Tài liệu MA ASS2

Qualification Unit Code / Unit number and title R/601/0836 Pearson BTEC Level 5 HND Diploma in Business (Management) Unit 9 Management Accounting: Costing and Budgeting Student name / BTEC Registration Number Assessor name Vũ Hoàng Anh F06-011 Nguyễn Tuấn Anh F07-002 Lê Phương Mai F08-047 Nguyễn Thanh Ngọc F08-055 Trần Thế Võ F07-068 Date issued Hand in deadline Submitted on Ms. Nguyễn Bích Ngọc 29th December 2015 Assignment title Super Star Publishing House Assignment No 2 of 2 In this assessment you will have opportunities to provide evidence against the following criteria. Indicate the page numbers where the evidence can be found. h Learnin g Outcom e LO3 Learning outcome Be able to prepare forecasts and budgets for a business Assessme nt Criteria In this assessment you will have the opportunity to present evidence that shows Explain the purpose and you 3.1 nature of the budgeting process 3.2 Select appropriate budgeting methods for the organisation and its needs 3.3 Prepare budgets according to the chosen budgeting method 3.4 Prepare a cash budget MACB A2 Sept 2015 1 Tas k no. Evidence (Page no) LO4 Be able to monitor performanc e against budgets within a business 4.1 4.2 4.3 Calculate variances, identify possible causes and recommend corrective action Prepare an operating statement reconciling budgeted and actual results Report findings to management in accordance with identified responsibility centres Student declaration I certify that the work submitted for this assignment is my own. I have clearly referenced any sources used in the work. I understand that false declaration is a form of malpractice. Date: 29th December 2015 Student signature: In addition to the above PASS criteria, this assignment gives you the opportunity to submit evidence in order to achieve the following MERIT and DISTINCTION grades Grade Descriptor Indicative characteristic/s Contextualisation M1 Identify and apply strategies to find appropriate solutions An effective approach to study and research has been applied. To achieve M1, Effective judgements have been made on the purpose and nature of the budgeting process in budget preparation (Task 1) M2 Select / design and apply appropriate methods / techniques Relevant theories and techniques have been applied. To achieve M2, Appropriate techniques (e.g. incremental, zero-based, fixed and flexible etc) have been applied for preparation of budgets (Task 1) MACB A2 Sept 2015 2 M3 Present and communicate appropriate findings A range of methods of presentation have been used and technical language has been accurately used. To achieve M3, An appropriate structure and approach has been used and a range of methods of presentation has been used to prepare budgets (Task 1) D1 Use critical reflection to evaluate own work and justify valid conclusions Conclusions have been arrived at through synthesis of ideas and have been justified. To achieve D1, the ability to show evaluation has taken place to generate and recommend corrective action to monitor performance against budgets D2 Take responsibility for managing and organising activities Activities have been managed. (Task 2) To achieve D2, Independence demonstrated and substantial activities have been planned, managed and organised related to responsibility centres and also identification of responsibility for variances. (Task 2) D3 Demonstrate convergent / lateral / creative thinking Innovation and creative thought have been applied Convergent, lateral and creative thinking has been used to solve problem reconciling budgeted and actual results (Task 2) Assignment Brief Qualification Pearson BTEC Level 5 HND Diploma in Business (Management) Unit number and title Unit 9: Management Accounting: Costing and Budgeting Assessor name Date issued Hand in deadline MACB A2 Sept 2015 3 Assignment title Super Star Publishing House Assignment no 2 of 2 Evidence checklist Summary of evidence required by student Task 1 A group assignment Task 2 A group assignment Task 3 A group assignment MACB A2 Sept 2015 4 Evidence presented PRESENTATION 1. The assignment should have a cover page that includes the assignment title, assignment number, course title, module title, Lecturer/tutor name and student’s name. Attach all the pages of assignment brief/achievement summary with your report and leave them blank for official use. 2. Ensure that authenticity declaration has been signed. 3. This is an individual assignment. 4. Content sheet with a list of all headings and page numbers. 5. A fully typed up professionally presented report document. Use 12 point Arial or Times New Roman script. 6. Your assignment should be word-processed and should not exceed 2,500 words in length. 7. Use the Harvard referencing system. 8. Exhibits/appendices are outside this limit. 9. The assignment should contain a list of any references used in the report. NOTES TO STUDENTS FOR SUMMISSION  Check carefully the submission date and the instructions given with the assignment. Late assignments will not be accepted.  Ensure that you give yourself enough time to complete the assignment by the due date.  Do not leave things such as printing to the last minute – excuses of this nature will not be accepted for failure to hand-in the work on time.  You must take responsibility for managing your own time effectively.  If you are unable to hand in your assignment on time and have valid reasons such as illness, you may apply (in writing) for an extension.  Failure to achieve a PASS grade will results in a REFERRAL grade being given.  Take great care that if you use other people’s work or ideas in your assignment, you properly reference them in your text and any bibliography.  