HND财政预算OUTCOME34报告你不过我从此消失Word格式.docx
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Findings
PartA
(ⅰ)Flexbudgetinlinewithactualactivity
TricolplcFlexedBudgetforJune
Originalbudget
Flexedbudget
Actualresults
Variance
2000units
1600units
F/A
£
Directmaterial
80,000
64,000
61,600
2,400
F
Directlabor
36,000
28,800
35,200
6,400
A
Variableproductionoverhead
4,000
3,200
Fixedcost
Depreciation
1,500
Rentandrates
2,500
Administrationoverhead
2,000
2,200
200
Insurancecosts
Total
128,200
104,200
108,600
4,400
(ⅱ)Variancescalculation
Directmaterialtotalvariance
(Standardunitsofactualproduction*standardprice)-(actualquantity*actualprice)
(4kg*1,600*£10)-£61,600=£2,400(F)
Rateofsignificance:
%)
Directmaterialusagevariance
Standardprice*(standardunitsofactualproduction-actualquantity)
£10*[(4kgⅹ1,600)-5,600kg]=£8,000(F)
Rateofsignificance%)
Directmaterialpricevariance
Actualquantity*(standardprice-actualprice)
5,600kg*[£10-(£61,600/5,600kg)]=£(5,600)(A)
Directlabourtotalvariance
(Standardhoursofactualproduction*standardrateph)-(actualhours*actualrateph)
[(2hrs*1,600)*£9]-£35,200=£(6,400)(A)
Directlabourefficiencyvariance
Standardrateph*(standardhoursofactualproduction-actualhours)
£9*(2hrs*1,600-3,520hrs)=(2,880)(A)
(10%)
Directlabourratevariance
Actualhours*(standardrateph–actualrateph)
3,520hrs*(£9*-£35,200/3,520hrs)=£(3,520)(A)
Totaloverheadvariance
Totalstandardoverheadforactualproduction-totalactualoverheads
(£18,000/12+£2,500+£2,200+£2,000)-(£1,500+£2,500+£2,200+£2,400)=£(400)(A)
(ⅲ)Reportaboutvariances
Directmaterialvariance
Thedirectmaterialtotalvariancecanbeanalyzedintwoaspectswhicharedirectmaterialvolumeanddirectmaterialprice.
Forvolumeside,ascalculatedabove,thebudgetvolumeis6400kg;
theactualvolumeis5600kg.Sothereis800kgvariancewhichisfavorableandeachunitvarianceis.Thelikelyreasoncausingthevariancecomesfromthreeaspects.Firstofall,thecompanyupgradedtheproductionmachineryrecently,andnewmachinemayusematerialsefficiently,soitreducedthewasteofmaterials.Secondly,thecompanyswitchedsuppliersandusinghigher-gradematerialscandecreasewasteofmaterialstoo.Finally,thecompanyhasconcludedahigher-than-expectedwagesettlementforproductionoperatives,whichwillmaintainemployeeswithhigherskillsaswellasdecreaseturnoverofemployees,anditalsocanincreaseefficiencyinusingmaterials.
Forpriceaspect,thebudgetpriceis£10perkg,andtheactualpriceis£11perkg,itisadversethatonepoundoverthebudgetprice.Thecompanyswitchingsuppliersmaycausetheincreaseofnegotiationcost.Theremaybealong-termrelationshipbetweenTricolplcanditsoldsuppliers,sothesuppliersmaytakelotsofdiscountstothefirm.Afterchangingsuppliers,thediscountmaydisappear.Furthermore,highergradematerialsincreasedunitprice.
Overall,thetotalmaterialvarianceisfavorable.£8,000-£5,600=£2,400.
Directlabourvariance
Thedirectlabourtotalvarianceiscomposedofdirectlabourefficiencyvarianceanddirectlabourratevariance.
Thebudgetdirectlabourhoursare3,200hrsandtheactuallabourhoursare3,520hrs.Therearemore320hrsneededthanthebudget,andeachunitis,whichitisobviouslyadverse.Thecompanyupgradingtheproductionmachinerymayneedtimeforemployeestoadoptit.Also,employeesneedtrainingtime.Therebuildprocessofmachineryconsumedtimetoo.Inaword,thechargeablehourshaveincreased.
Thebudgetdirectlaourhoursrateis£9perhour,theactualhoursrateis£10perhour.Itisadversethatonepoundhigherthanbudgeted.Itispossiblecausedbybothinternalandexternalfactors.Higher-than-expectedwagesettlementmaybeinternalreasonforthevariance,andnewmachinerymaybeneededtorecruitnewemployeestooperatethemachinery,whichalsocanincreasetheexpense.Forexternalfactors,thechangingoflabourmarketmayincreaselabourcost;
thegovernmentlegislationalsocanincreasethelabourcost,forexampleminimumpay.
