2010_CIMA_P1_R2_Kaplan.pptVIP

Q 88 89 90 Homework 94 111 * Planning and Operational example ￡ ￡ Planning variances A - B Sales price Material price Wage rate Operational B - C Sales price Material price Material usage Wage rate Labour efficiency Planning and Operational example Construct a revised ex post plan using standards that with hind sight should have been used. Compare ex post plan to actual A Original plan ￡ B Revised ex post ￡ C Actual results ￡ Sales 1000 x 200 200,000 1,000 x 330 330,000 1,000 x 316 316,000 Material 10,000 x 10 100,000 10,000 x 17 170,000 10,800 x 18 194,400 Labour 6,000 x 8 48,000 6,000 x 12.50 75,000 5,800 x 12 696,000 Planning and Operational example ￡ ￡ Planning variances A - B Sales price 130,000(F) Material price 70,000(A) Wage rate 27,000(A) 33,000(F) Operational B - C Sales price 14,000(A) Material price 10,800(A) Material usage 13,600(A) Wage arte 2,900(F) Labour efficiency 2,500(F) 33,000(A) Q 64 65 66 Homework 269 Planning ‘Planning is an unnatural activity. It is much more fun to do something. And the nice thing about not planning is that failure comes as a complete surprise without the worry and depression that precedes it’ Sir John Harvey-Jones Purpose of budgeting C R U M P E T Preparation of budgets - coordination Interrelationship between operational budgets means one budget cannot be completed without another Features of a budget committee: Representatives from all key areas Meet regularly Discuss all aspects of budget Preparation of budgets – principle budget factor The factor which limits the activities of the organisation E.g.: Sales volume Machine capacity Failure to identify the principle budget factor can lead to delays later Preparation of budgets – final comments All budgets interrelated e.g. sales, production and stockholding Spreadsheets useful due to interrelationship Master budget is summary of all functional budgets and comprises: Balance sheet Profit and loss account Cash flow Master budget receives senior manageme