NOTE: If you are caught plagiarizing, the University policies and procedures will apply. MACB A2 Sept 2015 5 Achievement Summary Qualification Pearson BTEC Level 5 HND Diploma in Business (Management) Assessor name Unit Number and title Unit 9 Management Accounting: Costing and budgeting Student name Criteria Reference To achieve the criteria the evidence must show that the student is able to: Achieved ? (tick) LO 3 3.1 Explain the purpose and nature of the budgeting process 3.2 Select appropriate budgeting methods for the organisation and its needs Prepare budgets according to the chosen budgeting method 3.3 Prepare a cash budget 3.4 LO 2 4.1; 4.2 4.3 Calculate variances, identify possible causes and recommend corrective action. Prepare an operating statement reconciling budgeted and actual results Report findings to management in accordance with identified responsibility centres Higher Grade achievements (where applicable) Grade descriptor Achieved ? (tick) Grade descriptor M1: Identify and apply strategies to find appropriate solutions D1: Use critical reflection to evaluate own work and justify valid conclusions M2: Select/design and apply appropriate methods/techniques D2: Take responsibility for managing and organising activities D3 Demonstrate convergent / lateral / creative thinking M3: Present and communicate appropriate findings MACB A2 Sept 2015 6 Achieved ? (tick) Assignment Feedback Formative Feedback: Assessor to Student Action Plan Summative feedback Feedback: Student to Assessor Assessor Signature Date Student Signature Date FOR INTERNAL USE ONLY VERIFIED DATE YES  NO  : ................................................................. VERIFIED BY : ................................................................. NAME : ................................................................. MACB A2 Sept 2015 7 MACB A2 Sept 2015 8 EXECUTIVE SUMMARY Management accounting is absolutely essential to any organisation because this process helps the managers be aware of the state of the company and possible solutions for occurring problems or improvements to current operations. In this report, the following aspects of management accounting are achieved: • Explaining the purpose and nature of the budgeting process • Selecting appropriate budgeting methods for the organisation and its needs • Preparing budgets according to the chosen budgeting method • Preparing a cash budget • Calculating an operating statement reconciling budgeted and actual results • Reporting the findings to management in accordance with identified responsibility centres By accomplishing these tasks, the organisation can ensure their continued sustainability and profitability. MACB A2 Sept 2015 9 TABLE OF CONTENT LIST OF TABLES AND FIGURES...........................................................11 I. INTRODUCTION.........................................................................12 II. BODY...................................................................................13 3.1 The purpose and nature of the budgeting process...................................13 3.1.1 Definition........................................................................13 3.1.2 Roles of budgeting in firm’ planning and controlling..........................15 3.2 Select appropriate budgeting methods for the organisation and its needs..........18 3.2.1 Fixed budget and flexble budget................................................18 3.2.2 Incremental budgeting and zero-based budgeting..............................20 3.2.3 Top-down and bottom-up budgeting............................................22 3.3 Prepare budgets according to the chosen budgeting method........................25  Revenue Budget......................................................................25  Production Budget in Unit............................................................25  Direct Material Usage Budget........................................................25  Direct Material Purchases Budget....................................................26  Direct Manufacturing Labor Cost Budget...........................................26  Manufacturing Overhead Budget....................................................26  Budgeted Unit Cost of Ending Finished Goods Inventory..........................27  Ending Inventories Production Budget..............................................27  Ending Inventories Material Budget.................................................27  Cost of Goods Sold Budget..........................................................28  Nonmanufacturing Cost Budget......................................................28  Budgeted Income Statement..........................................................28 3.4. Prepare a cash budget...................................................................29 MACB A2 Sept 2015 10 4.1 (&4.2) Variances, Operating Statement and Analysis...............................30 1. Variances..............................................................................30 2. Operating Statement..................................................................32 3. Analysis...............................................................................33 4. Conclusion............................................................................34 4.3 Report findings to management in accordance with identified responsibility centres 35 III. CONCLUSION.........................................................................37 IV. REFERENCES..........................................................................38 MACB A2 Sept 2015 11 LIST OF TABLES AND FIGURES Table 1: Revenue Budget.........................................................................................................25 Table 2: Production Budget in Unit..........................................................................................25 Table 3: Direct Material Usage Budget....................................................................................25 Table 4: Direct Material Purchases Budget..............................................................................26 Table 5: Direct Manufacturing Labor Cost Budget..................................................................26 