NORTH SOUTH UNIVERSITY

ACT 202 Group Project

Selected Item: Candle
Fall 2023
Section: 4

Submitted To:
Mr. Rezwanul Mumtahin Husain
Lecturer
Department of Accounting & Finance

Submitted By:
Abu Saleh Md. Sakib 1921729642

Jubaer Islam 1921654630

Md. Shahajad Nur 2013452630

Rifa Nawar Preema 2013864630

Md. Zayed Hosaain 2013844030

Submission Date: 18/01/24

 Letter of Transmittal

Mr. Rezwanul Mumtahin Husain

Lecturer

Department of Accounting & Finance

North South University

Subject: Submission of the final report of ACT 202 on candles.

Honorable Sir,

We are pleased to inform you that we have completed our group project on candles for this
semester. Through this project, all of us learned how a company establishes its presence and
gained insights into transforming theoretical concepts into reality. We would like to express
our gratitude for providing us with the opportunity to work on this project and for assisting us
with all the necessary information throughout the entire duration of the project.

We are confident that our utilization of the ACT 202 materials has substantially enhanced our
managerial skills, intending to apply these newfound capabilities in our professional
endeavors. We trust that this report provides valuable insights and that you recognize the
dedication and effort invested in its creation.

Sincerely,

Md. Shahajad Nur: 2013452630

Jubaer Islam: 1921654630
Rifa Nawar Preema: 2013864630
Abu Saleh Sakib: 1921729630
Md. Zayed Hosaain: 2013844030

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 Abstract:
We are creating candles. Candles are in high demand globally. This product is both functional
and decorative, adding a touch of elegance to any house. Candles are becoming increasingly
popular in Bangladesh. According to our projection, now is the appropriate time to place this
request in the market.

Regardless, we will not be the first to enter this business in Bangladesh. However, price is an
important consideration when making a request. To attract our target market, we will offer
lower request-based pricing than our competitors. This will help us build a strong market
foundation. Currently, we will sell candles upon request. Candle manufacture is a
straightforward process. Currently, only 5 members are active in the manufacturing process.
We can make the final products after completing the six processes of candle making. We
anticipate selling 15000 units at BDT 15 each during our first month of operation.

To create our product, we need total 2 materials. One of them is Paraffin wax and another one
is wicks. The overall cost per unit of the affair is BDT 1.36. Our company's production begins
in January. The report includes a budget and cost calculation for the next one months. A 15%
rise in the Dealing Price leads to a 12% increase in yearly transactions (Physical Units) and a
20% increase in product costs next month. We've forecasted the following months based on the
increase seen below.

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 Table of Contents
Letter of Transmittal ................................................................ 2
Abstract:............................................................................................... 3
Introduction: ........................................................................................ 5
Making Process: .................................................................................. 6
Master Budget ...................................................................................... 7
Sales Budget: .................................................................................... 7
Production Budget: ........................................................................... 7
Direct Material Budget: .................................................................... 8
Direct Labor Budget: ........................................................................ 9
Manufacturing Overhead Budget:................................................... 10
Selling and Administrative Budget: ................................................ 11
Conclusion ......................................................................................... 12
Reference ............................................................................................ 13
1. Sans', .., Jaman, K., By, Jaman, K., ৬, জ., ৩, জ., ২৬, ড., ২৪, ড.
and ২৩, ড. ...................................................................................... 13

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 Introduction:

We chose candles as our product due to their popularity and readily available components.
Additionally, this product and firm require less labor. Working would be possible. We use
candles to maximize labor efficiency and produce a large quantity of goods.

There are 4 steps in our scented candle-making process, which are given below:
➢ Step 1: Melt the wax
➢ Step 2: Pour the wax
➢ Step 3: Wrap the wick in place
➢ Step 4: Let the wax cool

Industry analysis suggests an entry into a profitable and appealing market. With increased
disposable income, there is a growing trend in house design and improvement initiatives. The
pandemic has further fueled this trend, as people are spending more time at home and seeking
ways to enhance their living conditions. Some use candles for decorative purposes, while others
rely on them out of necessity. Despite the prevalence of regular candles, many people across
the country still continue to use them, especially during common occurrences of load shedding.

Given the daily necessity of candles, they are readily available in grocery stores. However, due
to the widespread availability, there is intense competition in the market. To stand out, we aim
to offer candles at a competitive price without compromising on quality.

