...Budget/Finance Case Cost Management Cost information is required both for short – term and long – run managerial problems. Differential costs are of particular use in short – term problems which are non – repetitive, one time, and ad – hoc problems. The following are the most common short – term problems and areas where differential cost analysis may be deployed (ICAI, 2014). 1. Accept – or – reject special order decisions. 2. Make – or – buy decisions. 3. Sell – or – process decisions. 4. Reduce – or – maintain price decisions. 5. Add – or – drop product decisions. 6. Operate – or shut down decisions. If Economic Order Quantity and safety stock are well balanced that will minimize the total costs. The term wastage represents that portion of material which is lost in storage, handling and in manufacturing process. It does not have any recoverable value. It may be invisible or invisible form. Control of wastage: For control of wastage, allowance for normal waste should be made on the basis of technical factors, special features of the material, nature of process and product and past experience, if any. Actual yield and wastage should be compared with anticipated figures of yield and wastage. Appropriate action should be taken to rectify the situation in the case of variation. Responsibility should be fixed on storage, purchasing, maintenance, production and inspection staff to maintain standards. A systematic procedure of feedback of achievement...
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...Kenya Ratcliff American Intercontinental University FINA425 – Budgeting January 24, 2016 Abstract This is a research paper about financial budgets. This research paper talks about a management director would establish policies and system for a business and/or organization. This research paper will help to explain the different style of budgets, budget cycles and the guidelines rules for set up a financial budget for a business and/or organization. Unit 3 Individual Project Introduction This is a report from the management director to establish policies and systems for the new business, I Can Business Incorporated (ICBI). This report will be delivered to the board of directors of ICBI. This report will describe what a financial reporting system is and explain how management for ICBI should use an activity based budget instead of an operating budget. This report also gives examples of budget guidelines for ICBI. Describe the meaning and the components of a financial reporting system Financial reporting is the process of compiling statements that shows a glimpse of an organization’s financial “health” or status to management, investors and the government. There are four basic reports that are included in a financial report. There is a balance sheet, an income statement or sometimes called the profit & loss statement, a cash flow statement and a statement of shareholder’s equity. The balance sheet gives a detailed picture of the financial condition of a business at...
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...INTRODUCTION: The budget preparation phase starts with the Development Budget Coordination Committee (DBCC). It is headed by the DBM Secretary and its members are the Secretary of Finance, the NEDA Director-General, and the Bangko Sentral Governor, with the Office of the President for general oversight. The NEDA provides the over-all macro-economic assumptions with which budgetary levels are to be determined. They involve the projected Gross National Product (GNP) real growth rates, inflation rates, 91-day treasury bill rates, the London Interbank Offered Rates (LIBOR) rates, foreign exchange rates, population growth, and other economic parameters. The Department of Finance (DOF), the Bureau of the Treasury, the Bureau of Internal Revenue and the Bureau of Customs help the DBCC in determining the sources of financing. They project the revenues that will be generated for the budget year as well as the borrowings that may have to be tapped. The DBCC determines the overall economic targets, expenditure levels, the revenue projection, deficit levels and the financing plan. It submits them to the President and the Cabinet for approval. Once these are approved, the DBM issues the Budget Call. This requires agencies to prepare their budgets in accordance with the said guidelines, macro-economic assumptions, and ceilings. The DBM spells out guidelines, procedures, and timetables. Agencies undertake their own internal consultations. They rank programs, projects and activities using...
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...component in management short and long term planning." Budgeting could let us have a well plan list of our upcoming event’s expenses as well as our current and financial plan. By planning our budget we could also have a better view of our current and future’s expenses cum revenues. Having a budgeting plan company would also be able to identify out if there is any problem occur with the company’s financial states. Limits, expenses limits it’s a definitely need in companies which budgeting helps to show our current assets, cash and how much amount does the company may afford to expend or do investment in their business. Having this budget planning companies will be able to keep track and stay within their calculated budget’s limits. Companies wouldn’t overspend with the list of guidelines; we could use budgets as a guide. In business, budgets help you determine how much money you have and how you will use it, and help you decide whether you have enough money to achieve your financial goals. As part of a business plan, a budget can help convince a loan officer that you know your business and have anticipated its needs. Budgeting may possibly be an advantage for a company to have, as it can help a company on financial and its strategy. In order to make the most effective use of your budgets, you will want to establish reporting devices. These will include periodic reports and reviews on both efforts and accomplishments. It is through comparing actual performance with budgeted...
