Question 1 – What points need to be considered before preparing a budget? Question 2 – Some companies, such as Volvo, no longer prepare budgets. What are the main advantages and disadvantages of using...

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Question 1 – What points need to be considered before preparing a budget? Question 2 – Some companies, such as Volvo, no longer prepare budgets. What are the main advantages and disadvantages of using a budget? Question 3– The financial controller of BBQ Essentials requests estimates sales, production and other operating data from the various administrative units every month. Selection information concerning sales and production for May is summarised as follows: Required 3.1Prepare a sales budget for May. 3.2Prepare a production budget for May. 3.3Prepare a direct materials purchases budget for May. 3.4Prepare a direct labour cost budget for May Question 4 – Visit the Woolworths Limited website (www.woolworths.com.au) and download the company’s most recent annual report. Locate within the Director’s Statutory Report the report of the Remuneration Committee which provides comprehensive disclosures about the remuneration paid to key management personnel (KMP). 4.1What is Woolworths’ remuneration strategy and what are the goals the strategy is designed to achieve? 4.2What are the principles embodied in Woolworths’ remuneration framework? 4.3How will Woolworths apply these remuneration principles in terms of the use of external data, the setting of targets and the awarding of incentives to KMP? 4.4What is the structure of the remuneration package offered to KMP? 4.5Focusing on the at-risk short-and long-term rewards offered by Woolworths to KMP, identify, review and comment on the components of the incentives, the weightings allocated to each component and the performance measures (or hurdles) used to determine whether an incentive will be awarded. 4.6Review the performance measures Woolworths uses for the awarding of short-term annual cash incentive for the KMP identified in the Remuneration Report. 4.6.1 What are those financial and non-financial measures? 4.6.2 How would you assess the balance between financial and non-financial measures? 4.6.3 Why would the financial and non-financial measures for individual KMP be different in terms of applicability and weighting? Question 5 – Indicate, for each of the following independent casers, whether they are best structured as cost, profit or investment centres: 5.1 Kellee is head of the marketing and public relations department at Satellite University. The department receives funding from the central administration for teaching and research. The department is allocated funds based on projected expenditures. Kellee is responsible for 10 academic staff and 2 general staff. 5.2 Leigh is head of the school of business located on the campus at Planet University. The school enrols only full-fee-paying students and is responsible for all operating costs and a share of the university’s overheads. The university provides a building and teaching venues. Leigh is responsible for 30 academic staff and 10 general staff. 5.3 Troy is head of the division of business at Universe University. The division is located in its own building in the city as part of a strategic move by the university. The division enrols only full-fee-paying students and it also conducts short courses for businesses in the CBD. The division is responsible for all capital and operating costs. Question 6 – You are a director of a credit union and you have been appointed to the remuneration subcommittee. One of your first tasks is to consider a bonus for the general manager. You believe that a bonus should be paid based on performance. The credit union has 10,000 members and total assets of $50 million, with $40 million in loans to members. It operates four branch locations and a head office and employs a total of 30 people. You are familiar with using KPIs such as return on assets as a measure of performance. However, the board of directors has a policy of not aiming to maximise profit as the credit union exists for the benefit of its members. Therefore, you consider it to be inappropriate to use return on assets as a measure of the performance of the general manager. Required What other financial and non-financial measures of performance could be used to assess the performance of the general manager? Question 7 – List three performance measures that would be appropriate for the following centres: 7.1 An academic department in a university established as a cost centre. 7.2 A branch of a bank established as profit centre. 7.3 A division of a large steel company established as an investment centre.
Answered Same DayApr 14, 2021

Answer To: Question 1 – What points need to be considered before preparing a budget? Question 2 – Some...

Khushboo answered on Apr 18 2021
143 Votes
Solution 1:
The budget is considered as the vital process for any organization. It helps the entity in making effective decisions which is fruitful for the organization. Hence for developing the sound budget the management should possess the clear knowledge of the concerned entity and its working condition and environment. There are various important factors that should
be considered in preparing the budget which consists of sales or income, cost and expenses and the balances and fund available with the entity. Hence making the budget as the effective one the management should consider the past trends and should also be conducting the market research and review the economic condition.
Solution 2:
Since budget is the vital process in the entity and there are various merits and demerits associated with the budgets. The benefits include the increase chance of attainment of goals and objectives. It also helps in determining the strength and weaknesses of the entity and problem can be dealt with and avoiding the problems with the remedial action. It also helps in assisting in better allocation and understanding the responsibility of the staff. It also ensures better coordination in the activities and different departments of the entity. Besides this there are various demerits of the budget which includes the de motivation of the staff and employees as sometimes the unachieved targets are set and it leads to unnecessary additional work. Moreover there is lack of cooperation among the departments which leads to operational budget in conflict. It also leads to lower flexibility and variance analysis presented to the management too late to have any influence (Ashe-Edmunds, Sam 2019).
Solution 3:
1. Sales Budget for the month of May
    Product and Area
    Unit sales Volume
    Unit selling price
    Total sales
     
     
     
     
    Backyard model
     
     
     
    Sydney
    3500
    550
     1,925,000
    Hobart
    2800
    500
     1,400,000
    Perth
    4000
    600
     2,400,000
    Total
    10300
     
     5,725,000
    Deluxe master model
     
     
     
    Sydney
    1800
    1300
     2,340,000
    Hobart
    1500
    1200
     1,800,000
    Perth
    2900
    1500
     4,350,000
    Total
    6200
     
     8,490,000
    Total sales
     
     
     14,215,000
2. Production Budget for the month of May
     
    Basic model
    Deluxe model
    Total
    Budgeted sales unit
    10300
    6200
    16500
    Planned ending inventory
    1200
    500
    1700
    Less: Beginning inventory
    -1500
    -400
    -1900
     
     
     
     
    Planned Production
    10000
    6300
    16300
3. Direct material purchase budget for the month of may
     
    Grates
    Stainless Steel
    Burner assemblies
    selves
    Basic model
     
     
     
     
    Planned production
    10000
    10000
    10000
    10000
    Units required
    2
    25
    1
    2
    Total material required in production (a)
    20000
    250000
    10000
    20000
     
     
     
     
     
    Deluxe model
     
     
     
     
    Planned production
    6300
    6300
    6300
    6300
    Units required
    6
    65
    4
    3
    Total material required in production
    37800
    409500
    25200
    18900
     
     
     
     
     
    Total material required in production
    57800
    659500
    35200
    38900
    add: closing material
    800
    1900
    800
    480
    less: beginning material
    1000
    2500
    600
    400
    Budgeted DM purchase
    57600
    658900
    35400
    38980
    Purchase price
    $15
    $3
    $72
    $7
    Budgeted DM Purchase in $
    $864,000
    $1,976,700
    $2,548,800
    $272,860
4. Direct labor budget for the month of May
    Basic model
    Prefabrication
    Forming
    Assembly
    Planned production
    10000
    10000
    10000
    Direct labor hour per...
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