2023年-HND财政预算报告outcome

Introduction

Tricolplcacompanywhomakesarangeoffurnitureandkitchenware.Andoneofitsmostpopularproductsisthe"Zupper9expandabletable.

Thepurposeofwritingthisreportistodothevarianceanalysis,projectevaluationandtocomparethebudgetandactualdatabyusingthetechnique.

Findings

PartA

PossibleReasonforVariances

Material

DirectMaterial-Total-£2,400Fmadeup:

DirectMaterialUsage一£20000F

(Levelofsignificance-usage/totalbudgetedMaterialcosts=8,000/64,000=12.5%>3%,shouldbereviewed)

2000kglessmaterialsareusedthanbudgetedfortheactuallevelofproduction.Possiblereasonmaybeusingthehigher-gradematerialwithlesswastage.Orthenewmachineryuselessmaterialsandincurslesswstage.

DirectMaterialPrice-£5,600A

(5,600/64,000=8.75%>3%)

Itis£1perkgmoreexpensivethanplanned

Possiblereason:

Newmaterialsupplierdoesnotgivediscountsformaterials.

Hither-gradematerialshavebeenusedwhichismoreexpensive.

Labour

DirectLabourTotal-£6,400A

DirectLabourRate-£3,520A

(3,520/28,800=12.2%>3%)

Onaverage,theactuallabourrateis£1/hourhigherthanbudgeted

Possiblereason:

Thewagesettlementishigherthanexpected

Thenewmachinerequirestrainingssothatovertimerequiredmorethanexpected.

DirectlabourEfficiency・£2000A>3%)4.16%

Actually,morethan200labourhourshavebeenusedthanbudgeted.Possiblereason:

Newmachineryrequiresmorehoursfortraining..

Humanresourceissues-theskilledoperativesisnotenough.

TotalOverhead-£600F

Rateis4.70%

UnpredictedincreaseininsuranceandAdministrationcosts

Possiblereason:

Newmachinerybringsmoreexpensiveinsurance,highermaintenanceandadditionaladministrativecosts.

PartB

Keyassumptionsmade:

Thereisnotaxationandinflation.

Assumedthatthereisnovarygivenreturnmarketrate.

Thetotalcostoftheprojectwillbepayableatthestart

Theexpectedrevenuefromtheinvestment-thisistheexpectedNetCashFlowafterdeductionofallrelevantcosts

Payback

Paybackinthiscaseis4.125years(totalinvestment-returnperiodisfiveyears).Sothecompanycangetbacktheinvestment.

TheNetPresentValueis£-64,800.Itindicatesthattheprojectdoesnotappeartobefinanciallyviable.

Conclusion

PartB

Thisprojectisavailablebecausethepaybackis4.125years.

ButtheNetPresentValue(NPV)isnegative.Sotheprojectisnotavailable.

However,weshouldusetheconclusionoftheNetPresentValuebecausetheNetPresentValue(NPV)consideredthetimevalueofmoney.

Recommendations

PartA

Recommendationsformanagementaction:

Allthevariancesshouldbeanalysisbecauseallofthemareabove3%,thelevelofsignificance.

Particularly,thedirectlabourvariancesneedfurtherinvestigation-whyisthecompanypayingahigherwageratebutthelabourproductivityislowerthanplanned.

PartB

Toconsidertheeffectofthenewfacilitiesoncompany'sownstaff-intermsofemploymentandredeploymentopportunities.

Toconsideranychangesinanyotherareas,likesocial,political,economic,legalandtechnologicalfactors.

Whetheritispossibleforthecompanytoraisethesufficientfunds-toconsiderifthecurrentcashflowpositioncansupportsuchaninvestment.

Appendix

PartA

LTable1TricolplcFlexedBudgetforJune

TricolplcFlexedBudgetForJune

FixedBudget2,000units

FlexedBudget1,600units

Actual1,600units

Variance

£

£

£

£

A/F

DirectMaterial

10*4*2,000=

80,000

10*4*1,600二

64,000

61,600

2,400

F

DirectLabor

2*9*2,000=

36,000

2*9*1,600二

28,800

35,200

6,400

A

VariableProductionOverheads

2*2,000=

4,000

2*1,600=

3,200

3,200

0

Insurancecosts

2,200

2,200

2,400

200

A

Depreciation

1,500

1,500

1,500

0

RentandRates

2,500

2,500

2,500

0

AdministrationOverheads

2,000

2,000

2,200

200

A

FixedOverheads

8,200

8,200

8,600

400

A

Total

128,200

104,200

108,600

4,400

A

FurtherVarianceAnalysis

Thecalculationofthevariances

Directmaterialtotal:

(BudgetedQuantity*BudgetedPrice)-(ActualQuantity*ActualPrice)

二(4kg*1,600*£lOperkg)-(5,600kg*£11perkg)=£64,000-£61,600=£2,400F

Directmaterialusage:

Budgetedprice*(BudgetedQuantity-ActualQuantity)

二£1Operkg*(4kg*1,600-5,600kg尸£8,000F

Directmaterialprice:

ActualQuantity*(Budgetedprice-Actualprice)=5,600kg*(£10perkg-£11per

kg)

二£5,600A

Directlabortotal:

BudgetedHours*BudgetedRate-Actualhours*ActualRate

二(2hours*1600*£9)-£35200=£6,400A

Directlaborrate:

ActualHours*(BudgetedRate-ActualRate)

=3,520hours*(£9-£10)=£3,520A

Directlaborefficiency:

BudgetedRate*(BudgetedHours-ActualHours)

二£9-(2hours*1600-3520hours)=£2,880A

Totaloverhead:

(BudgetVariableOverhead+BudgetFixedOverhead)-(ActualVariableOverhead+

ActualFixedOverhead)=(£4000+£8200)-(£3200+£8600)=£400F

PartB

LPaybackperiodmethod

Year

Yearlynetcashflow£

Cumulativecashflow£

0

(1,000,000)

(1,000,000)

1

160,000

(840,000)

2

160,000

(680,000)

3

320,000

(360,000)

4

320,000

(40,000)

5

320,000

280,000

Netcashbenefits

280Q00

280300

Payback=4+40,000/320,000=4.125years

2.Discountcashflowtechnique(netpresentvalue)

CalculationofNetPresentValue(NPV)at10%

Year