商务会计 企业会计B.doc

Copyright 20091 This resource book has been prepared for the exclusive use by students of the Department of Accounting and Finance at Unitec New Zealand No portion of this document may be reproduced stored in a retrieval system or transmitted in any form or by any means electronic mechanical or otherwise without prior permission Faculty of Creative Industries we need to know where and why The approach taken is to compare the budgeted and actual figures for the various items in the above statement Compare the various items sales direct materials etc for Bramwell Ltd Can you draw any conclusions as to which aspects of the operation were out of control A key problem was that the level of output achieved was 10 below budget This resulted in savings on direct labour cost and budget but overall a lower profit Copyright 200930 This resource book has been prepared for the exclusive use by students of the Department of Accounting and Finance at Unitec New Zealand No portion of this document may be reproduced stored in a retrieval system or transmitted in any form or by any means electronic mechanical or otherwise without prior permission FLEXIBLE BUDGETS AND VARIANCES Variances Using a budget for control means we need to set up a method for reporting deviations from budget on a regular basis usually monthly The deviations from budget are called variances Favourable variances increase profit but sometimes there can be nasty consequences later on Large favourable variances may represent large failures Variances should be reported to a manager only if that manager can exercise some control over the cost or revenue responsibility accounting We may flex the budget to take account of differences in actual and planned activity levels Variances resulting from changes in activity that are outside the control of the section being examined can be identified and excluded Only costs that vary with the activity level should be re calculated flexed We need to separate variable costs from fixed costs When the volume of activity is allowed for we can find the apparent causes of the adverse variances in comparison with the flexed budget We should look for reasons why the sales volume changed and why any other items that were expected to be fixed in fact changed Flexing the budget removes the volume variance the effect of a change in the level of activity or throughput After flexing the variable costs raw materials direct labour and variable factory overhead we compare these figures with the actual figures to determine flexed variances actual flexed for the variable cost and fixed cost items We then look for causes of the flexed variances One practical way of comparing actual figures with a budget that did not meet its target is to flex the budget to what it would have been had the planned level of output been 900 units rather than 1000 units Flexing the budget simply means proportionally adjusting it to what it would have been if the planned level of output was the volume achieved To be able to flex the budget management need to know which items are fixed and which are variable relative to the output We can assume that sales revenue direct materials cost and direct labour cost vary strictly with volume Usually fixed overheads will not vary with volume over a relevant range On the basis of the above assumptions the flexible budget for Bramwell Ltd on previous page would be as follows Copyright 200931 This resource book has been prepared for the exclusive use by students of the Department of Accounting and Finance at Unitec New Zealand No portion of this document may be reproduced stored in a retrieval system or transmitted in any form or by any means electronic mechanical or otherwise without prior permission Flexible Budget Output production and sales 900 units Sales variable 270 000 Direct materials variable 108 000 Direct labour variable 54 000 Fixed overheads indirect 60 000 Profit for the Period 48 000 Putting together the original budget the flexible budget and the actual figures for May 123Flexed OriginalFlexibleActualVariance Masterbudget 3 2 budget Output1000 units900 units900 units sales and production Sales300 000270 000276 0006 000 F Direct materials 120 000 108 000 110 700 2 700 U Direct labour 60 000 54 000 52 500 1 500 F Fixed overheads 60 000 60 000 62 100 2 100 U Profit for the Period 60 000 48 000 50 700 2 700 F F favourableU unfavourable A more valid comparison can now be made and individual variances worked out and considered However the business must not lose sight of the shortfall of the 100 sales units Reasons for this must also be looked into and considered A profit of 60 000 was budgeted for based on 1 000 units Although the actual profit of 50 700 is below the original budget it is a favourable result based on the 900 units sold On the following page for your reference is a full example showing the setting out of an Original Master Budget compared to Actual then the calculation and presentation of the Flexible Budget and the Variance Copyright 200932 This resource book has been prepared for the exclusive use by students of the Department of Accounting and Finance at Unitec New Zealand No portion of this document may be reproduced stored in a retrieval system or transmitted in any form or by any means electronic mechanical or otherwise without prior permission FULL EXAMPLE Dilbert Ltd is an engineering company making didgets Listed below are the master or static budget the actual figures the flexible budget and the variances for the month of August 2011 123Flexed Master Flexible Actual Variance BudgetBudget 3 2 000 000 000 000 Units800840840 Sales revenue40 00042 00042 840840F Manufacturing costs Direct materials12 00012 60012 68484U Direct labour5 6005 8805 460420F Variable overhead costs3 2003 3603 27684F Fixed overhead costs 6 400 6 400 6 720320U Total manufacturing costs27 20028 24028 140100F Selling and administration costs Variable selling costs2 4002 5202 60484U Fixed