Bothdirectlabourefficiencyanddirectlabourratevariancesareadverse,sothedirectlabourtotalvarianceisadverse.
Overheadvariance
Ascalculatedabove,totaloverheadvarianceiscausedbyadministrationandinsurance.Eachfactorhas£200variance,sothetotaloverheadvarianceis£400anditisadverse.Duringtheprocessofchangingsupplier,thecompanyneededmoreexpenseonpublicrelationshipornegotiation,inaddition,inordertomaintainthenewmachinery,administrationcostwillbeincreasedtoo.Forinsuranceaside,theimprovementofmachinerywillneedmoreinsurancefeestocover,whichalsocontributestotheincreaseofinsurancefeeofnewemployees.
PartB
Selectionandapplicationoftwoinvestmentappraisaltechniques
Asthecompanyiskeentorecoupthecostoftheinvestmentwithinfiveyears,IwillchoosePaybackperiodandNetPresentValuetohelpmecompletetheappraisal.
Inordertofulfilltheappraisaleasily,therearesomeassumptionslistedbelowshouldbeconsideredbeforetheappraisal.
⑴Allrevenueandinflowareassumedcashflow
⑵Allinvestmentcostincurredinyear0
⑶Nouncertaintyisconsidered
⑷Donotconsiderinflationandtaxation
⑸Marketrateofreturnisexpectedrateofreturn
⑹Rateofreturnisvaryingalongwithtime
TricolplcPaybackperiodforprojectdistributionarm
YearNetcashflow
CumulativeCashFlow
CashFlow
Year0
(1,000,000)
CashInflow
Year1
160,000
(840,000)
Year2
(680,000)
Year3
320,000
(360,000)
Year4
(40,000)
Year5
280,000
NetCashBenefit
Note:
require40,000/320,000inyear5=1/8*year=moths
Payback=4yearsmoths
TricolplcNetPresentValueforprojectdistributionarm
Annualcashflow
Presentvaluefactorsat10%
Present
Value
145,440
132,160
240,320
218,560
198,720
935,200
NPV
(64,800)
Recommendationaboutinvestment
AccordingtoPaybackPeriodanalysis,theinvestmentcostcanberecoupedinyear4andmoths.Inotherwords,theperiodisundercompany’sexpectation.Theprojectcanbeexecuted.However,accordingtoNetPresentValueanalysis,intermsofpresentvalue,withinfiveyears,whattheNPVwillbringnetresultisnetcashlossbutnotnetcashsurplus.Ingeneral,thecompanyshouldconsidertimevalueandotherfactors,sotheprojectshouldnotbeexecuted.
Factorsimpactontheinvestmentshouldbeconsidered
Variousfactorswillimpactonresultofinvestment.Iwilloutlinefactorsshouldbeconsideredwhenthemanagementreviewingmyrecommendationinfinancialandnon-financialfactors.
Financialfactor
Asdistributionarmisfinanciallong-termbeneficialproject,itcanbeusedin
long-termperiodandbringbenefitscontinuous.Theinvestmentcostis£1,000,000,whichcanbeconsideredalargeinvestment.Soitmorelikelyneedslongperiodpaybackperiod.Themanagementshouldfocusonlongercashflowsforlongerperiodoffuture.Ontheotherhand,NetPresentValueinyearfiveis(28,000)onlytake%percentsoftheinvestmentcost,itismorelikelysurplusinyearsix.Anotherfinancialfactorissourceofmillionpounds.Ifitisinternalsource,themanagementmainlyconcentrateonopportunitiescost.Ifitiscostofcapitalorcostofcapitaltakingmuchweightofthesource,themanagementmustpaycostofthesourcefirstly,themarketingrateofreturnlikelylowforthecompany,inaddition,themanagementshouldusehigherdiscountedcashflow.
Non-financialfactor
Theinvestmentmustbeconsistencewithcompany’sstrategicplan.AsTricolisaplc,itmusttakesocialresponsibilitysuchasobeyinggovernmentpolicy,minimizingimpactonenvironmentandminimizingimpactonnatives.
Conclusion
Forrealcompetitionismorecomplexandfierce,inordertomakeaccuratedecisions,managementshouldconsidermorefactorsduringthedecision-making;
furthermore,themanagementshouldusemoretoolstohelpthemsuchasIRR,DCF.