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...Rhonda Moore According to Merriam-Webster dictionary, a budget can be defined as “the amount of money that is available for, required for, or assigned to a particular purpose”. Many people think of budgeting as something to do when they're short on cash. College students might turn to a budget to figure out how to make due with their high expenses and limited incomes. Two purposes for budgets are planning and control. Planning is a way of constructing the budget to meet the pre determined goal and, it also controls the feedback system to ensure proper execution of the plan. The advantages of budgeting are communication of management plan in the organization, provides guidelines for managers to think and plan for future, allocate resources, uncover bottle necks, co-ordinate activities for entire organization and provide benchmark for evaluation of future performance. Typically budgets can be prepared annually, and they can represent a company’s plan in specific, quantitative terms. A budget can help companies plan for the future. So companies can also take advantage of a budget by shaping the well-organized line for making money and increasing assets. “A budget may span any period of time. It may be short-term (one year or less, which is usually the case), intermediate (two to three years), or long-term (three years or more). Short-term budgets provide greater detail and specifics. Intermediate budgets examine the projects the company currently is undertaking and...
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...the use of a financial reporting system, our company will have the support and foundation of a well-established company. The budget cycle refers to the life of a budget from creation to evaluation (Sessoms, n.d.). The framework of the budget cycle processes creates the necessary tools to help businesses be successful. It progresses in four stages, which are: preparation and submission, approval, execution, and audit and evaluation. During the initial stage, the company must take its budget into consideration in order to make decisions. The departments that are responsible for submitting budgetary projections are reviewed. Recommendations are made and the budget is approved. The budget may move back and forth between preparation and submission until all parties accept the document (Sessoms, n.d.). Once the budget is approved, the execution stage begins during the beginning of the accounting period or the fiscal year. Also during this stage, financial activities are monitored and controlled, making adjustments as needed while the budget is implemented (Sessoms, n.d.) After the accounting period has ended, an audit is completed to examine and measure the accuracy of the budget projections of financial activities. The evaluation provides a final report of the budget and the audit and makes recommendations for the next budget cycle and budget (Sessoms, n.d.). Although an...
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...total cost of $608,000 substitute (PQ-AP) with $608,000. E.g. $608,000 – (PQ-SP) DIRECT MATERIAL QUANTITY VARIANCE = SP (AQ-SQ)……..SQ = standard KG/unit x actual good output (e.g. 38,000 dartboards)……AQ = actual kg of direct material used DIRECT LABOR RATE VARIANCE = AH (AR-SR)……..RATE VARIANCE = (AHxAR) – (AHxSR)….if given ‘total wages for September were $84,000, 90% of which were for direct labor’ then (AHxAR) = 84,000 x 0.9 DIRECT LABOR EFFICIENCY VARIANCE = SR (AH – SH)……..SH = standard hour/unit x actual good output + work 1 VARIABLE OVERHEAD SPENDING VARIANCE = AH (AR-SR) VAIABLE OVERHEAD EFFICIENCY VARIANCE = SVR (AH –SH)…………SVR = standard variable overhead ratio…….SH = actual output x standard quantity of direct labour FIXED OH BUDGET VARIANCE = Actual FOH – Budgeted FOH ……. Budgeted FOH may be given in annual and need to be turned into monthly e.g. X/12 FIXED OH VOLUME VARIANCE = Budgeted FOH – Applied FOH……. Applied = PROHR x standard hours. In order to determine applied need to work out Predetermined OH rate. Done so by (BUDGETED FOH/Budgeted Activity Level)……..Budgeted Activity Level = Budgeted output x standard quantity of direct labour…or machine hours etc. VOLUME VARIANCE IS NEVER FAVOURABLE OR UNFAVOURABLE…….could also be units produced x FOH cost e.g. (5 hours at $3) = 15 VARIABLE OH SPENDING VARIANCE = AH (AR – SR)…….if given VOH e.g. 11,000 then it should look like this. =11,000 – (8,000 x1.50) ….where 8,000 is AH and 1.50 is SR. VARIABLE OH EFFICIENCY VARIANCE...
