Applying Managerial

Accounting Concepts to
business Plan, Dates
Delight Limited
Managerial Accounting

Submitted To:
Mr Ameet Kumar
Lecturer, Finance
Sukkur Institute of Business Administration

Submitted By:

Zunaira Tariq

Umayya Zahid

Rajeel Gul Khan

Shama Baloch
DECLARATION

We, students of Bachelor of business administration studies, hereby declare that we have
successfully completed this Project on Managerial Accounting in academic year 2017. The
information incorporated in this project is true and original to the best of our knowledge.

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ACKNOWLEDGEMENT

This project is a result of dedicated efforts. It gives us immense pleasure to prepare this project
on Applying Managerial Accounting concepts on Business Plan Dates Delight Halwa. We
would like to thank our project guide, Sir Ameet Kumar, for consultative help and constructive
suggestion on the matter in this project. Without his support it would have been impossible for us
to work on the assignment.

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Table of Contents
DECLARATION............................................................................................................. 2
ACKNOWLEDGEMENT................................................................................................. 3
Company Introduction:............................................................................................... 5
VISION STATEMENT.................................................................................................. 5
MISSION STATEMENT............................................................................................... 5
Basic Assumptions Data:............................................................................................ 6
Direct Material......................................................................................................... 6
Labor:...................................................................................................................... 6
Manufacturing Overhead......................................................................................... 7
Non-current Assets and Depreciation.........................................................................7
Selling Expense.......................................................................................................... 8
Budget Schedules....................................................................................................... 9
Cost-Volume-Profit Analysis...................................................................................... 12
Variable and Absorption Costing Income Statement................................................................13
Material Quantity Variance....................................................................................... 14

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Dates Delight
A sweet that makes everyone Happy

Company Introduction:

Dates Delight is a public limited company incorporated in Pakistan under the Companies
Ordinance, 1984. Its shares are quoted on Karachi and Lahore Stock Exchanges. Dates Delight
limited is principally engaged in the manufacture and sale of the dates Halwa. It was
incorporated on 10 of July. Initially it was having a capacity. It distributes delicious Halwa from
Khajoor, Khoya and lots of Nuts. It is available in the packaging of one kilogram to all the
nearest super stores and retai sweet shops in Sukkur, Rohri, Shikarpur and Khairpur. It has a
price of 433 per Kg. It will be produced in sukkur at site area and then will be distributed to the
other targeted cities. Well according to our estimations, it will be ordered twice in a month from
retailers as per its demand.

VISION STATEMENT
To have well-known position in manufacturing and supplying quality Dates Halwa and thus play
an important role in the economic and social any vested interest which might be incompatible
with development of the country.

MISSION STATEMENT
We the Management of Enterprise have set onward our belief as to the purpose for which the
Company established and the principles under which it should operate. We assurance our entire
efforts to the accomplishment of the purpose within the agreed principles. Dates Delight Limited
is committed to:

Manufacture to the highest quality standards. Pursuing the improvement in shareholders

value through team work and continuous improvement in the system in a competitive
business environment.

Be ethical in practice and fulfill social responsibilities

Ensure a fair return to stakeholders.

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 Realize responsibility towards society and contribute to the environment as good
corporate citizen.

Basic Assumptions Data:

The data given below in this report includes per tonne direct material cost, direct labour cost and
direct manufacturing overhead. This data is taken from cost audit report of the company. The
price of dates Halwa per tonne is calculated by the sales given in the companys financial
statements and the number of units they have sold.

Direct Material
Direct material contributes highest in the variable cost of production. Direct material used in the
production of one batch kg of Halwa is summarized in the following table:

Labor:
Labor is an important factor for this business. Because, labor uses its skills to convert this raw
material into finished good. We need four persons for the production of Halwa, and two people
for its packaging. They will be paid fixed amount per month. They will be working for 7 hours
each day for 30 working days in a month. So, a total of 210 hours in a month. So we have

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distributed the cost of labor per kg of the Halwa. Direct labor cost is summarized in the table
below:

Moreover, Peon and one person for the distribution are employed. Following is the cost paid to
these two employees. As both are employed for the production facility, salaries paid to both are
included in manufacturing overhead. Following is the summary:

Cost of indirect labor is included in the account of manufacturing overhead.

Manufacturing Overhead
Cost of electricity and packaging is included in the manufacturing overhead. Total electricity and
gas consumed is estimated at Rs. 7000 per month. Moreover, the packaging expense is estimated
for the production is 9000 per month. Summarized data is as follows:

Non-current Assets and Depreciation

Equipment, land, and building is used for the production facility so the depreciation of these
items is included in the manufacturing overhead, and finally it would be transferred to cost of
goods sold.Details for equipment, land, and building used in the business are summarized in the
following table:

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 Depreciation for equipment and building is fixed, so it is included in fixed manufacturing
overhead account in contribution format income statement and included in cost of goods sold in
absorption format income statement because of distribution of fixed manufacturing overhead into
units produced.

Selling Expense
These expenses include all which are needed to sell the product and make it available to the
customer (Retailer). Below is the table in which cost related data is summarized.

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Budget Schedules
Using all these estimations, we have made the following budget schedules for the first year.

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Cost-Volume-Profit Analysis
Keeping the above data in view now we will make the income statement, find the contribution
margin and the break even sales to know what sales company have to make to reach the zero loss
zero profit situation. So the Cost-Volume-Profit Analysis for Dates Delight is as under:

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The calculations suggest us that the contribution margin is Rs. 65,415 per Ton. The amount of
Rs. 65,415 is contributed towards the profits and fixed costs. Secondly, the company has to do
sale of Rs Rs 2229842.43 to achieve breakeven. The same is shown in the chart.

Variable and Absorption Costing Income Statement

From the statements below we can see that the net income recorded under absorption costing
method is greater than that of variable costing. Because, the number of units sold is less than the
produced number of units. In absorption costing fixed manufacturing overhead is distributed to
the number of units produced, and included in the cost of goods sold. So, manufacturing
overhead is charged according to the units sold. And units sold are less than that of produced,
which make the net profit look somehow greater.

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 Material Quantity Variance
It shows that the actual quantity used in production is less than standard quantity of material. We
have produced less than the standard capacity of the facility, because the demand was quite lower
than capacity. However, it is favorable for us. Due this our cost is reduced by 135398.

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