COMMERCE 7039 Business Research Methods

Income statement for one month
Balance sheet for the first year
Cash budget
Cash burn
Cash build
Breakeven point

Explain the statements and other numbers at the end like why and how we got the numbers

Answer:

The income statement represents that projected sales revenue for the month stood 105,000. The expenditure for the month stood the app development cost, enterprise server cost, business internet plans, wages of the administrator for maintenance and marketing cost (Schuster 2015). The projected income that the company intends to generated stood 34, 864 with net income before tax standing 49,800 with income tax expenditure standing 14,936 for the month. The commission rate is lower than the relevant personal service application earning more approximately 30 per cent of the transaction. The value of the errand runner is not particularly aimed at increasing the revenue but also aims the maximum utilization of the application as well.  

Balance Sheet:  

Cash Budget for the Errand Running
Particulars	August	September	October	November	December
Opening Balance		99800	239350	429184	682626
Income
Add: Budgeted Cash Receipts	150000	189750	240034	303643	384108
Total Receipts (A)	150000	289550	479384	732826	1066734
Payments:
App development cost	30000	30000	30000	30000	30000
Business Internet Plans	200	200	200	200	200
Wages	5000	5000	5000	5000	5000
Marketing Cost	15000	15000	15000	15000	15000
Total Payments (B)	50200	50200	50200	50200	50200
Balance:
Net Cash receipts (A-B)	99800	239350	429184	682626	1016534
Cash balance at the beginning of the month	0
Total	99800	239350	429184	682626	1016534
Cash balance at the close of the month	99800	239350	429184	682626	1016534

The cash budget portrays that budgeted cash receipts for the month of august stood 150000 and the figure is derived by forecasting with an increase of 26.5% in each month. Considering the payment Errand Running incurs the app development cost of 30,000 with business internet plans is considered as 200. Wages is considered to be 5000 per month and the marketing cost is projected to be 15000 per month each (Drury 2013). The net amount of total payment standing each month is stated to be approximately 50200 per month. Net cash receipts are derived by subtracting the total receipts by the total payments. The figures that are reported at the opening month of September stood 99800. The cash budget reported at the end of August standing 99800 and in September it is approximated to stand around 239350.   

Cash Burn

Computation of Cash Burn
Particulars	Amount ($)
App Development Cost	30000
Enterprise server cost	5000
Business Internet cost	200
Administrator wages	5000
Marketing cost	15000
Cash Burn	55200

Cash burn can be defined as the concept where a business measures the sustainability of the staying afloat until the increase for sales (Bhimani et al., 2013). The figures of the cash burn states that the app development cost stood 30,000 and other cost such as administrative wages and marketing cost standing 5000 and 15000 respectively. The net amount of cash burn, which the company anticipates to incur, is 55200 until there is a rise in the amount of sales units.

Break-Even Point

Computation of Break-Even Point
Fixed Cost	Amount ($)
App development cost	30000
Enterprise Server cost	5000
Business internet plan	200
Total Fixed Cost	35200
Variable Cost
Marketing Cost	15000
Total Variable Cost	15000
Fixed Cost	35200
Sales Price per unit	27
Variable cost per unit	8.5
Break-even point	1902.70

The breakeven point is computed by considering the fixed cost and variable cost to determine each unit of application (Lorenz et al. 2015). The fixed cost for the month stands 35200 and the total amount of variable cost stood $15000. The selling price per unit is assumed to be $27 per unit with the variable cost per unit standing $8.5 per unit.  The break-even point stands $1902.70 per unit for each unit of the application that is sold by the company. 

Reference list: 

Bhimani, Alnoor, et al. Introduction to management accounting. Pearson Higher Ed, 2013.

Deegan, Craig. Financial accounting. McGraw-Hill Education Australia, 2016.

DRURY, COLIN M. Management and cost accounting. Springer, 2013.

Lorenz, Angela. Contemporary management accounting in the UK service sector. Diss. University of Gloucestershire, 2015.

Schuster, Peter. "Cost and Management Accounting." Transfer Prices and Management Accounting. Springer International Publishing, 2015. 1-4.

Weil, Roman L., Katherine Schipper, and Jennifer Francis. Financial accounting: an introduction to concepts, methods and uses. Cengage Learning, 2013.