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...Discussion Budget, Savings, etc., what are the definitions of these terms? According to an article entitled “Financial Literacy to Everyone” at www.practicalmoneyskills.com, budgeting is plan for your future income and expenditures that you can use as a guideline for spending and saving. Budget came from the old French word “bougette” which means purse. It is practically, a plan and list of all planned expenses and revenue. It is a plan for borrowing, saving, and spending. So why Budget? An average student spends his allowance for books, student housing, tuition fee, and food. These are all expenses encountered not only by students but, in general, most of the people in the world. There are generally three types of expenses usually faced by students, the Academic, Living, and Personal Expenditures or Costs. Academic Costs are usually what eats up the total budget of students. It contains the different expenses that are required in able to carry out a student’s academic life. It varies from tuition fees until the very miniscule expenses utilized for photocopying hand-outs from your professor. Living Costs, on the other hand, are expenses that a student need for day to day living however, indirectly related to academics. These include your expenses in utilities (e.g. electricity, water, and internet bills), personal care expenses (shampoo, soap, etc.), and clothing and food expenses. Lastly, Personal Costs are expenditures that are unique yet still a part of a student’s budget. This...
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...utilized to analyze how well a company is doing with meeting current budgetary goals as well as a means for forecasting information for future budgets. In preparing a variance analysis report to be presented to the vice president, the information needs to be simple enough to understand easily, but detailed enough for the information to be useful to the person reading the report. To ensure a well-rounded variance report it should include information such as budgeted values, the actual values for the specific term as well as the overall variance. This paper will explain the relationships between variance reporting, interpreting or analyzing variance report results, and actual results of performance. A variance report is a valuable tool used to analyze a company’s or a specific department’s performance in a given period. When variances in wages occur, there are several factors that could have contributed to that variance. Such factors include higher than expected patients admittance, longer than average patient days and possibly wage increases awarded to staff. An additional factor could be over-time wages to cover sick or vacation days that other employees have taken. It is important for a company to have a variance reporting policy in order to ensure that the performance of the company is staying within the budgetary guidelines that it has set for itself. The creation of the variance report is the responsibility of the finance manager within the company and will included...
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...AC4.1 Explain the uses of a budget Businesses use budgets to plan, monitor and control the spending within the business in order to manage their financial resources more efficiently. Budgets also give businesses guidelines to follow, this gives them direction and co-ordination, in order to help the company move forward as opposed to not having a goal or objective to move towards. Capital budgets are used for any investments in resources needed, to last more than a year; these are also typically used to generate profit/income. Operational budgets cover the day-to-day spending within a business which includes wages, utilities and supplies etc. Money can be borrowed from the operational budget for capital expenditures. At Tinsmiths our budget is managed by the Business Owner/Manager and the Finance administrator, they work together to ensure effective financial management, and to make sure that the budget is realistic and appropriate for each department/section. It is the role of the shop manager and office manager to decide if they need extra resources/supplies for their department throughout the year. It is also good practice to factor into the finical forecast a budget for innovation and investments and any other potential future activities that may occur throughout the year as this will leave you better...
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...1. How can GoodFood be classified in the typology of organizations? GoodFood complements its relatively small volume flow of goods (food and beverages) with services (cooking, serving) thus it can be classified as a service organization with a limited flow of goods. More precisely as food and beverages are purchased and owned by the restaurant it can be classified as a service organization with a limited flow of own goods. 2. a. What risks inherent to this type of organization apply to GoodFood? Risks inherent to this type of organization include: - Insufficient quality or amount of ingredients which could lead to unsatisfied customers and loss of reputation and/or revenues - Most ingredients are perishable thus loss of value of ingredients occur if they are not used on time - Customers do not receive what they ordered (misalignment between customer orders and meals prepared) and therefore are dissatisfied and meals have to be returned and prepared again which means loss of assets - Incomplete documentation of waiters (when orders are not documented thus sales are not recognized) can lead to loss of assets and revenues - Incomplete cash collection by waiters lead to loss of assets Accounting Process Management 2 - 6 - - Theft of ingredients or cash by personnel leading to loss of assets - Since sales transactions are relatively simple personnel usually performs more than one duty (servers take orders, serve meals, and collect cash) which gives opportunity to fraud ...