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 Making Process:

The process of making candle is very easy and hassle free. This part of the report is about the
making process of candle. Embark on the artistry of candle making by threading the dice
meticulously, guiding the thread from its apex down to the base, and securely fastening it in
place. The thread acts as the backbone, facilitating the structural integrity of the candle-to-be.
This foundational step ensures a seamless coherence throughout the crafting process.

Figure: Making process of Candle.

Moving forward, delicately introduce the candle powder into the waiting dice, creating the
essence of the candle's form. The meticulous placement of the powder is crucial for achieving
an aesthetically pleasing and evenly shaped result. As you introduce heat, witness the
transformative journey of the powder into a molten state, filling the dice with the essence of
the candle's substance. Upon completion of the molding process, unveil the delicately formed
candle by opening the screw lock with a precise touch. The initial reveal sets the stage for the
final touches. Armed with a knife, trim away any excess material protruding beyond the defined
contours of the dice, refining the candle's silhouette. As the last step, release the lock, allowing
the meticulously crafted candle to emerge gracefully from its mold. Behold the fruits of your
labor – a bespoke, handcrafted candle, a testament to the artful fusion of precision and creativity
in the candle-making process.

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 Master Budget
Sales Budget:

January February Total March April

Budget Sales in 15000 16800 31800 18816 21072
Unit
Selling Price BDT 15 BDT 17.25 BDT 17.25 BDT 20 BDT 23
Per Unit
Total Budgeted BDT 2,25,000 BDT 2,89,800 BDT 5,48,550 BDT BDT
Sales 3,76,320 4,84,656

“Timeless Glow” is preparing their budget for January and February; for January, timeless
Glow estimates that the budgeted sales in the units are 15000. On the other hand, in February,
the budgeted sales of candles increased by 12%, which is 16800 units. The per unit selling price
of the candles goes up by 15% per month. However, on the month of March, Budget sales in
unit increases by 12% which is 18816 and the selling price increases by 15% which is BDT 20.

Produc1on Budget:

January February Total March April

Budgeted Sales 15000 16800 31800 18816 21072
(Unit)
Add: Desired 3360 3763 3763 4214
ending Inventory
Total Needs 18360 20563 35563 23030

Less: Beginning 0 3360 0 3763

Inventory
Required 18360 17203 35563 19267
Production

Here, we are assuming to have 20% of the following month's sales to produce in the current
month. As a result, we have 3360 units ending inventory in January, which is 20% of February's
budgeted sales unit. In addition, in February we produced 3763 units extra, which is the 20%
of March.
Again, as we started our business in January, there is no beginning inventory. We deducted
3360 units in February; the beginning inventory of February.

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Direct Material Budget:

January February Total March

Production (unit) 18360 17203 35563 19267
Materials Per Unit 0.03 0.03 0.03 0.03
(kg)
Production Needs 551 kg 516 kg 1067 kg 578 kg
Add: Desired ending 103 kg 116 kg 116 kg
inventory
Total Needed 654 kg 632 1183
Less: Beginning 0 103 0 116
inventory
Materials to be 654 kg 529 1183
purchased
Cost Per kg BDT 45 BDT 45 BDT 45
Total Cost of BDT 29430 BDT 26,415 BDT 53,235
Materials

To make a basic candle we need two materials. One of them is Paraffin wax and
another one is wicks. As the major raw material is Paraffin wax, we made the Direct Material
Budget for the month of January and February on it.
Here 0.03 kg paraffin wax used in per unit. We are assuming to keep 20% of the raw
materials in hands in the current month. As a result, we kept 45 kg paraffin wax as the desired
ending inventory which is 20% of the month of February. Also, we kept 116 kg materials in
the ending inventory which is 20% of the month of March.
As we started our business in January, there is no beginning inventory. On the month
of February, we brought 103 kg of raw materials which comes from January’s ending
inventory.
So, we need to purchase 654 kg raw materials for January and as 116 kg raw materials
was in hand on the month of February, we need to purchase 529 kg paraffin wax as direct
material.

Costing behind Paraffin Wax:

Per kg Paraffin Wax: BDT 45
Paraffin Wax used in per production: 0.03 kg (30 gm)
Number of Candle produced: 1kg=1000 gm/30 gm =33 units
Cost in per production: BDT 45/33 units = BDT 1.36

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Direct Labor Budget:

January February Total March

Units of production 18360 17203 35563 19267
Direct labor per hour 0.022 0.022 0.022

Labor hours required 404 378 782

Guaranteed Labor Hours 400 400 400

Labor hours paid 404 400 804

Hourly wage rate BDT 50 BDT 50 BDT 50

Total direct labor costs BDT 20,200 BDT 20,000 BDT 40,200

Based on our research we figured out that we can produce 45 units per hour. From that
information we calculated Direct Labor Hour which is 0.022. From that DLH we calculated
total labor hours required for January is 404 and 378 for the month of February. We have fixed
for the minimum payment as the guaranteed labor hour which is 400. At the 50-taka hourly
wages rate we paid 20,000 takas as the total direct labor cost and 20,000 takas as the direct
labor cost in February.

