Groups Members Nik Hassan Syukri Nik Zainal Rashed Shee Mei Theng Emilya Mazrina Bt Slamat Gramono

Norhidayah Bt Ibrahim

Term that refers, in business finance, to padding the budget by overestimating expenses and underestimating revenue or sales when developing a budget. Budgetary slack may occur if a manager is fearful of termination and pads the budget to avoid termination.

The process of planning implies the existence of objectives and is used as a tool or technique for achieving the objectives. Objectives should not only be imposed on subordinates but should be decided collectively (teamwork-junior subordinate & senior,manager).

Practice of examining the financial and operational results of a business, and only bringing issues to the attention of management if results represent substantial differences from the budgeted or expected amount Purpose- only bother management team with the important varience

Anwers :

Cash Budget for year ended 2013, 2014, and 2015 2013
Direct Material 20,528

2014
21,634

2015
21,176

Direct Labour
Variable Overhead Fixed overhead - service 30% - head office 50% Total

75,700
25,265

80,999
27,084

86,669
41,321

15,430 25,717 162,640

16,355 27,258 173,330

26,168 43,613 218,947

Production cost per unit Direct Material Direct Labour Overhead cost [(75x20%)+270]=285 - variable overhead [(15x30%)+(270x33.33%)]

75 270 94.50

- fixed overhead (285-94.50)

Quantity of houses(for each year) Estate - A -B 500x30% 600x20%

190.50
Units 150 120

Total
Production cost for 270units Direct Material Direct Labour Variable overhead Fixed overhead

270

20,250 72,900 25,515 51,435

Total cash flow for the year 2013 Accrued Direct Material Direct Labour Variable Overhead Fixed overhead - service 30% 2,100 2,800 600 Current year 18,428 72,900 24,665

Total 20,528 75,700 25,265 15,430

- head office 50%

25,717

Total cash flow for the year 2014 Accrued Current year Direct Material Direct Labour Variable Overhead Fixed overhead - service 30% 1,822 850 19,812 80,999 36,234

Total 21,634 80,999 27,084 16,355

- head office 50%

27,258

Total cash flow for the year 2015 Accrued Direct Material Direct Labour 1741 Current year 19,435 86,669

Total 21,176 86,669

Variable Overhead Fixed overhead - service 30%

office 50% - head

871

40,450

41,321 26,168
43,613

2(b.ii) Other factor to consider : 1.Material qualities usage 2.Labour effieciency 3.Performance history of company

Standard Product Cost Per Unit () Direct Material-Wals (15x60) 900 -Lops (8x75) 600 Direct Labor (60x10.50) 630 Fixed O/head (504,000/12month/200) 210 2,340

Material Price Variance

WALS = (AP-SP) X AQ = (57-60) X 3,000 = 9,000 (F) = (AP-SP) X AQ = (81-75) X 1,000 = 6,000 (A)

LOPS

Material Usage Variance

WALS = = = = = = = = (AQ-SQ) SP (3,000-[18015])60 (3,000u-2,700u)60 18,000 (A) (AQ-SQ) X SP (1,000u-[1808])75 (1,000u-1,440u)75 33,000 (F)

LOPS

Direct Labour Efficiency = (SH-AH) SR = ([60h200]-11,700h)10.50 = (12,000h-11,700h)10.50 = 300h10.50 = 3,150 (F)

Wage Rate Variance = (SR-AR) AH = (10.50-9.60) 11700h = 10,530 (F)

Fixed o/head Expenditure = (BFO-AFO) = ([504,000/12]-42,600) = 600 (A)

Volume Variance = (AP-BP)SR = (180u-200u)210 = 4,200

SR=Budget Fixed O/head Budgeted Activity =504,000/2400 = 210

() Budgeted Profit Direct Cost Variances:

()

() 66,000

Materials Price-Wals
-Lops Materials Usage-Wals -Lops Labour-Rate -Efficiency Manufacturing o/head variances Fixed expenditure Volume Variance Actual Profit

9,000 (F)
6,000(A) 18,000(A) 33,000(F) 10,530(F) 3,150(F) 13,680(F) 15,000(F) 3,000 (F)

600 (A) 4,200(A) 4,800(A) 26,880 39,120

() Budgeted Profit Direct Cost Variances: Materials Price-Wals -Lops Materials Usage-Wals -Lops Labour-Rate -Efficiency Manufacturing o/head variances Fixed expenditure Volume Variance Actual Profit 600 (A) 4,200(A) 9,000 (F) 6,000(A) 18,000(A) 33,000(F) 10,530(F) 3,150(F)

()

() 66,000

3,000 (F) 15,000(F) 13,680(F)

4,800(A)

26,880 39,120