Table 6: Manufacturing Overhead Budget...............................................................................27 Table 7: Manufacturing overhead budget.................................................................................27 Table 8: Budgeted Unit Cost of Ending Finished Goods Inventory........................................27 Table 9: Ending Inventories Production Budget......................................................................27 Table 10: Ending Inventories Material Budget........................................................................27 Table 11: Cost of Goods Sold Budget......................................................................................28 Table 12: Nonmanufacturing Cost Budget...............................................................................28 Table 13: Budgeted Income Statement.....................................................................................28 Table 14: Cash Budget.............................................................................................................29 Table 15: Operating Statement.................................................................................................32 Table 16: Analysis of the diffident Variances...........................................................................34 Figure 1: Master budget diagram.............................................................................................14 Figure 2: Budget planning process diagram.............................................................................16 MACB A2 Sept 2015 12 I. INTRODUCTION In this assignment, we discuss the financial information of Super Star Company. We need to prepare their budgets and suggest some methods for Super Star Co. to ensure their liquidity. We will also analyse the variances of Super Star Co. and explain those variances and decide which managers should be rewarded or punished. MACB A2 Sept 2015 13 II. BODY .1 The purpose and nature of the budgeting process .1.1 Definition A budget is defined as management’s quantitative expression of plans for forthcoming period (American Management Association Communications (AMACOM), 2013. Budgets are prepared at various levels of an organization. The budget process is the way an organization goes about building its budget. A good budgeting process engages those who are responsible for adhering to the budget and implementing the organization's objectives in creating the budget [ CITATION Eli10 \l 1033 ]. AMACOM (2013) defines the master budget as the overall financial plan for the period, which reflects the organization’s goals and objectives. The master budget includes operating and financial budgets. Operating budgets show the company’s planned sales and operating expenses. Financial budgets reflect financing plans such as borrowings, leasing, and cash management. Desired Ending Inventory Budget  Budget method Sales Budget Production budget Budgets help the company set out the cost or revenue that can be incurred or earned for the future periods. Nowadays, budgeting methods being used popularly consist of fixed budget andDirect flexible budget, incremental budgeting and overhead zero-based budgeting, material Direct labour Factory top-down and bottom-up budgeting. They have many advantages but drawbacks are not few. Based on characteristic of these methods, the company will choose the most suitable method to use. Cost of Goods Sold Budget Master Budget Selling Expense Budget Administrative Expense Budget Budget Income Statement MACB A2 Sept 2015 14 Capital Budget Budgeted Balance Sheet Cash Budget Figure 1: Master budget diagram Source: [ CITATION Lie08 \l 1033 ] MACB A2 Sept 2015 15 .1.2 Roles of budge[ting in firm’ planning and controlling Budgeting play an important role in the planning and controlling of an organization (Business Solution, 2013) a. Planning Making all the business planning including the utilization of resources, capital, and assets, maximizing the profit and minimizing the liabilities are only done by the proper budget planning. Making of right budget on right time will shows the performance of good selective teams, and the business management. Generally, it can be said that budgeting is about aiding a company to make plans for the future. b. Controlling Controlling is also an integral part of the business management. Controlling is the only way to implement the business plan efficiently. In other words, controlling is the way to handle the finance and leisure expenses. So, this way, the company’s activities, employees, time and money can all be under control with the introduction of budget in the company’s financial plan. The company would certainly become more efficient if it works in a controlled manner. So, this would be for the mutual benefit of both the employees and the company as well. Additionally, the connection between planning and control is the budget. To have more detail about the connection, the planning and control cycle is shown below. c. Ensure the achievement of the organization’s objectives Budgets are representative for the future objectives of the company; it shows targets which need to be achieved in estimated fixed timescale. By this way, the company has general views and can estimate operation should use to obtain objectives promptly. d. Co-ordinate activities When creating budgets, Super Star Publishing House set goals which relate to relative parties, precisely, departments. This leads to operations of departments more coordinated in order to achieve common aim. MACB A2 Sept 2015 16 e. Provide a frame work for responsibility accounting As a position of department’s head, department managers has responsible for the achievements set in budget. Based on budget, managers of department will have appropriate manners to implement and accomplish goals set. f. Motivate employees to improve their performance In order to obtain benefits above, the company needs to use budget process including planning and control aspect of budgeting Figure 2: Budget planning process diagram Source: Financial management (BPP, 2010) Planning process is chain stages including objectives needing development and preparing suitable budgets to obtain goals. This process includes 5 steps. Step 1: Identify objectives Super Star Publishing establishes the direction for departments such as sales, production, fixed charges, etc. For example, regarding finished goods inventory on hand at the end of each month, the company wants to keep from losing sales. Based MACB A2 Sept 2015 17 on the decision of Manager – Super Star, vice president of marketing, the manager wants to increase sales and attract customers. Step 2: Identify potential strategies In this step, Super Star Publishing identifies a range course of strategies or operations which are possibly appropriate the potential of company. To do that, the company must collect all essential information to ensure that they have full and deep understanding about the sources of the firm, including external and internal information which are known as “position audit” or “strategic analysis” and include looking both inwards and outwards. • Regarding internal information, Super Star musts find out what kind and how many resources that they have, actual capacity of departments within the company, working-capital, equity and liabilities, etc. • Super Star also must gather external information to under the position and image of company in the market, evaluating their strengths and weaknesses. Furthermore, they must assess these towards rivals and whole market to identify possibly business opportunities. This process is called SWOT analysis. Step 3: Evaluate strategies The strategies must subsequently be assessed in terms of suitability, feasibility and acceptability in the context of the strategic analysis. Super Star will select strategies which are most potential for obtaining company’s goals. In this step, one or several strategies may be selected. Step 4: Choose alternative courses of action Super Star Publishing collect selected strategies together and co-ordinate them into a long-run plan which is normally expressed in financial terms, these are: • Projected cash flow • Projected long-term profits MACB A2 Sept 2015 18 • Capital expenditure plans • Balance sheet forecasts • A description of the long-term objectives and strategies in words Step 5: Implement the long-term plan Long-term plan at this step is separately into smaller parts, usually one year, being suitable with each developed period of company. The result of short-term plan is the budget. Control process involves managing operations implemented really basing on planning objectives. This process includes last 2 steps: Measure actual results and compare with the plan, respond to divergences from the plan. After ending a budget, the company compares actual results to expected results in budget. Managers also consider the feasibility of achieving the objectives if it was unforeseen. This aspect of control is carried out by senior manager. The control of day-to-day operations is carried out by lower manager. 3.2 Select appropriate budgeting methods for the organisation and its needs 3.2.1 Fixed budget and flexble budget  Fixed budget: “A fixed budget, also known as a static budget, projects static levels of known income and expenses over a set period of time” [ CITATION Ste12 \l 1033 ]. This method has some advantages and disadvantages as follow[CITATION Dav15 \l 1033 ]  Advantages o Measure profits : Fixed budget helps the company measure short-term and long-term budgets. It allocates money to essential departments. Profits will be the money being left at the end of the period. o Kepping costs down: This method will keep costs down if the company is strict in spending money for future periods. It has to make decision to use this amount effectively. As a result, risks that can be happen will be reduce to avoid losing money. MACB A2 Sept 2015 19 o Measure performance: the amount of money allocated to departments is the same; therefore, managers can compare budgets of each period to measure success. They can determine which months/years that budgets are better and the reason for that.  Disadvantages o Lack of budget mobility: It means that “the company won't have the ability to allocate resources to prop up under-performing areas of your business, provide additional capital in the event of equipment failure or seize a new market opportunity” [ CITATION Jon14 \l 1033 ]. This can lead to a decrease in revenue, even loss o Low accuracy: Montoya [CITATION Dav15 \n \l 1033 ] showed that inflation and cost increases are ignored when making fixed budget, which can affect the accuracy of the budgets  Flexlble bugget: "The flexible budget is a performance evaluation tool. It cannot be prepared before the end of the period. A flexible budget adjusts the static budget for the actual level of output” [ CITATION Den15 \l 1033 ] Advantages and disadvantages of flexible budget can be summed up as follow[ CITATION Jul15 \l 1033 ]  Advantages o Adjustment for predictions: Flexible budget allows managers to make adjustment when financial or operating activities do not meet their expectation. At that time, managers can change the level of activities within relevant range so that activities will not be interrupted. o Control and evaluation: When sales or production units changes, managers will easily realize and adjust the fund allocated for each department using flexible budget. This brings them more control of cost, revenue, so that profits evaluation will be much simpler. o Adapting changes: Using flexible budget helps company deal with unexpected changes in order to take the greatest benefits as well as reduce loss. Flexible budget will be very helpful when external environment changes, MACB A2 Sept 2015 20