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Task 1

The assignment mainly focuses on depicting the relevant tools, which are used by organisation in conducting budgets and variances. The preparation of budget mainly allows the organisation to conduct its operations smoothly. The use of budget variance is mainly conducted to understand the effective of the prepared budget on operations of the company. The relevant cost budgeting techniques are mainly used in the assignment for deriving the accurate budget for the company.

The persons are mainly chosen from the company, where they hold the position of finance manager, production manager, and sales executive. These individuals will mainly allow the company to gather relevant information for drafting accurate budget.

Income

Quantity

Prices

Amount

Quantity

Amount

Quantity

Amount

Fridge

12

1600

 19,200

8

           12,800

16

           25,600

Freezers

15

800

 12,000

10

             8,000

15

           12,000

Microwaves

13

470

 6,110

6

             2,820

6

             2,820

Range hoods

11

190

 2,090

15

             2,850

8

             1,520

Ovens

6

2100

 12,600

5

           10,500

8

           16,800

Cook tops

16

560

 8,960

18

           10,080

14

             7,840

Dishwashers

18

990

 17,820

18

           17,820

14

           13,860

Vacuums

22

390

 8,580

26

           10,140

29

           11,310

Coffee makers

14

600

 8,400

18

           10,800

26

           15,600

Toasters

25

99

 2,475

13

             1,287

19

             1,881

Irons

5

156

 780

7

             1,092

9

             1,404

Mixers

16

89

 1,424

11

  979

16

             1,424

Deep fryers

13

99

 1,287

9

 891

13

             1,287

Portable ACs

4

350

  1,400

6

             2,100

8

             2,800

Hair driers

0

35

 -  

2

 70

1

 35

Irons

14

45

630

16

720

21

                 945

Scale sets

14

24

 336

18

 432

22

                 528

Kettles

13

78

 1,014

14

             1,092

19

             1,482

Small bins

15

40

 600

14

 560

31

             1,240

Large bins

7

60

 420

17

             1,020

16

                 960

Wine coolers

9

299

 2,691

10

             2,990

16

             4,784

Washing machines

5

340

 1,700

10

             3,400

15

             5,100

Dryers

4

330

 1,320

4

             1,320

8

             2,640

The above table mainly represent the relevant income that is generated from October till December. The relevant income from sales of production are adequately calculated for drafting the budget for 2015. These identified values in budget directly allow the company to form an adequate budget to support its future activities.

Expenses

Amount to Oct

Oct

Nov

Dec

2014

Phone services

                         780

             65

              65

              65

           975

Electricity

                     1,590

           133

           133

           133

        1,988

Gas

                         600

             50

              50

              50

           750

Water

                         550

             46

              46

              46

           687

Insurance

                     1,300

           108

           108

           108

        1,625

Payroll

                 465,000

     38,750

     38,750

     38,750

   581,250

Cleaning

                         850

             71

              71

              71

        1,062

Finance cost

                     1,650

           138

           138

           138

        2,063

Advertising

                         560

             47

              47

              47

           700

Rent

                   25,000

       2,083

        2,083

        2,083

     31,250

Petrol

                         560

             47

              47

              47

           700

Accounts fees

                         370

             31

              31

              31

           462

Maintenance fee

                     1,405

           117

           117

           117

        1,756

Bank fees

                         210

             18

              18

              18

           263

Office supplies

                         600

             50

              50

              50

           750

Total expenses

                 501,025

     41,752

     41,752

     41,752

   626,281

From the above table relevant expense conducted during October, November and December can be identified. This relevant detection of expense mainly helps in drafting the overall budget for 2015, which is needed by the company.

From the overall valuation of the budget table relevant budget surplus is mainly identified, as the expenses of the organisation. This detection of the budget surplus mainly indicates that relevant profits will be made by the company in next fiscal year.

