Setting up of a Bakery Unit - Term Paper Example

Setting up of a bakery unit Bakery business is a good investment since most of the products are fast-moving and fetch good returns. The products of bakeries are attractive to young people from high income groups and in wealthy suburbs, investments in bakeries hold tremendous potential especially in the vicinity of schools, colleges’ educational institutions, hospitals, places of public interests and public places. Moreover, bakery products can be consumed at any time and are generally appealing to people from all strata’s of society and almost, all age groups.

A bakery needs to keep the following in mind: The quality of the raw materials must be of good standard, the manufacturing process must be standarised, well organized and well supervised There should be least amounts of process losses and wastages The selling outlets must be clean and spruced up to attract customers Highest quality and hygienic standards have to be maintained There should be close and friendly rapport with the customers and suppliers They could make ready to use products and “sell mainly in in-house supermarkets, bakeries, hotels and similar outlets.

(Focus: Asia Laps up Nanotechnology Cosmetics, 2006). Process costing is best: A bakery manufacturing unit should prefer process costing, since it involves producing large quantities of bakery products in a mass production basis. Greater significance needs to be laid to the process in the bakery making like pouring, mixing, churning, baking and finally bringing out the finished products in batches. All elements of the most efficient and state-of-the-art manufacturing processes needs to be inculcated and the areas of health, hygiene and careful handling needs to be enforced.

Quality control and enforcement is a major area in bakery, since these are the elements which are manifest in the final products. Organizational set up: Although a lot depends upon the capital invested in the project, its scalability and the expected turnover, combined with the wealth of skill and experience of the promoters, a medium size bakery manufacturing should have the following persons : 1. Factory Supervisor and administrator who is in charge of the shop floor operations 2. Office Administration including accountants, secretaries and clerical staff 3.

Sales personnel who form the backbone of this business since bakery business deals with highly perishable commodities which have low shelf lives, despite refrigeration facilities. Moreover, they are also seasonal and dependent on good marketability and rapport with the customers. Financial year: The calendar year is the best year that is from January to December every year because the peak season for bakery coincides with Christmas and New year Location: The location may be in wealthy suburb uptown with good population and young inhabitants with spending potential Finance requirements and mode of finance: A medium size manufacturing bakery would require an initial investment of $ 100,000 to $ 150,000 which could be arranged through bank loan or public investments.

Accounting entries : $ $ 1. 1/11/2007 Cash A/c debited 50.000 1/11/2007 Capital A/c credited 50,000 (Capital contributed by proprietor) 2. 2/11/ Computer A/c debited 5000 2/11/ Cash A/c credited 5000 (Computer purchased for unit) 3. 3/11/ Motor Vehicle A/c debited 6500 3/11/Cash A/c credited 6500 (Delivery Vehicle purchased for unit) 4. 4/11/ Freight charges A/c debited 500 4/11/ Cash A/c credited 500 (Freight charges paid) 5.

4/11/ Raw Materials purchase A/c debited 150 4/11 Cash A/c credited 150 (Raw materials for bakery purchased) 6. 5/11/ Shop furnishing expenses A/c debited 250 5/11/ Cash A/c credited 250 (Decoration of shop paid in cash) 7. 7/11/ Equipment A/c debited 4000 7/11 Cash A/c credited 4000 (Baking equipments purchased) 8. 8/11/ Insurance A/c debited 550 8/11/ Cash A/c credited 550 (Being insurance premium of unit paid) 9.

9/11/ Raw materials A/c debited 1750 9/11/ Cash A/c credited 1750 (Purchase of bakery raw materials accounted) 10. 11/11/ Carriage inwards A/c debited 500 11/11/Cash A/c credited 500 (Charges paid for bakery raw materials) 11. 13/11/ Bank A/c debited 65000 13/11 Cash A/c credited 65000 (Bank account opened for bakery unit) 12. 15/11/ Cash A/c debited 50000 15/11 Sales A/c credited 50000 (Bills raised and paid for cakes and pastries sold) 13.

