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Accounting Unit 7 Essay

3746 words - 15 pages

Fran Mackenzie |
Management Accounting |
Unit 7 |
Zahra Ali |
10/30/2014 |


Assessor's comments |
Qualification | BTEC Level 3 Extended Diploma in Business | Assessor name | Fran Mackenzie |
Unit number and title | Unit 7 Management Accounting ( J/502/5419) | Learner name | Zahra Ali |
Assignment title | Tasks 1, 2 and 3 Regional Business Support Agency. Costs and Break Even |
Grading criteria | Achieved? | Comments |
P1 | | |
P2 | | |
M1 | | |
D1 | | |
General comments |
Action plan |
Assessor signature | Fran MacKenzie | Date | |
Issue date: 6th October 2014
Final hand in date SUBMISSION 1: 3rd November 2014
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This is the total amount where the revenue can fall into whilst it’s still staying above the break-even point. The breakeven analysis is there to control the point of the revenue made by the company. This will be equal to the costs that will be related to getting the revenue. 6
2) Calculate the contribution per unit. 7
3) Calculate the break-even point from the information provided. 8
Conclusion 9
Bibliography 9
Reference 9

In this report for my P1 I will be explaining the management accounting concepts to a younger audience within the business people in the chosen areas, by providing them with useful advice on costing, how to measure business budgets/performance applications and the break even analysis. For my P2 I will be carrying out a break even analysis for a selected organisation. By using the information and data provided by the SIGNature, I will be showing all my calculation on another document and attach my word and excel documentation together.
Task 1
‘’1.Describe the main cost elements that a business needs to consider, explaining what category the costs fall into.’’- Blackboard
Businesses need to consider many cost elements such as; the capital expenditure, marginal costing, break even analysis costing, revenue expenditure, fixed costs, absorptions of overheads, semi- variable costs, variable costs and semi fixed costs. Businesses need to make sure that they follow and consider each one of these elements and use it for their advantage to increase sales and profit into the business. It also allows the business to keep a track of money going in and out of the business. There are two main categories that all the elements fall into:
Revenue expenditure –
This is the total amount of money spent by the business on regular operations that they are entitled to pay for that they need to run their business, this can be paid monthly or on other agreed set period of times, for example; rates, heating, lightning, water, rent, wages, maintenance, products, insurance and much more. All the revenue expenditures are continuous they need to be paid on time in order to sustain the operation of the business well and the business performance as any convenience can slow the business down. All operational costs will be counted as revenue expenditures whether it’s a variable cost, fixed cost, semi- variable or a semi-fixed cost, in order to maintain a business that runs smoothly and efficiently.
Capital expenditure –
This is the process of preserving fixed assets and the money which is spent by a company or an organisation in order to obtain it and manage this process. These fixed assets can be; vehicles, land, equipment/gears and buildings. This is also on the balance sheet documentation if businesses use this it will help them manage their business better. The capital expenditure is there to improve and purchase what the business needs in order to improve the product/service. For example if ‘’ Pizza Express’’...

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