Annual financial statements of Clinton Cards Plc Academic Essay

Presented below are the annual financial statements of Clinton Cards Plc for the financial years 2009 to 2011.

Required:

Prepare a business report for the board of directors which analyses the performance of Clinton Cards Plc over the financial period 2009-2011 by using all of the financial information provided and, recommend what the directors should do to address the company’s position.

Belling Company Ltd manufactures three types of ceramic coffee percolator, the Basic, Deluxe and the Premium models. The maximum market demand and resource requirements of each of these products are shown below. The percolators are made from an advanced heat-resistant material that gives the firm a competitive advantage. An e-mail from the purchasing manager has informed you that, because of a problem with the supplier, it should be assumed that the half year’s supply of this special material is limited to 28,000kg.

Belling Company Ltd operates on a just-in-time production (JIT) method so that opening and closing inventory levels are zero.

The sales director has already accepted an order for 1,000 Deluxe percolators that, if not fulfilled, would incur a financial penalty of £2,000. This order is included in the Deluxe’s maximum market demand figure.

Belling’s directors need to know whether they should go ahead and satisfy the contract and then prioritise production in the normal way or whether it should consider breaching the contract and incurring the penalty.

Budgeting Data for first half year 2013

	Basic	Deluxe	Premium
Maximum demand (units per year)	4,500	2,000	4,000
Special ceramic material used per kettle (kg)	2.00	5.00	8.00

The financial out turns for the previous two half years is as follows;

First Financial Half Year 2012
	Basic	Deluxe	Premium	TOTAL

Sales in units	4100	1800	3600
	£	£	£	£
Sales	114800	93600	302400	510800

Costs
Raw materials	41000	45000	144000	230000
D Labour	8200	7200	28800	44200
Overheads	60800	42400	56800	160000

Total Costs	110000	94600	229600	434200

Profit/Loss	4800	-1000	72800	76600
Second Financial Half Year 2012
	Basic	Deluxe	Premium	TOTAL

Sales in units	4600	2200	4325
	£	£	£	£
Sales	128800	114400	363300	606500

Costs
Raw materials	46000	55000	173000	274000
D Labour	9200	8800	34600	52600
Overheads	64800	45600	62600	173000

Total Costs	120000	109400	270200	499600

Profit	8800	5000	93100	106900

Required

Prepare a product analysed and total marginal cost income statement for the first half year of 2013 assuming that the Deluxe contract is honoured.

Prepare a product analysed and total marginal cost income statement for the first half year of 2013 assuming that the Deluxe contract is not honoured.