ND财政预算答案

PartA

(i)

Tricolplc

FlexedBudget

ForJune

OriginalFlexedActual

Variance

BudgetBudgetresults

F/A

2.000units1.600units1,600units

££££

DirectMaterial80,00064,00061,6002,400F

DirectLabour36,00028,80035,2006,400A

VariableProduction

4,0003,2003,2000

Overheads

InsuranceCosts2,2()02,2()02,400200A

Depreciation15,0001,5001,5000

RentandRates2,5002,5002,5000

Administration

2,0002,0002,200200A

Overheads

Total104,200108,6004,400A

(ii)

Directmaterialtotalvariance

(standardunitsofactualprcxluctionxstandardprice)-(actualquantityxactualprice)

[(4kgx16(X))x£IO]-£61600

=£64000一£61600

=£2400(F)

Theratefordirectmaterialtotalvariancesis£2.400/£64,00()x1CO%=3.75%>3%

Directmaterialpricevariance

actualquantityx(standardprice-actualprice)

=5600kgx(£10-£11)

=5600kgx£1

=5600(A)

Therateofdirectmaterialpricevarianceis£5,600/£64,000x100%=8.75%>3%

Directmaterialusagevariance

standardprice*standardunitsofactualproduction-actualunits)

=£I0x(4kgx|600-5600kg)

=£10x800kg

=£8000(F)

Therateofdirectmaterialusagevarianceis£8,0()0/£64,000x100%=12.5%>3%

Note:Whenaddingthepriceandusagevariancestheresultmusteqaalthetotalvariance.

Therefore,£5600(A)(price)4-£8000(F)(usage)=£2400(F)(total).

Directlabourtotalvariance

(standardhoursofactualproductionxstandardrateph)—(actualhoursxactual

rateph)

[(2hxl600)x£9]一(3520hx£10)

=(32OOhx£9)-£352OO

=£28800-£35200

=£6400(A)

Therateofdiretclabourvarianceis6400/28800x100%=22.2%>3%

Directlabourratevariance

actualhoursx(standardrateph—actualrateph)

3520hx(£9~£10)

=3520hx£1

=£3520(A)

Therateofdirectlabourratevaiianceis£3,520/£28,800x100%=12.2%>3%

Directlabourefficiencyvariance

standardratephx(standardhoursofactualproduction—

actualhours)

£9x[2hxl600-3520h)

=£9x(32(X)h-3520h)

=£9x320h

=£2880(A)

Therateofdirectlabourefficiencyvarianceis£2.880/£28,000x100%=10%>3%

Note:Whenaddingrateandefficiencyvariancestheresultmustequalthetotalvariance.

Therefore,£3520(A)(rate)+£2880(A)(efficiency)=£6400(A)(total).

Overheadtotalvariance

(standardinsurancecost-actualinsurancecost)-1-(standardadministnition

overheads—actualadministrationoverheads)

(£2200-£2400)4-(£200C-£2200)

=£200(A)+£200(A)

=£400(A)

Therateofoverheadtotalvarianceis£400/£4,2(X)x1OO%=9.52%>3%

(iii)

Analysis

Materialvariance

Fromtheactualbudget,wecanseethatthedirectmaterialtotalvarianceis£2,400(F).The

Directmaterialusagevarianceis£8,000(F),(heDirectmaterialpricevarianceis

£(5.600)(A).

Thepossiblereasonsformaterialusagevariancesareinclude:

Usenewmachinery.

Usehigherquality

Thepossiblereasonsformaterialpricevariance:

Changesuppliers.

Usehigherqualitymaterial.

Lossofdiscount

Labourvariance

Thedirectlabourtotalvarianceis£(6.400)(A),(heDirectlabourefficiencyvarianceis

£(2.880)(A)andtheDirectlabourratevarianceis£(6.400)(A).

Thepossiblereasonfordirectlabourefficiencyvariance:

Lowergradeworkforce

Shortiigeofskilledlabor

Thepossiblereasonfordirectlabourratevariance

Highergnideworkforces

ShorUigeofskilledlabour

Overheadvariance

Thetotaloverheadvarianceis£(400)(A).TheInsuranceandAdministrationvariancesarc

£(200)(A).Thetotaloverheadvarianceis£(400)(A).