Calculation of Direct Labor Budget:

Production per Hour: 45

Direct Labor Hour: (60/45)/60= 0.022

Guaranteed Labor Hour (5 hours * 5 workers* 16 days) = 400

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Manufacturing Overhead Budget:

January February Total

Budgeted DLH 404 378 782
Variable mfg. OH rate BDT 42 BDT 42 BDT 42

Variable mfg. OH Costs BDT 16,968 BDT 15,876 BDT 32,844

Fixed mfg. OH costs BDT 14,000 BDT 14,000 BDT 28,000

Total mfg. OH Cost BDT 30,968 BDT 29,876 BDT 60,844

Less: Non-cash expense BDT 1000 BDT 1000 BDT 2000

Cash disbursement for BDT 29,968 BDT 28,876 BDT 58, 844
MOH

Variable Manufacturing Overhead

Here, we are assuming that our variable costs are Gas bill (4000 taka), Electricity bill (5000
taka), Water bill (1000 taka), Maintenance (3000 taka), Indirect costs (4000tk).
Total cost is 17000 tk. Variable MOH =17000/404=42.On the other hand, the fixed MOH costs
are Salaries of supervisor (5000 taka) ,Property tax (2000tk),Factory rent (7000 taka).So, total
Fixed MOH cost is 14000 tk.

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Selling and Administra1ve Budget:

January February Total

Budgeted Sales 15000 16800 31800

Variable Selling & BDT 1.5 BDT 1.5 BDT 1.5

Administrative
Rate
Variable Expense 22,500 25,200 47,700

Fixed Selling & 90,000 90,000 1,80,000

Administrative
Expense
Total Selling & 1,12,500 1,15,200 2,27,700
Administrative
Expense
Less: Depreciation 2,000 2,000 4,000
expense
Cash Selling & 1,10,500 1,13,200 2,23,700
Administrative
Expense

Assumption:
Variable Expenses
Administrative Expenses 1500
Delivery Expenses 5,500
Marketing Cost 8,000
Packaging Expenses 10000
Total Variable expenses=22500
Fixed Expenses
Salaries Experience -12000*5=60,000
Office rent 10,000.
Sales team expense 20,000
Total Fixed Expenses= 90000

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 Conclusion
In conclusion, the report provides a comprehensive overview of "Timeless Glow," a candle-
making business, focusing on its product, production process, and budgetary considerations for
January and February. The company's decision to enter the candle market aligns with the
current trends in home improvement and design, fueled by increased disposable income and
the impact of the pandemic. The candle-making process, outlined in four steps, emphasizes the
meticulous craftsmanship involved in creating each product. The production and sales budgets
demonstrate a strategic approach to meet growing demand, with a focus on competitive pricing
without compromising quality. The direct material budget outlines the procurement of paraffin
wax, a key raw material, while the direct labor budget and manufacturing overhead budget
detail the workforce requirements and associated costs. Furthermore, the selling and
administrative budget underscores the company's commitment to managing costs efficiently.
The variable and fixed expenses for selling and administrative activities are carefully
considered, contributing to the overall financial planning of the business.

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 Reference
1. Sans', .., Jaman, K., By, Jaman, K., ৬, জ., ৩, জ., ২৬, ড., ২৪, ড. and ২৩, ড.
Sans’, .tdb-post-meta{margin-bottom:16px;color:#444;font-family:’Open, Jaman, K., By, & Jaman, K.
(2020). Kaium Jaman. Retrieved from
https://www.uddokta.net/bn/%e0%a6%ae%e0%a7%8b%e0%a6%ae%e0%a6%ac%e0%a6%be%e0
%a6%a4%e0%a6%bf-%e0%a6%a4%e0%a7%88%e0%a6%b0%e0%a7%80-
%e0%a6%b9%e0%a6%a4%e0%a7%87-%e0%a6%aa%e0%a6%be%e0%a6%b0%e0%a7%87-
%e0%a6%86%e0%a6%aa%e0%a6%a8/?fbclid=IwAR2rms5Cw_F6U7QmFFuFipewQcF

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