HND财政预算报告outcome2.doc

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1、IntroductionTricolplcacompanywhomakesarangeoffurnitureandkitchenware.Andoneofitsmostpopularproductsisthe‘Zupper’expandabletable.Thepurposeofwritingthisreportistodothevarianceanalysis,projectevaluationandtocomparethebudgetandactualdatabyusingthetechnique.FindingsP

2、artAPossibleReasonforVariances1.MaterialDirectMaterial–Total-￡2,400Fmadeup:DirectMaterialUsage–￡20000F(Levelofsignificance–usage/totalbudgetedMaterialcosts=8,000/64,000=12.5%>3%,shouldbereviewed)2000kglessmaterialsareusedthanbudgetedfortheactuallevelofproduction.

3、Possiblereasonmaybeusingthehigher-gradematerialwithlesswastage.Orthenewmachineryuselessmaterialsandincurslesswstage.DirectMaterialPrice–￡5,600A(5,600/64,000=8.75%>3%)Itis￡1perkgmoreexpensivethanplannedPossiblereason:Newmaterialsupplierdoesnotgivediscountsformater

4、ials.Hither-gradematerialshavebeenusedwhichismoreexpensive.2.LabourDirectLabourTotal-￡6,400ADirectLabourRate–￡3,520A(3,520/28,800=12.2%>3%)Onaverage,theactuallabourrateis￡1/hourhigherthanbudgetedPossiblereason:ThewagesettlementishigherthanexpectedThenewmachinereq

5、uirestrainingssothatovertimerequiredmorethanexpected.DirectlabourEfficiency-￡2000A>3%)4.16%Actually,morethan200labourhourshavebeenusedthanbudgeted.Possiblereason:Newmachineryrequiresmorehoursfortraining..Humanresourceissues–theskilledoperativesisnotenough.3．Total

6、Overhead-￡600FRateis4.70%UnpredictedincreaseininsuranceandAdministrationcostsPossiblereason:Newmachinerybringsmoreexpensiveinsurance,highermaintenanceandadditionaladministrativecosts.PartB1.Keyassumptionsmade:a)Thereisnotaxationandinflation.b)Assumedthatthereisno

7、varygivenreturnmarketrate.c)Thetotalcostoftheprojectwillbepayableatthestartd)Theexpectedrevenuefromtheinvestment–thisistheexpectedNetCashFlowafterdeductionofallrelevantcosts2.PaybackPaybackinthiscaseis4.125years(totalinvestment-returnperiodisfiveyears).Sothecompa

8、nycangetbacktheinvestment.TheNetPresentValueis￡-64，800.Itindicatesthattheprojectdoesnotappeartobefinanciallyviable.ConclusionPartBThisprojectisavailablebecause