Accounting for Managers Assignment Homework Help
- July 13, 2017
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- Category: Accounting QA
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United Consultancy is a company specialising in providing consultancy services to the F&B industry. United Consultancy prepared its operating statement for period 2 of the year ending 31 August 2012. This was as follows.
Budget | Actual | Variance | |
Chargeable consultancy hours | 2,400 | 2,500 | |
$ | $ | $ | |
Administration staff salaries– fixed | 15,000 | 15,750 | 750 |
Consultants’ salaries – fixed | 80,000 | 84,000 | 4000 |
Casual wages – variable | 960 | 600 | 360 |
Motor and travel costs – fixed | 4,400 | 4,400 | |
Telephone – fixed | 600 | 800 | 200 |
Telephone – variable | 2,000 | 2,150 | 150 |
Printing, postage & stationery – variable | 2,640 | 2,590 | 50 |
Premises and equipment costs – fixed | 3,200 | 3,580 | 380 |
Total costs | 110,400 | 116,480 | 6,080 |
Fees charged | 180,000 | 200,000 | 20,000 |
Profit | 69,600 | 83,520 | 13,920 |
While the directors are pleased that the actual profit exceeded their budget expectations they are interested to know how this has been achieved. After the budgets had been issued to them, the consultants expressed concern at the apparent simplicity of assuming that costs could be classified as being either fixed or varying in direct proportion to chargeable consultancy hours.
Requirements
Part a
As the newly appointed Finance Director, prepare a report addressed to the board of directors of United Consultancy which:
i. Explains the present approach to budgeting adopted in United Consultancy and critically evaluate the advantages and disadvantages of involving consultants in the preparation of future budgets
ii. Critically discusses the format of the operating statement for period 2.
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Part b
Explain how a spreadsheet could be set up so that a flexed budget and variance calculations could be rapidly produced by inserting only the actual data, assuming that variable costs are thought to vary in line with chargeable consultancy hours.
Part c
Critically discuss the suitability of Zero-Based Budgeting for United Consultancy. Your discussion must clearly explain the advantages and disadvantages of Zero-Based Budgeting and supported by the real-world examples.
Your assignment should be organized as follows
1. Executive Summary (about 300 words, not include in the word count)
2. Table of contents
3. Introduction
4. Main body
The main body should address the requirements as stated in Part a, b and c above.
5. Conclusion
6. References: you are required to reference / research books and journals, apart
from online sites.
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