selling and administration7 2007 2007 362162U Total selling and admin costs9 6009 7209 966246U Profit for the Period3 2004 0404 734694F Copyright 200933 This resource book has been prepared for the exclusive use by students of the Department of Accounting and Finance at Unitec New Zealand No portion of this document may be reproduced stored in a retrieval system or transmitted in any form or by any means electronic mechanical or otherwise without prior permission REPORTING ON VARIANCES Identifying the reason for a particular variance can help bring the relevant cost or revenue back under control and avoid future problems Significant adverse variances should be reported and investigated because any continuation of the fault could be very costly Significant favourable variances should also be investigated because such variances still represent things not going according to plan Small variances need not be reported because the cost of investigating them would outweigh the benefits In reporting on variances large adverse variances should be highlighted and possible reasons for the variances given Large favourable variances should also be mentioned but not insignificant variances Flexible budgeting techniques should be applied to isolate the individual variances but priority must be given to any differences between actual production and sales and planned production and sales in the report POSSIBLE REASONS FOR ADVERSE VARIANCES Sales and production variances Poor performance by sales staff Lack of inventory to sell because of production problems Deterioration in market conditions resulting in lower selling price Direct material variances Poor quality materials used Poor performance by purchasing staff quantity discounts not made use of Old or faulty machinery leading to wastage Inexperienced staff used in production Change to a more expensive supplier Direct labour variances Unskilled workers used leading to longer production hours Poor quality materials used leading to longer production hours Using more highly skilled workers than planned An unplanned general wage rise Overhead variances General increase in costs not taken into account in the master budget Poor control of costs Copyright 200934 This resource book has been prepared for the exclusive use by students of the Department of Accounting and Finance at Unitec New Zealand No portion of this document may be reproduced stored in a retrieval system or transmitted in any form or by any means electronic mechanical or otherwise without prior permission Variances can thus be explained by causes such as selling price change or discounting material purchasing price changes material usage wastage labour price change labour efficiency change or changes in the costs included in factory overheads Copyright 200935 This resource book has been prepared for the exclusive use by students of the Department of Accounting and Finance at Unitec New Zealand No portion of this document may be reproduced stored in a retrieval system or transmitted in any form or by any means electronic mechanical or otherwise without prior permission QUESTIONS on Budgeting QUESTION 3 13 From the following estimate of expenses at 25 000 units of production estimate expenses at 30 000 units of production Rates F 40 200 Rent F 20 400 Repairs and maintenance SV 15 000 Supervision SV 20 000 Electricity SV 5 000 Indirect labour SV 10 000 Direct materials V 4 000 114 600 F Fixed expenses SV Semi variable expenses varying 10 for each 20 variation in production level V Variable expenses QUESTION 3 14 Listed below are Somerfield s Income Statement Master Budget and Actual figures for September 2011 MasterActual Budget Sales units800760 000 000 Output production and sales 40 00038 420 Manufacturing costs Direct materials12 00011 600 Direct labour5 6005 220 Variable overhead costs3 2002 960 Fixed overhead costs 6 400 6 450 Total manufacturing costs27 20026 230 Selling and Administration costs Variable selling costs2 4002 200 Fixed selling and administration costs7 2007 180 Total selling and administration costs9 6009 380 Profit for the Period3 2002 810 Copyright 200936 This resource book has been prepared for the exclusive use by students of the Department of Accounting and Finance at Unitec New Zealand No portion of this document may be reproduced stored in a retrieval system or transmitted in any form or by any means electronic mechanical or otherwise without prior permission Required a Prepare a Flexible Budget Income Statement for September 2011 b Compare the Flexible Budget with the actual figures and calculate the flexible budget variances State whether the variances are favourable or unfavourable QUESTION 3 15 Outriggers Ltd make sails Listed below are the Income Statement Master Budget and the Actual figures for the month of September 2011 MasterActual budget Units6 0007 500 Sales revenue216 000265 000 Manufacturing costs Direct materials72 00088 000 Direct labour54 00068 000 Variable overhead costs9 60012 500 Fixed overhead costs 22 00021 600 Total manufacturing costs157 600190 100 Selling and administration costs Variable selling costs8 40010 100 Fixed selling and administration costs18 00017 200 Total selling and administration costs26 40027 300 Profit for the Period32 00047 600 Required a Prepare a flexible budget based on actual sales of 7 500 for September 2011 b Compare the flexible budget with actual figures and calculate the variances State whether the variances are favourable or unfavourable Copyright 200937 This resource book has been prepared for the exclusive use by students of the Department of Accounting and Finance at Unitec New Zealand No portion of this document may be reproduced stored in a retrieval system or transmitted in any form or by any means electronic mechanical or otherwise without prior permission QUESTION 3 16 The following are the budgeted and actual performance statements for Halstead Ltd for the month of August 2011 MasterActual Budget Sales1 000 units1 