sold 2,869,634.32  
               

Income Statement 3rd Year      

   
Sales revenue 4,761,000.00  
  less: cost of goods sold   2,869,634.32    
Gross Margin       1,891,365,68    
  depreciation of vehicle 210,000.00  
  electricity 39,000.00  
  telephone 5,000.00  
  office rent 192,000.00  
  salary 636,000.00  
   advertisement 50,000.00  
Selling & admin     1,132,500.00    
Profit before Tax 758,865.68  
  Less tax (25%)     189,716.42    
569,149.26  
               

8.4 Cost Sheet for Year 4

Schedule of Cost of Goods Manufactured 4th Year

   
Raw Materials  
   
Opening Raw Materials 256,691.56  
  add: Purchase of Raw Material   883,118.50    
Raw material available 1,139,810.06  
  less: Closing Raw Material 284,952.51  
Raw Material Used       854,857.54  
   
Direct Labor 912,525.00  
   
Manufacturing overhead          
Factory Rent 720,000.00  
Indirect labor 384,000.00  
Indirect Material 123,500.00  
Electricity 156,000.00  
Depreciation on furniture 15,000.00  
Depreciation on Machinery 37,500.00  
Depreciation of Computer     12,500.00  
Total Manufacturing Overhead     1,448,500.00  
Total Manufacturing cost 3,215,882.54  
  add: Opening Work in Process 301,207.46  
  less: closing Work in Process (10%)   321,588.25  
Cost of Goods Manufactured 3,195,501.75  
               

Schedule of Cost of Goods Sold 4th Year  

   
Opening Stock of finished goods 747,974.14  
  add: Cost of Goods Manufactured 3,195,501.75    
 Cost of goods available for sale 3,943,475.89  
  less: closing stock of finished goods 798,875.43    
Cost of goods sold 3,144,600.46  
               

Income Statement 4th Year      

   
Sales revenue 5,475,150.00  
  less: cost of goods sold   3,144,600.46    
Gross Margin       2,330,549.54    
  depreciation of vehicle 210,000.00  
  electricity 39,000.00  
  telephone 5,000.00  
  office rent 192,000.00  
  salary 636,000.00  
  advertisement 50,000.00  
Selling & admin     1,132,500.00    
Profit before Tax 1,198,049.54  
  Less tax (25%)     299,512.38    
898,537.15  
               

8.5 Cost Sheet for Year 5

Schedule of Cost of Goods Manufactured 5th Year

   
Raw Materials  
   
Opening Raw Materials 284,952.51  
  add: Purchase of Raw Material   971,430.35    
Raw material available 1,256,382.86  
  less: Closing Raw Material 314,095.71  
Raw Material Used       942,287.14  
   
Direct Labor 1,049,403.75  
   
Manufacturing overhead          
Factory Rent 720,000.00  
Indirect labor 384,000.00  
Indirect Material 123,500.00  
Electricity 156,000.00  
Depreciation on furniture 15,000.00  
Depreciation on Machinery 37,500.00  
Depreciation of Computer     12,500.00  
Total Manufacturing Overhead     1,448,500.00  
Total Manufacturing cost 3,440,190.89  
  add: Opening Work in Process 321,588.25  
  less: closing Work in Process (10%)   344,019.08  
Cost of Goods Manufactured 3,417,760.06  
               

Schedule of Cost of Goods Sold 5th Year  

   
Opening Stock of finished goods 798,875.43  
  add: Cost of Goods Manufactured 3,417,760.06    
Cost of goods available for sale 4,216,635.49  
  less: closing stock of finished goods 854,440.01    
Cost of goods sold 3,362,195.48  
               

Income Statement 5th Year      

   
Sales revenue 6,296,422.50  
  less: cost of goods sold   3,362,195.48    
Gross Margin       2,934,227.02    
  depreciation of vehicle 210,000.00  
  electricity 39,000.00  
  telephone 5,000.00  
  office rent 192,000.00  
  salary 636,000.00  
  advertisement 50,000.00  
Selling & admin     1,132,500.00    
 Profit before Tax 1,801,727.02  
  Less tax (25%)     450,431.75    
1,351,295.26  
               

Year 1 Year 2 Year 3 Year 4 Year 5

2,991,896.5 3,195,501.7 3,417,760.0
COGM 2,291,512.50 2,783,876.88 9 5 6
1,718,634.3 2,731,043.1 2,869,634.3 3,144,600.4 3,362,195.4
COGS 8 3 2 6 8
561,649. 207,342. 569,149. 898,537. 1,351,295.
Profit/ Loss 21 65 26 15 26

9. Conclusion

From the assumptions made above table we got the above Cost of good Manufactured, Cost of
Goods Sold and Profit/Loss. Due to estimated increase in COGM and COGS in second year the
company is expected to decrease in profit i.e. Rs. 207,342.65 from Rs. 561,649.21 in first year.
However, from the third year the company will increase to earn profit respectively. The
production per unit is not increased however with estimated increase in labor cost and raw
material cost the selling price is increased every year with 15%. The above information is
presented in bar diagram below: