Financial Analysis and Strategy Recommendations for Garments Manufacturing Firm

Introduction: After completion of my first activity (creation of an online blog), I had asked to work wi

The firm's creator is contributing 4.5 crores of their own money and has also for a 2.5 crore bus

Client requirements: I have asked to prepare an accounting memorandum that includes the following

• Cash budget for 12 months ending October 2023 (Nov 2022 To Oct 2023)
• Budgeted income statement for the month of December 2022
• Actual income statement for the month of December 2022
• Reconciliation statement for the month of December 2022

The reconciliation will include following variances:

Sales vdume Sales price
Direct materials
Direct labour
Fixed overheads

Show the impact of the following scenario:

• Discounting prices for 20
• Increasing the marketing budget (advertising expenses) by 10 per cent per month, which in turn genre;
• Offering suppliers one-month's trade credit
• Reducing rental property related costs by 15 percent per month.

The following Budget is received from the client through Husys consulting firm:

The following relevant actual data for the month of Dec 2022 was received during the month of Dec 2022, 300 units were sold for a total of rs 56000 the raw material cost was rs 95000 labour cost rs 54500

Fixed production overhead -Rs 8500
Rent paid for Dec 2022- Rs 30,000
advertising for Dec 2022- Rs 25000.

Working Notes

I sales volume variance [Actual number of units sold - budgeted number of units sold]
2.sale price variance :-[Actual price -Budgeted price J'Acual units sold=( 1866.67-1800)3
3. Direct material variance [ Actual cost of material -budgeted cost of material I
4. Direct labour variance [ Actual labour - budgeted laborer ]154500-5O=1500

1. Discounting prices by 20 percent, which in tum increases sales volume per month by
2. Increasing the marketing budget by 10 per cent per month, which in tum generates an
3. Offering suppliers one-month's trade credit:
4. Reducing rental/property-related costs by 15 per cent month.
1m act of scenarios

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