200 units Sales200 000230 000 less Cost of goods sold 80 variable 150 000175 000 Gross Profit50 00055 000 less Operating Expenses 90 fixed 40 00040 600 Profit for the Period 10 000 14 400 Required a Prepare a flexible budget for August 2011 b Compare the flexible budget with the actual figure and calculate the flexible variances Copyright 200938 This resource book has been prepared for the exclusive use by students of the Department of Accounting and Finance at Unitec New Zealand No portion of this document may be reproduced stored in a retrieval system or transmitted in any form or by any means electronic mechanical or otherwise without prior permission SOLUTIONS QUESTION 3 13 Solution Expenses at 30 000 unit level Rates40 200 Rent20 400 Repairs and maintenance16 500 Supervision22 000 Electricity5 500 Indirect labour11 000 Direct materials 4 800 120 400 QUESTION 3 14 Solution FlexibleActualFlexed budgetvariance Output 760 000 units 760 000 units 000 000 000 Sales Revenue38 00038 420420 F Manufacturing costs Direct materials11 40011 600200 U Direct labour5 3205 220100 F Variable overhead costs3 0402 96080 F Fixed overhead costs 6 4006 45050 U Total manufacturing costs26 16026 23070 U Selling and Administration costs Variable selling costs2 2802 20080 F Fixed selling and administration costs7 2007 18020 F Total selling and administration costs9 4809 380100 F Profit for the period2 3602 810450 F Copyright 200939 This resource book has been prepared for the exclusive use by students of the Department of Accounting and Finance at Unitec New Zealand No portion of this document may be reproduced stored in a retrieval system or transmitted in any form or by any means electronic mechanical or otherwise without prior permission QUESTION 3 15 Solution a FlexibleActual b Flexible budgetvariances Units7 5007 500 Sales revenue270 000265 0005 000 U Manufacturing costs Direct materials90 00088 0002 000 F Direct labour67 50068 000500 U Variable overhead costs12 00012 500500 U Fixed overhead costs 22 000 21 600 400 F Total manufacturing costs191 500190 1001 400 F Selling and administration costs Variable selling costs10 50010 100400 F Fixed selling and administration costs18 00017 200 800 F Total selling and administration costs28 50027 3001 200 F Profit for the period50 00047 6002 400 U QUESTION 3 16 Solution FlexibleActualFlexible budgetvariances Sales 1 200 units1 200 units Sales240 000230 00010 000 U less Cost of Goods Sold174 000175 0001 000 U Gross Profit66 00055 00011 000 U less Expenses40 80040 600200 F Profit for the period 25 200 14 400 10 800 U U unfavourable F favourable Copyright 200940 This resource book has been prepared for the exclusive use by students of the Department of Accounting and Finance at Unitec New Zealand No portion of this document may be reproduced stored in a retrieval system or transmitted in any form or by any means electronic mechanical or otherwise without prior permission EXTENSION QUESTION Budgeting PART A Taradale Ltd makes a single product a tiki which is budgeted to sell at 15 each in a competitive market A tiki is made by taking a budgeted 0 8kg of direct materials budgeted to cost 7 20 kg and an employee working on it by hand paid a budgeted 10 hour for a budgeted 12 minutes Monthly variable overheads for Taradale Ltd are budgeted at 2 per unit while fixed overheads are budgeted at 14 040 The output for September was budgeted at 8 000 tikis The actual results for September were as follows Sales 7 500 tikis 111 920 Direct Materials 6 120 kg 43 664 Direct Labour 1 480 hours 13 880 Variable overheads 15 400 Fixed Overheads 13 260 Operating Surplus 25 716 No inventories of any description existed at the beginning and end of the month Required a Determine the Operating Surplus using a flexible budget based on the actual sales of 7 500 tikis by Taradale Ltd for the month of September b Compare the flexible budget with the actual figures for Taradale Ltd and state whether the variances are favourable or unfavourable Give four possible reasons for these variances c Comment on Taradale Ltd s overall actual results when compared with both the master budget and the flexible budget for the month of September PART B a Explain why the budgeting process is essential to managers of a business b Explain the difference between a master budget and a flexible budget Copyright 200941 This resource book has been prepared for the exclusive use by students of the Department of Accounting and Finance at Unitec New Zealand No portion of this document may be reproduced stored in a retrieval system or transmitted in any form or by any means electronic mechanical or otherwise without prior permission EXTENSION QUESTION SUGGESTED SOLUTION PART A Flexible Actual Variance Budget 000 000 000 Units7 5007 500 Sales revenue112 500111 920580U Direct materials43 20043 664464U Direct labour15 00013 8801 120F Variable overhead costs15 00015 400400U Fixed overhead costs 14 040 13 620780F Profit for the period 25 260 25 716 456F b Possible reasons for the variances Choose from any four of the following Direct materials higher than expected price paid for materials or greater than expected quantity used in production Direct labour lower than expected hourly rate paid or shorter than expected working hours to complete production Variable overheads more indirect materials used than expected or a higher than expected rate paid to indirect labour Fixed overheads Lower than expected factory rent or lower depreciation on machines c Although the overall actual profit for the period compares favourably with the flexible budget profit for the period the company still has much reason for concern Taradale Ltd was expected to sell 8 000 tikis in September and this was expected to provide a profit for the period of 27 880 Compare this figure with the actual profit for the period of 25 716 from sales of 7 500 tikis and it becomes apparent that the actual profit is less than expected Overall sales were 500 tikis short and the