2015 Jan

Income

Quantity

Prices

Amount

Operating income

Fridge

31

1728.00

         53,568.00

Freezers

34

864.00

         29,376.00

Microwaves

21

507.60

         10,659.60

Range hoods

29

205.20

           5,950.80

Ovens

16

2268.00

         36,288.00

Cook tops

41

604.80

         24,796.80

Dishwashers

43

1069.20

         45,975.60

Vacuums

65

421.20

         27,378.00

Coffee makers

49

648.00

         31,752.00

Toasters

48

106.92

           5,132.16

Irons

18

168.48

           3,032.64

Mixers

37

96.12

           3,556.44

Deep fryers

30

106.92

           3,207.60

Portable ACs

15

378.00

           5,670.00

Hair driers

3

37.80

               113.40

Irons

43

48.60

           2,089.80

Scale sets

46

25.92

           1,192.32

Kettles

39

84.24

           3,285.36

Small bins

51

43.20

           2,203.20

Large bins

34

64.80

           2,203.20

Wine coolers

30

322.92

           9,687.60

Washing machines

26

367.20

           9,547.20

Dryers

14

356.40

           4,989.60

The above table mainly represents the overall sales forecast for the 2015 for all the products, which is been sold by the organisation. The sales forecast is mainly based on all the relevant assumption presented in appendix 5, which could help in generating the revenue for the organisation. The decline demand and increment in selling price is also accommodated in the forecast, as it might help in depicting the relevant profits of the organisation.

2015 Jan

Income

Quantity

Prices

Amount

Expenses

Fridge

31

840.00

     26,040.00

Freezers

34

262.50

       8,925.00

Microwaves

21

157.50

       3,307.50

Range hoods

29

84.00

       2,436.00

Ovens

16

945.00

     15,120.00

Cook tops

41

210.00

       8,610.00

Dishwashers

43

472.50

     20,317.50

Vacuums

65

136.50

       8,872.50

Coffee makers

49

262.50

     12,862.50

Toasters

48

36.75

       1,764.00

Irons

18

81.90

       1,474.20

Mixers

37

47.25

       1,748.25

Deep fryers

30

47.25

       1,417.50

Portable ACs

15

189.00

       2,835.00

Hair driers

3

9.45

             28.35

Irons

43

19.95

           857.85

Scale sets

46

12.60

           579.60

Kettles

39

35.70

       1,392.30

Small bins

51

13.65

           696.15

Large bins

34

23.10

           785.40

Wine coolers

30

136.50

       4,095.00

Washing machines

26

231.00

       6,006.00

Dryers

14

220.50

       3,087.00

The relevant expense budget is mainly depicted in the above table, which might be useful in next fiscal year. The expense budget has all the relevant adjusted of the demanded products that will be sold in the next fiscal year. The expenses budget also allows the company to gauge into the inventory that is needed for smoothly selling process in the next fiscal year.

Particulars

Budget 2015

Total sales

   1,286,621.28

Total cost

       533,030.40

Total expenses

       579,281.21

Profit

       174,309.67

The relevant profit estimation of 2015 can be identified from the above table, which is relevantly about $174,309.67. This profit level is mainly achieved after adjusting the relevant sales price, quantity and other expenses of the organisation.

Evaluation

Operating cash flow

2015

Beginning balance

    245,000.00

Sources of cash

Net income

    174,309.67

Receivables

       43,601.00

Total

    462,910.67

Cash used

Payables

         5,976.00

Others

         1,000.00

Total

         6,976.00

Surplus/deficit

    455,934.67

The relevant estimation of cash flow of the organisation is also conducted in the above treble, which might help in depicting the cash balance of the company in next fiscal year. This estimation could allow the company to understand the relevant cash inflow and outflow that will be conducted in the next fiscal year.

Progress of the Budget

The progress of the budgeted has been conducted adequately where all the relevant adjustments are made in sales price, quantity and expenses in payroll of the organisation.

Aspect of important document

The major aspect of the documents is to prepare an adequate budget, which could allow the company to conduct smooth operations in the next fiscal year. The use of balance sheet, income statement and cash flow statement is essential for the organisation to relevantly gather adequate capital to support its future activities.

Assessment of the budget

From the relevant budget has surplus amount, which indicates that after expenses the company will be able to make relevant profits in the next fiscal year. More, the expenses, income and cost of goods are also estimated in the budget, which could allow the company to conduct business operations in future.

Contingency plan

Relevant contingency plan is mainly prepared, which will affect marketing, operations and finance of the organisation to support the budget. Developing, distribution channels, quality of the property, and acquisition of more fund could be conducted as a contingency plan for the budget.

