Preparing Financial Forecasts Report Essay

Submitted By remainalof
Words: 1177
Pages: 5
Open Document
[pic]

[pic]

HND program, Sichuan University 2006-12-21

Part A
Introduction
This report refers to show the variances between the Flexed Budget and Actual results. After cooperation, we will understand the overview of the organization’s current situation. In order to find the problems and solve them, I analyzed them below. Here are the detailed information about the materials variance, labour variance and overhead variance.
In addition, I will give out the advice of my opinion at the end of this report.
|Tricol plc Flexible budget |
| |Original budget |Flexed budget |Actual results |Variance |
| | | | |A/F |
| |2000 units |1600 units |1600 units[1] | |
|Direct material |￡80000[2] |￡64000[5] |￡61600 |￡2400 |F |
|Direct labor |￡36000[3] |￡28800[6] |￡35200 |￡（6400） |A |
|Variable production overheads |￡4000[4] |￡3200[7] |￡3200 |0 | |
| |Depreciation |￡1500 | |￡1500 | |
|Fixed overheads | | | | | |
|Total cost of production | |￡104200 |￡108600 |￡（4400） |A |

[1] Flexed budget amount is 80% of the target amount
[2]￡10×4 kg×2,000＝80,000
[3]￡9×2×2,000＝36,000
[4]￡2×2,000＝4,000
[5]￡10×4 kg×1,600＝64,000
[6]￡9×2×1,600＝28,800
[7]￡2×1,600＝3,200
Material:
Direct material total variance = (standard units of actual production*standard price)-(actual quantity*actual price) = (1600*4*10) - 61600 =￡2400(F)

Direct material usage variance =standard price*(standard unit of actual production - actual quality) =10*(1600*4-5600) =￡8000(F)

Direct material price variance =actual quantity*(standard price – actual price) =5600*(10-11) =￡-5600(A)
Material total Variance percentage = 2400/64000 *100% =3.75%
Material usage variance percentage = 8000/64000*100% =12.5%
Material price variance percentage =5600/64000*100% =8.75%

Labour:
Direct labour total variance = (standard hours of actual production*standard rate ph)-(actual hours*actual rate ph) = (1600*2*9)-35200 =￡-6400(A)

Direct labour efficiency variance =standard rate ph*(standard hours of actual production – actual hours) =9*(1600*2-3520) =￡-2880(A)
Direct labour rate variance =actual hours*(standard rate ph-actual rate ph) =3520*(9-10) =￡-3520(A)
Labour total variance percentage =6400/28800*100%=22.22%
Labour efficiency variance percentage =2880/28800*100%=10%
Labour rate variance percentage=3520/28800*100% =12.22%

Overhead:

Total overhead variance =total standard overhead for actual production-total actual overheads = (7.125*1600)-(3200+2200+1500+2400+2500) =11400-11800 =￡-400(A)

Overhead absorption rate =total budgeted overhead/total budgeted activity level = (1600*2+2000+2200+1500+2500)/1600 =￡7.125 per unit
Show More

Related Documents: Preparing Financial Forecasts Report Essay

Essay about chapter 1

costs, and other measures to forecast activities and their results B) provides information about the company as a whole C) reports information that has occurred in the past that is verifiable and reliable D) provides information that is generally available only on a quarterly or annual basis Answer: A 2) Managers use management accounting information to ________ strategy. A) choose B) communicate C) implement D) All of these answers are correct. Answer: D 3) Financial accounting: A) focuses on…

Words 801 - Pages 4

Finance and Cash Flow Analysis Essay

Ej Reed Professor Uhr December 4, 2013 Finance, Forecast, Budget In chapter 18, there were a lot of topics that seemed to be a very important part in a business but there were three terms that I found very interesting; finance, forecast, and budget. They all play different roles in management and each rely on each other to do their job in order to have the business running properly. With that being said, you can tell that in order to be an employee, the person will have to go through the proper…

Words 850 - Pages 4

Essay about Barringer E4 PPT 08

Chapter 8 Assessing a New Venture’s Financial Strength and Viability Bruce R. Barringer R. Duane Ireland Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 8-1 Chapter Objectives 1 of 2 1. Explain the two functions of the financial management of a firm. 2. Identify the four main financial objectives of entrepreneurial ventures. 3. Explain the difference between historical and pro forma financial statements. 4. Explain the purpose of an income statement. 5. Explain the purpose…

Words 2118 - Pages 9

Auditing and Assurance Services Essay

determine and report on the degree of correspondence between the information and established criteria. Auditing should be done by a competent, independent person. The criteria for evaluating information vary depending on the information being audited. In the audit of historical financial statements by CPA firms, the criteria may be U.S. generally accepted accounting principles (GAAP) or the International Financial Reporting Standards (IFRS). For an audit of internal control over financial reporting…

Words 853 - Pages 4

Essay about BSBMGT515A: Manage Operational Plan

Assessment Tool 2 (AT2): Written/Oral Questions 1. List some of the details outlined in an operational plan. An operational plan, also known as an action plan, is derived from an organisation’s strategic plan. It is a more concrete, detailed document that outlines how the strategic plans of an organisation will be achieved in practice. It includes projects to be undertaken, actions, resource policies, responsibilities and timeframes. It outlines the actions teams/individuals within an organisation…

Words 1267 - Pages 6

Practical: Finance and High Level Essay

University with breadth studies in Corporate and Taxation Law. I am a current candidate in the Chartered Accountants program. 2. High level experience in financial management and accounting, ideally in the not for profit sector, including experience in legal, audit, compliance and budget matters I have extensive experience in preparing financial & management accounts using MYOB, Excel and Quickbooks. I implemented and manage the entire accounting function for various organisations including…

Words 573 - Pages 3

Types Of Professionals In Accounting

these tasks include: preparing taxes, tax planning, auditing financial records, and financial planning (Careers in Accounting, 2014). A tax preparer at the local H&R Block would be an example of a public accountant. This accountant would handle multiple clients and be responsible for managing their tax returns. Management accountants are employed by a single organization that retains their services exclusively. These professionals are responsible for managing the financial performance of their respective…

Words 1470 - Pages 6

Notes on Management Accounting Essay

budgeting, and how to use current or historical financial data to plan for the effective finances and costs of the business for the future. Unit introduction Whether an organisation is successful and long established or a business start-up, one of the most important aspects of its management is effective financial planning and control. This is known as management accounting and it builds on historical accounting information provided by financial accounts. A sound understanding of costs and…

Words 4482 - Pages 18

Assessment Task AIS Essay

I have been approached by some businessmen who are preparing to start up a business operation in which they will be manufacturing and selling women's fashion clothing. After I carried out some research and looked at a typical manufacturing business today, I have done a report for the businessmen. This report provides them with information and recommendations about employing an Accounting Information System. I. Company Overview Company name: Ally P/L Number of employees: 35 people, including 1 director…

Words 1521 - Pages 7

Essay Kota Fibres Ltd Case Analysis

company can be in a position to increase this ratio. In preparing the forecasts for Kota Fibres, Mr. Mehta, the bookkeeper, and Ms. Pundir agreed on various assumptions to arrive at the projections. This is not desirable because the prediction may be misleading. The forecast should be premised on actual figures. Ms Pundir as the owner should hire an accountant or at least assign the book keeper the task of preparing the forecast. The final report on the projections should thereafter be reviewed to check…

Words 3171 - Pages 13