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Norhidayah Bt Ibrahim
Term that refers, in business finance, to padding the budget by overestimating expenses and underestimating revenue or sales when developing a budget. Budgetary slack may occur if a manager is fearful of termination and pads the budget to avoid termination.
The process of planning implies the existence of objectives and is used as a tool or technique for achieving the objectives. Objectives should not only be imposed on subordinates but should be decided collectively (teamwork-junior subordinate & senior,manager).
Practice of examining the financial and operational results of a business, and only bringing issues to the attention of management if results represent substantial differences from the budgeted or expected amount Purpose- only bother management team with the important varience
Anwers :
Cash Budget for year ended 2013, 2014, and 2015 2013
Direct Material 20,528
2014
21,634
2015
21,176
Direct Labour
Variable Overhead Fixed overhead - service 30% - head office 50% Total
75,700
25,265
80,999
27,084
86,669
41,321
Production cost per unit Direct Material Direct Labour Overhead cost [(75x20%)+270]=285 - variable overhead [(15x30%)+(270x33.33%)]
75 270 94.50
190.50
Units 150 120
Total
Production cost for 270units Direct Material Direct Labour Variable overhead Fixed overhead
270
Total cash flow for the year 2013 Accrued Direct Material Direct Labour Variable Overhead Fixed overhead - service 30% 2,100 2,800 600 Current year 18,428 72,900 24,665
25,717
Total cash flow for the year 2014 Accrued Current year Direct Material Direct Labour Variable Overhead Fixed overhead - service 30% 1,822 850 19,812 80,999 36,234
27,258
Total cash flow for the year 2015 Accrued Direct Material Direct Labour 1741 Current year 19,435 86,669
871
40,450
41,321 26,168
43,613
2(b.ii) Other factor to consider : 1.Material qualities usage 2.Labour effieciency 3.Performance history of company
Standard Product Cost Per Unit () Direct Material-Wals (15x60) 900 -Lops (8x75) 600 Direct Labor (60x10.50) 630 Fixed O/head (504,000/12month/200) 210 2,340
LOPS
LOPS
()
() 66,000
Materials Price-Wals
-Lops Materials Usage-Wals -Lops Labour-Rate -Efficiency Manufacturing o/head variances Fixed expenditure Volume Variance Actual Profit
9,000 (F)
6,000(A) 18,000(A) 33,000(F) 10,530(F) 3,150(F) 13,680(F) 15,000(F) 3,000 (F)
() Budgeted Profit Direct Cost Variances: Materials Price-Wals -Lops Materials Usage-Wals -Lops Labour-Rate -Efficiency Manufacturing o/head variances Fixed expenditure Volume Variance Actual Profit 600 (A) 4,200(A) 9,000 (F) 6,000(A) 18,000(A) 33,000(F) 10,530(F) 3,150(F)
()
() 66,000
4,800(A)
26,880 39,120