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...Get Assignment help for this module at cduassignhelp@gmail.com at discounted prices of 200 AUD only in 24 hour UNIT CODE: PRBA007 UNIT NAME: ACCOUNTING FOR MANAGERS Assignment Two Information Get Assignment help for this module at cduassignhelp@gmail.com at discounted prices of 200 AUD only in 24 hour Semester 2 2015 Assessment 40% Get Assignment help for this module at cduassignhelp@gmail.com at discounted prices of 200 AUD only in 24 hour PRBA007-assignment2-sem0220155 SUBMISSION REQUIREMENTS. Due Date This assignment may be submitted at or before 12 midnight on Sunday of Study Week 13 (25 October 2015). Lodgement • The Assignment must include a coversheet that shows the student full name, student number, campus, and lecturer’s name. Do not use the standard CDU Assignment Cover Sheet templates. • Assignment must be lodged online via the PRBA007 Learnline Assignment Lodgement link on the CDU PRBA007 Learnline site . • Ensure your file is named using a file naming convention that allows the lecturer to identify to whom it belongs. Failure to use an acceptable file naming convention may result in your assignment lodgement being rejected. • DO NOT LODGE VIA EMAILor FAX - assignments lodged by email or fax will not be accepted. • KEEP A COPY - Ensure you have a copy...
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...20 EXECUTIVE SUMMARY This paper begins with an exploratory view of what budget is all about. In principal, the budget has been useful in providing a list of financial explanatory information for the top management in organisations to plan and control the organisation’s actual performance against the prediction. In general, budgeting process appears to be a favourite in blueprinting the business operations. In the course of converting objectives and goals into useful data for the top management, justifications on both advantages and disadvantages are made, in evaluating how effective a budget can play its role in achieving greater financial accuracy in practice. Just like other business operations, the involvement of adequate human resource is vital particularly in a budgeting process which often needs to consolidate useful ideas and information from the relevant employees. Understanding the barriers in the human resource involvement, communication is seen as a great tool to shape the correct perception of the individual roles which attempts to align the personal interests to the organisation’s visions and objectives. The formulation and implementation of budgets, namely the imposed and participatory approach, adopts totally different communication flow. The prior approach is traditionally authoritative while the latter is contemporarily democratic. The paper concludes that an excellent budget aligns with the popular acceptance, that it is a very important process that...
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...Part D i) The success of a budget will be determined in large part by the way in which the budget is developed. Had the budget been imposed on Paulo by top management, it will probably generate resentment and ill will rather than cooperation and commitment. This is due to the fact that there is a tendency to feel increasingly pressured in terms of achieving what has been imposed in the budget from above, as nothing else is deemed to be more important. If the budgets are too high and employees know they are unrealistic, motivation will suffer. If the targets allow too much slack, waste will occur. And unfortunately top management is often not in a position to know whether the targets they have set are attainable. Goals that are perceived as belonging to others are less likely to be internalised, increasing the likelihood of dysfunctional behaviour. For example, in attempting to achieve favourable direct material price variances, Paulo may instruct the purchasing department to purchase larger quantities of materials than needed to obtain quantity discounts. Too much emphasis on shopping around for the lowest prices can also result in a lack of emphasis on quality (i.e. quality of conformance to specifications), excess inventory and an excessive number of vendors. In terms of placing too much emphasis on direct labour rate variances, this might motivate Paulo to assign inexperienced or less qualified workers to the task or not provide workers with the required training...
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... B Submitted to: Sir Hassan Jabbar Explain the relative merits of the top-down and bottom-up approaches to budget setting? Budgeting Budgeting is a formal process in which a company's expenses and revenues are planned for the future. Top down and bottom up are two most common budgeting techniques. In the top-down approach, upper management prepares budgets with no input from employees or lower-level managers. In the bottom-up budgeting approach, managers and employees at the department level prepare budgets for their individual departments. A final, organizational budget is prepared by consolidating all individual, department budgets. The relative merits of Top-Down Budgeting Financial Control * When upper management evaluates a company's overall financial needs and compares the needs to projected revenues for a year, it gets a clear picture of how much money it can reasonably allocate to different areas. Decisions are made about where finances will have the most positive impact and staffers are given directives on what they have to work with. This approach allows upper managers to maintain complete financial control over a budget. Accountability of Staff * When a staff is given a certain budget to work with, it must make prudent financial decisions about how the money will be used. This may result in greater financial accountability and more comparison-shopping for products,...
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