ACCOUNTING



Accounting



Accounting

Profit and Loss Statement

Department A

Department B

Department C

Department D

Turnover (Sales)

57500

53500

101850

115750

Cost of Goods Sold

Opening Stock

0

0

6500

2500

Purchase

0

0

30555

57875

Goods Available for sales

0

0

37055

60375

less: Closing Stock

0

0

5500

1500

Cost of Goods Sold

0

0

0

0

31555

31555

58875

58875

Gross Profit

57500

53500

70295

56875

less: Operating Expenses

Advertising

4900

4559

8679

9863

Gas and Electricity

4444

2667

1778

7111

Rent

5000

3000

2000

8000

General administration cost

2187

2035

3874

4403

General manager salary

9600

7198

4800

8400

Medical expenses

844

1011

1688

2955

Laundry and Cleaning

2720

2039

1360

2380

Maintenance cost

1944

1167

778

3111

Insurance

1600

1200

800

1400

Miscellaneous Costs

525

488

930

1057

Pension Costs

3377

4045

6753

11818

Salaries expenses

12000

9000

8000

15000

Depreciation Expenses

30000

30000

6000

15000

Total Operating expenses

79142

79142

68409

68409

47440

47440

90498

90498

Earnings Before Interest and tax

-21642

-14909

-47440

22855

-33623

The above income statement is automatically generated using the financial model made in excel file. For this purpose we have used account formula to calculate the items of an income state. The formulas that have been used in income statement are:

Goods available for sales = Opening Stock + Purchase

Cost of Goods Sold = Opening Stock + Purchase - Closing stock

Gross Profit = Turnover - Cost of Goods Sold

Total Operating expenses = sum of all operating expenses (given)

Net Profit = Gross Profit - Total Operating expenses.

Criteria for distributing operating cost

Department A

Department B

Department C

Department D

Floor area (Square Metres)

5000

3000

2000

8000

Space by Volume (Cubic Metres)

10000

6000

4000

16000

Number of Staff

10

12

20

35

Average number of customer per month

400

300

200

350

Fixed assets at cost

200000

150000

60000

75000

Annual rate of depreciation

15%

20%

10%

20%

Turnover

57500

53500

101850

115750

The above table shows the criteria of distributing the operating expenses on the basis of floor area, space by volume, number of staff, number of customers, fixed asset at cost, annual percentage of depreciation and turnover.

Criteria for distributing operating cost

Weight

Department A

Department B

Department C

Department D

Floor area (Square Metres)

0.28

0.17

0.11

0.44

Space by Volume (Cubic Metres)

0.28

0.17

0.11

0.44

Number of Staff

0.13

0.16

0.26

0.45

Average number of customer per month

0.32

0.24

0.16

0.28

Fixed assets at cost

0.41

0.31

0.12

0.15

Annual rate of depreciation

15%

20%

10%

20%

Turnover

0.17

0.16

0.31

0.35

The above table shows the weight allocated to each department on the basis of Floor area (Square Metres), Space by Volume (Cubic Metres), Number of Staff, Average number of customer per month, fixed assets at cost, Annual rate of depreciation and Turnover. For this purpose we have calculated weight as below

Floor area (Square Metres) = Floor area of department (Square Metres) / sum of area of all department

Space by Volume (Cubic Metres) = Space by Volume (Cubic Metres) of department/ sum of Space by Volume (Cubic Metres) department

Number of Staff = Number of Staff of Department/ sum number of staff all departments

Average number of customer per month = Average number of customer per month of department/ sum Average number of customer per month for all departments

Fixed assets at cost = Fixed assets at cost each department/ Total fixed asset of all departments

Turnover = Turnover of department/ total turnover of all departments

Distribution of operating cost

Total cost

Depart A

Depart B

Depart C

Depart D

Advertising (Turnover)

28000

4900

4559

8679

9863

Gas and Electricity ( space by volume)

16000

4444

2667

1778

7111

Rent (Floor area)

18000

5000

3000

2000

8000

General administration cost ( turn over)

12500

2187

2035

3874

4403

General manager salary (number of customer)

30000

9600

7198

4800

8400

Medical expenses (number of staff)

6500

844

1011

1688

2955

Laundry and Cleaning (number of customers)

8500

2720

2039

1360

2380

Maintenance cost (space by volume)

7000

1944

1167

778

3111

Insurance (number of customers)

5000

1600

1200

800

1400

Miscellaneous Costs (turnover)

3000

525

488

930

1057

Pension Costs (number of staff)

26000

3377

4045

6753

11818

Depreciation expense

30000

30000

6000

15000

Above table shows the allocation of operating expenses on the basis of the criteria of the organization. All operating expenses are allocated to each department by using following formulas:

Advertising = total advertising expenses x weights (turnover

Gas and Electricity = Total Gas and Electricity Cost x weight (Space by Volume)

Rent = Total rent x weight (Floor area)

General administration cost = Total General Administration Cost x weight (Turnover)

General Manager Salary = General ...