Thepossiblereasonsforoverheadvariances:

Usingnewmachinery

Increasedadministrationcost

Toconcludeahigher-than-expectedwagesettlementforproductionoperates.

Difficulttradingconditions

Intenselycompetilion

Recommendation

Accordingtoaboveanalysis,wecaneasilyunderstand(heorganization'scurrentsituation.In

ordertoachievethelowercostsandhighprofitheresomerecommendationsdividedinthree

sectionswhichincluedmaterialvariances,labourvariancesaswellastheoverheadvariances.

Therecommendationformaterialvariances:

Investigatethecheapermaterial.

Holdastafftrainingprogramtoincreasetheirworkefficiency.

Negotiatewithcurrentsupplierinordertoachievelowerprice.

Therecommendationfbrlabourvariances:

Providetrainingprogramtostaffforhigherskillofoperatingthenewmaterial.

Consideraboutthelowergradelabour

Therecommendationforoverheadvariances:

trytodecreasetheadministrationcost

Teachthestaffsscientificallyusetheseoverheadinordertomakeitlonger-used.

PartB

Paybackperiodmethod:

YearAnuualcashflowCumulative

0(1,000,000)(1,000,()00)

1160.000(840,000)

2160,000(680,000)

3320,000(360,000)

4320.000(40.000)

5(1/8of320,000)40,000NIL

5(7/8of320,000)280,000240,000

Paybackwilltake4year1.5months.

NetpresentValue

PresentValue

Annual

FactorsPresentValue

CashFlow

at10%

££££

Year0(LOOO.(X)D)1.000(1,00().000)

1160,0000.909145,440

2160.0000.826132,160

3320.0000.751240,320

4320.0000.683218.560

5320.0000.621198.720935.200

NetPresent

£(64,800)

Value

Thepremiseofpaybackperiodmethods

Identifyallofthecostsofinitialinvestment.Assumethattheywillbepaidnow.

Findthecashinflowforeachproject.Addupcashflowseachyearuntilcostof

projectcovered.Picktheprojectwiththeshortestpaybackperiod.Ifthepayback

periodisonlyoneyearthenitshouldbecomparedwithaninternalfigure

Thepremiseofdiscountedcashflowtechnique

Uncertaintydoesnotexist.Thereisnoinflation.Theappropriatediscountratetouse

isknown,toavoidunnecessarycalculations.WhenundertakingDCFquestions,the

discountraleshavebeencomputedforyou,andaregiveninthediscount

tables.Unlimitedfundscanberaisedatacompetitiverate.

Analyzingpaybackperiodmethod

Accordingtothepaybackperiodmethod,theoriginalcapitalthatthecompany

investis£1,000,000andthereare5yearsforthecompanytogetthereturnthat

isthebudgetedpaybackperiod.Accordingtotheprogram,4yearsand1.5months

thatthecompanywillgetitsallinvestments.Atthelastyear,companywillget(he

returnabout£280,000.Asaresult,basedontheperiodmethod,theprojectwill

beprofitableandisworthtoinvest.

Analyzingdiscountedcashflowtechnique

Ifthecompanyusesthediscountedcashflowtechnique,accordingtothepeogram,

theinvestmentis£1,000,000,andthenetpresentvalueis10%.Thebudgeted

paybackperiodis5years.After5years,theNPVfortheprojectwillbe£-64,800.

Itshowsthatthereturnislessthantheinvestment.Itwillbethelossof£64,800to

investthisproject.Sothisprojectwillnotbeprofitableandisnotworthtoinvest.

Recommendation

Accordingtothetwomethods,itisnotdifficulttofindthatthecompanywould

bettertochoosethepaybackperiodmethod.Thecompanychoosespaybackperiod

methodcouldgeltheprofitof£28O.(XX)andless5yearscouldgettheallinvestment.

Andforthediscountedcashflowtechnique,itwillcost5yearsandloss£64,800

atlastof(heproject.So,basedontheprofit,thecompanywouldbettertochoose

thepaybackperiodmethod.

Considerationofotherfactors

First,theenvironmentisonefactorthatthemanagersshouldtoconsider.Tricol

makesarangeoffurnitur