Recommendation

The contingency plan and budget the organisation could adequately conduct operations in 2015.

Particulars

Budget 2015

Actual 2015

Total sales

   1,286,621.28

   1,366,000.00

Total cost

       533,030.40

       643,000.00

Total expenses

       579,281.21

       186,000.00

Profit

       174,309.67

       537,000.00

The actual and budget figure in the above table are relevantly different, which increases the chance of budget variance. However, from the evaluation sales have relevant improved, which provides the organisation with excess income. However, the total cost pf good have increased, while the total expenses has declined, which has helped in increasing actual profits of the organisation.

The budget preparation is mainly conducted to derive he relevant value of cash flow, cost and revenue, which might affect profitability of the company. The future cash flows can only have positive variance if the relevant expenses of the organisation are higher than estimated. The control of future cash flows needs to be controlled for reducing the relevant variance in the budget. This relevant increment in expense could also lead to cost increment and create higher variance for the budget. This might hamper productivity of the company due to lack of funds. Furthermore, any kind of variance in revenue could directly affect capability of the company to generate the anticipated profits. Hence, relevant measures need to be taken by the management to reduce variance in the budget.

The use budget directly allows the organisation to detect strength and weakness of the operations. In addition, the cost budget directly helps in detecting the problems in operations of the management. The use of budget allows the organisation to detect recommendation for future operations, which could help in improving their profitability.

From the overall evaluation of the budget and actual value the companies faced to achieve purchase cost of the products, which is been sold. This increment in cost has mainly forced the organisation to reduce the profits from operations. However, the increase sales value and reduced expense cost has boosted profits of the organisation and generate higher profits than anticipated.

Particulars

Analysis

Variance %

Total sales

Favourable

5.81%

Total cost

Unfavourable

17.10%

Total expenses

Favourable

-211.44%

Profit

Favourable

67.54%

The table mainly represents the overall variance percentage and analysis, where it is detected to be favourable or unfavourable. From the evaluation it is estimated that total cost is mainly unfavourable in nature resulting in an increment in 17.10% cost of goods. Other variances have positive affect on financial stability of the organisation.

Projected Financial Statements

The budget variance report mainly depicts the overall difference between actual and budgeted figures. The relevant variance analysis is mainly conducted in such report, which could allow the company to gauge into the incremental expenses or revenues of the organisation.

The feasibility report directly indicates the relevant improvements, which needs to be conducted by the organisation. The sales, expenses and profits of the organisation is relevantly adequate and does not need improvement, However, the cost of goods purchased by the organisation needs to be controlled, as it has increased adequately. Hence the company needs to search for more suppliers who are willing to supply the product at low cost with adequate quality.

The major discrepancy was mainly conducted in the expenses, which drastically declined in 2015 by 211.44%. Moreover, the sales and cost of goods also showed discrepancy of 5.81% and 17.10% respectively. Lastly, the profits of the organisation also showed discrepancy of 67.54% due to the reduce expenses incurred during 2015.

The negative discrepancy mainly came from rising cost and expenses incurred by the company, while the positive discrepancy came from the rising sales value. This directly reduced the number of sales, which was conducted by the company.

  • Rising expenses
  • Reduced sales quantity
  • Increased selling price
  • Rising cost of goods
  • Low estimation of variable overheads

Particulars

Budget 2015

Actual 2015

Variance

Total sales

   1,286,621.28

   1,366,000.00

       79,378.72

Total cost

       533,030.40

       643,000.00

    109,969.60

Total expenses

       579,281.21

       186,000.00

  (393,281.21)

Profit

       174,309.67

       537,000.00

    362,690.33

The above table depicts the variance of budget and actual figure, where the major fault is identified to be in total cost, which has a positive variance. This positive variance is mainly reducing profits of the organisation by $79,378.72.

Particulars

Variance %

Total sales

5.81%

Total cost

17.10%

Total expenses

-211.44%

Profit

67.54%

The major difference is identified from turnover figure, purchase budget and profit budget of the organisation. The figure has relevant changed, which is depicted in above table.