17/11/Carriage outwards A/c debited 150 17/11 Cash A/c credited 150 (carriage of raw materials of bakery items) 14. 19/11/Purchase returns A/c debited 250 19/11 Purchase A/c credited 250 (Bakery items returned) 15. 22/11/ Telephone expenses A/c debited 1760 22/11/ Cash A/c credited 1760 (Telephone bills paid for office) 16.23/11/ Drawings A/c debited 550 23/11 Cash A/c credited 550 (Being drawings made by owner) 17.

25/11/ Cash A/c debited 15,000 25/11 Capital account A/c credited 1750 (New associate introduces capital) 18.27/11/ Drawings A/c debited 2000 27/11 Cash A/c credited 2000 (Cash withdrawals) 19. 28/11/ Purchase of raw materials A/c debited 500 28/11 Bank A/c credited 500 (Bakery items raw materials purchased) 20.30/11/ Bank A/c debited 6500 30/11/ sales A/c credited 6500 (Sales of bakery products lodged in bank) 21.

1/12/ Salaries and wages a/c debited 4765 1/12/Cash A/c credited 4765 (Salaries and wages paid to staff) 22.2/12/ Factory lighting and heating A/c debited 1500 2/12/ Cash A/c credited 1500 (Factory expenses paid) 23. 3/12/ Purchase returns A/c debited 250 3/12/ Purchase A/c credited 250 (Bakery items returned due to spoilage) 24.4/12/ Telephone A/c debited 1760 4/12/ Cash A/c credited 1760 (New Telephone for internet use in factory) 25.

5/12/ Trade license fees A/c debited 550 5/12/ Cash A/c credited 550 (Being trade license fee for bakery paid by owner) 26. 5/12/ Purchases of raw materials A/c debited 150 5/12/ bank A/c credited 150 (bakery purchase Medical expenses paid to staff) 27.6/12/ Petrol expenses A/c debited 200 6/12/Cash account credited 200 (Being petrol charges for pickup van paid) 28. 7/12/ Factory maintenance charges A/c debited 1500 7/12/ Bank A/c credited 1500 (Being factory maintenance charges adjusted) 29.

8/12/ Delivery maintenance and upkeep A/c debited 500 8/12/ Cash A/c credited 500 (Delivery van maintenance charges paid) 30. 9/12/ Canteen expenses A/c debited 476 9/12/ Cash A/c credited 476 (Canteen charges for bakery workmen paid) 31. 12/12/ Plant and Machinery A/c debited 15000 12/12/ Bank A/c credited 15000 (Being cake processing and storage machinery purchased) 32.

13/12/ Bank A/c debited 25000 13/12/Cash A/c credited 25000 (Cash sales deposited into bank) 33. 14/12/ Sundry Creditors A/c debited 17600 14/12/ Cash A/c credited 17600 (Purchase bills paid through bank) 34.15/12/ Depreciation of Plant and Machinery a/c debited 1500 15/12/ Plant & Machinery A/c credited 1500 (Being 10% depreciation of Plant & Mach accounted) 35.

17/12/ Depreciation of Motor vehicles A/c debited 325 17/12/ Motor vehicles A/c credited 325 (Being 5% depreciaton of Motor Vehicles accounted) 36. 19/12/ Depreciation of Computer a/c debited 1150 19/12/ Plant & Machinery A/c credited 1150 (Being 10% depreciaton of Plant & Mach accounted) 37. 22/12/ Accounting fees A/c debited 5750 22/12/Bank account credited 5750 (Being accounting fees for the year paid) 38.

24/12/ Rates and Taxes A/c debited 1000 24/12/ Bank account A/c credited 1000 (Being yearly Rates and Taxes paid for the year) 39.25/12/ Machinery maintenance A/c debited 2500 25/12 Bank account credited 2500 (Being the yearly contract service charges for bakery machinery paid) 40. n 29/12/Charity and Donation debited 200 29/12/Cash account credited 200 (Being the amount paid to Salvation Army as charity and donation) Works Cited Focus: Asia Laps up Nanotechnology Cosmetics.

Fonterra Adds a Bakery to its Global Galley. MarketWatch. AC Nielsen Information Center – Baroda (India). 18 Jan. 2006. 21 Nov. 2007. http://au.acnielsen.com/pubs/documents/MarketWatch_FMCG_Feb06.pdf.