sqahnd财政预算34.docx

1、sqahnd财政预算34 Contents1.0 IntroductionThis report will divided into two parts. Part A and Part B. In Part A,First of all, I will prepare a flexed budget in line with actual activity. Second, this will including the Materials variances, Labour variances and total overhead. At the same time, I will ide

2、ntify a minimum of one possible cause of the each variance. Finally, according to data analysis, there have been some recommendations to management of Matteck PLC. In Part B, It will have four different ways to evaluate financial performance and give recommendations for Matteck PLC. These ways are A

3、RR ,Payback, NPV and IRR. Part A2.0 The flexed budgetFor Flex budged of Matteck PLC, we can see the Appendix 1. 3.0 Calculate the Materials variances, Labour variances and the Total overhead. 3.1 Direct the materials variances , labour variances and the total overhead.This section shows the Appendix

4、 2. 3.2 Variance analysis.Material price variance:The material price variance is 32,000(F). According to the data analysis, it is 2/kg less expensive than planned. The possible reasons can be divided into three points: first, they could replace raw materials, using a lower - grade material. Second,

5、the supplier to provide some discount for this batch of raw materials. Finally, learn from the case, the company has managed to locate new materials from an overseas. Due to the product from overseas, according to different exchange rate, the material will reduce the price.Material usage variance:Th

6、e material usage variance is 30,000(A). The possible reasons include the effects of raw materials and the influence of the machine. If the company using poor quality raw materials, it may be more difficult to work. This will increase the waste materials. At the same time, the case shows that the com

7、panys new machinery can be fully used in the second week. The delay time may have caused the machine to use more materials than planned. Material total variance:The material total variance is 2,000(F). Case shows that the companys raw materials are from overseas suppliers. This will reduce some cost

8、s. Which leads to the material price variance is 32,000 (F). On the other hand, the company has introduced a new machine, the influence of machine installed time, caused some wasted of materials. This makes the material usage variance is 30000 (A). Even if The companys material total variance is 200

9、0 (F). The companys management still should pay attention to The utilization of raw materials.Labour efficiency variance:The Labour efficiency variance is 10,000(F). The possible reasons could include the new machine to improve staff work efficiency. Using new machine can less labour hours. At the s

10、ame time , the case shows that the company has had to employ more highly qualified staff. They can increase the working efficiently through the higher skill. Labour Rate Variance:The Labour rate variance is 15,000(A). Through the calculation, the labour rate is 1.50 per hour higher than original. Th

11、e possible reasons is 1.50 per hour higher than planned. The cost of direct labour is adverseness for this firm.Labour Total Variance:the Labour total variance is 5,000(A). The reasons of variance, the company has introduced the new machine, As the result the direct labor efficiency variance is favo

12、rable which is 10,000(F). On other hand, the labour rate is higher than standard labour rate. Finally, lead to the labour total variance is adverse, 4.0 The recommendations for management (variances).1. The company should be had a variety of data investigation to set up complete data system. At the

13、same time, through the different variance, the company can know more about the market information.2. The company should intensify the performance monitor for staff because the lower performance will accelerate waste of material and then lead to the material usage is increase, the performance monitor

14、 can help the company shrink the variance.3. Management: the company can provide some motivation policies to motivate the staff that is work hard and enhance the work enthusiastic of the staff. This can improve the staff work efficiency.Part B5.0 Using four different methods to evaluate the financia

15、l. 5.1 Identify the accounting rate of return.ARRAverage profit= =660,000Accounting rate of return= =26.4%The cases show that the company should have an accounting rate of return of at least 15%, through calculation, the ARR is 26.4%. Therefore, the data has meet company standards. 5.2 Identify the

16、payback. The company hopes to recover the cost of the investment within 4 four years. In fact, they just use 3 years 341days. (see Appendix 3.) 5.3 Identify the Net present value. The NPV method calculates the present values of cash inflows and outflows and establishes whether. Basically, NPV provides an objective for evaluating and selecting investment projects. Moreover, it takes into account requ