The techniques of cost budgeting allow the management to measure its performance, detect the operational efficiency level and identifying course of action needed by the company. Therefore, cost budding helps in improving financial health and generate higher revenue for the company.

Particulars

Slick Pile

Work amjig

SAP Financials

Price

$0.01 per year

$38 per month

$45 per month

Usability

Business hours

10 users

Used by various industries

Features

Instant access

Free demo

Free demo

Compatibility with other programs

Cloud, SAS and Web

Mac, Windows, and Mobile

Cloud and Web

Compatibility with specialist

Helps in documentation, dealing and online chats

Helps in online and specialises in business hours

Critical function, core function and performance management

Answer 1. 

Compiles the information needed for cost, revenue and profit

Answer 2.

Used in responsibility accounting for deriving the overall targets

Answer 3.

Revenue helps in sales forecast

Expenses depicts the cost incurred in particular period

Cash clarifies the inflow and outflow

Capital depicts the requirement for raising the funds

Answer 4.

Reviewing the income statement could depict the income and outflow requirements of the company.

Answer 5.

Political, social, legal, economic, taxation, technological, resource and workfare

Answer 6.

Investment made in respect to grow the relevant capital

Answer 7.

Expenses that is conducted to generate more capital

Answer 8.

Analyses both inflow and outflow related to cash

Answer 9. 

This terms refers to the point, where company neither make profit nor loss

Answer 10.

Detection of profits after deducting cost of goods sold

Answer 11.

Ability of the management to under changes for reducing risk factors

Answer 12.

Annual financial reporting cycle is used

Answer 13.

Net present value and Internal rate of return

Answer 14.

The budget holding workforce is able to prepare their own budget

Answer 15.

Planning and  implementation

Answer 16.

This states the place and time where delivery is involved.

Answer 17.

FCA innovates different products

CIF deal information related to freight, trade and insurance

DAF helps in frontiers and delivery

Answer 18.

The order regarding trade practises that needs to be followed by companies

Answer 19.

The convention where importance rules and regulations are formed

Answer 20.

Deals with trade rules between nations

Answer 21.

An agreement between two parties regarding trade practices

Answer 22.

Checks on debt and financial history of the company

Answer 23.

The records of income statement and balance sheet are required.

Conclusion:

The overall assignment mainly helps in depicting the relevant measures, which could be used by companies in smoothly continuing their activities. In addition, the use of budget, variance, and costing could allow the companies to improve their operational capability. Furthermore, the cost budget measures could allow the company to improve their profitability and generate higher return from investment.

Cömert, H., D’Avino, C., Dymski, G., Kaltenbrunner, A., Petratou, E. and Shabani, M., 2016. Too big to manage: Innovation and instability from regulated finance to the megabanking era.

Wang, N., 2014. Private finance initiative as a new way to manage public facilities: A review of literature. Facilities, 32(11/12), pp.584-605.

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My Assignment Help. (2022). Budgeting And Variance Analysis In Organizations: An Essay.. Retrieved from https://myassignmenthelp.com/free-samples/bfa503-introduction-to-financial-management/accounting-operations-system-file-AA1B9C.html.

"Budgeting And Variance Analysis In Organizations: An Essay.." My Assignment Help, 2022, https://myassignmenthelp.com/free-samples/bfa503-introduction-to-financial-management/accounting-operations-system-file-AA1B9C.html.

My Assignment Help (2022) Budgeting And Variance Analysis In Organizations: An Essay. [Online]. Available from: https://myassignmenthelp.com/free-samples/bfa503-introduction-to-financial-management/accounting-operations-system-file-AA1B9C.html
[Accessed 22 February 2024].

My Assignment Help. 'Budgeting And Variance Analysis In Organizations: An Essay.' (My Assignment Help, 2022) <https://myassignmenthelp.com/free-samples/bfa503-introduction-to-financial-management/accounting-operations-system-file-AA1B9C.html> accessed 22 February 2024.

My Assignment Help. Budgeting And Variance Analysis In Organizations: An Essay. [Internet]. My Assignment Help. 2022 [cited 22 February 2024]. Available from: https://myassignmenthelp.com/free-samples/bfa503-introduction-to-financial-management/accounting-operations-system-file-AA1B9C.html.

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